Dow +0.27%, S&P 500 -0.07%, Nasdaq -0.03%, Russell 2000 -1.12%, SOX -2.2%, Eurostoxx -0.99%, SMI +0.02% .
It was a choppy day for the indices yesterday, with the S&P500 (SPX) almost returning to its starting point at the bell. The atmosphere of the day is not really folichonne, it must be said that leading central bankers are speaking, including Christine Lagarde who explains to us in essence that nothing is like before the pandemic and that inflation is gone to stay with us for quite some time. For his part, Jerome Powell admits that the fight against inflation is worth it, even if it slows down American growth too much. Read: “my dear friends, a soft landing for the American economy is your wildest dream, I am not Gérard Majax all the same…”. As the icing on the cake, Loretta Mester, Cleveland Fed boss and FOMC voting member, is arguing for a 75 basis point hike at the Fed’s July meeting. Don’t throw any more, the falcons were released yesterday and the market, rather orphaned by news, doesn’t really have a good reason to move north. Moreover, today is the end of the month/quarter/semester and Monday will be a public holiday in the United States (Independence Day), traders are reluctant to take long positions in such an environment. I note in passing that, even if the hawks are heard yesterday, the Fed Funds, these little rascals with the contrarian spirit, now forecast 68 basis points of rise at the meeting of July 27, against 71 points yesterday.
The SPX is treading water at the bell, but it is working on its technical configuration and rather well. Not content with coming to successfully test the level of 3800 points during the session, it recovers its Fibonacci retracement (38.2%) at the end of the session. The dollar is in demand, the EUR/USD pair returns to 1.0468, volatility falls back very slightly, gold is weak at 1816 dollars per ounce and oil awaits the decision of OPEC+, the barrel of WTI Light Crude fell back slightly to $109.88. In terms of sectors, players are looking for non-cyclical stocks, they are returning to pharmas, which present increasingly attractive price/earnings ratios, are defensive stocks and participate in the fight against covid for some of them. them, the covid which is coming back in force among us, but apparently not really in people’s minds, to follow… (well, I rather believe that it is he who will follow us). The market does not have the big potato but remains selective, for example it seeks large technological capitalizations while disdaining small and mid-caps, the generals therefore more or less climb the hill on their own, the bulk of the army remains in the plain, well…
Bond yields fell back, the 10-year US fell to 3.08%, its current range is for the record between 3.00% and 3.50%.
OPEC+ decides its supply policy today. The market is expected to approve a production increase of 648,000 barrels per day for August, completing the reversal of the large cuts made at the start of 2020. Traders are at on the lookout for signs that Saudi Arabia and the United Arab Emirates may be willing to open the taps further, especially as Joe Biden prepares to visit Riyadh in July and Iran nuclear negotiations do not hardly progress.
The Chinese economy showed further signs of improvement in June. The official manufacturing PMI rose to 50.2 from 49.6 in May, while the services index reached 54.7. Lockdowns in the country and the impact on the global supply chain were the main reasons given for the 7.2% decline in Japan’s industrial production in May compared to the previous month.
Several consumption indicators are expected in Europe this morning, including those from Germany and France. In the United States, weekly jobless claims and household income and expenditure (2:30 p.m.) will precede the Chicago PMI (3:45 p.m.).
Barry Callebaut: Berenberg goes from holding to buying, aiming for 2600 francs. Clariant: Goldman Sachs remains on the buy side with a price target raised from 19.60 to 21.70 euros. Givaudan: Goldman Sachs remains neutral with a price target reduced from 4000 to 3000 francs. SGS: JP Morgan remains neutral with a price target reduced from 3000 to 2350 francs. Zur Rose: Barclays remains overweight with a price target reduced from 173 to 166 francs. Canal+ (Vivendi) has won the call for tenders for the broadcasting rights in France for the new Football Champions League for the period 2024-2027. Pfizer and BioNTech secure $3.2 billion contract from US authorities for new covid vaccines. Shell is to buy Equinor’s 51% stake in a development project in the Gulf of Mexico in the United States. UBS signs $25 million settlement with US SEC to settle fraud charges. Novartis is relaunching its production of radioligands in Italy and the USA. Snap is diversifying beyond advertising with a paid version, Snapchat+.
Last night and this morning in Asia, the indices are trading lower, except for Shanghai, which rose by 1.65%, the PMI went through it. Tokyo fell 1.54% at the bell, Hong Kong dropped 0.30% and Seoul lost 1.91%. The SPX future is down 0.9% and Europe is shown down 1.3% at the 9am open. The market ends its semester this evening, it is slowly entering a summer torpor synonymous with even lower liquidity than usual. The next two weeks will be marked by a more or less feverish expectation of the start of the corporate earnings season for the second quarter in the United States, but also of the consumer price index on July 13.
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