2023-05-26 05:55:00
It climbs strongly on the side of the American technological compartment, which roars with pleasure, but alone in its corner. Elsewhere, the atmosphere is not really festive. European markets are dragging their feet, the United Kingdom is sinking a little deeper into a deep crisis with Gilts adrift, Germany is officially entering recession, Beijing is struggling to vigorously recover its economy and oil is falling from regarding 3%. Here is the overall picture for this last session of the week, the culmination of which is expected at 2:30 p.m. More on this below.
Let’s start with an observation: the stock market indices went all over the place yesterday, with a rather impressive split between the Nasdaq and the rest of the stock market indices. Just compare the decline of 0.33% of the CAC40 with the XXL progression of the Nasdaq100, which gained 2.46% yesterday. I chose the example of the CAC40, but I might have taken the Dow Jones (-0.11%), the German Dax (-0.31%) or the OMX Nordic (-0.08%) . That doesn’t change the fact that tech stocks have gone off the rails, boosted by new kind of steroids that have appeared with the spread of artificial intelligence. Anthony spoke regarding it yesterday within this same heading: Nvidia is at the origin of this movement with a large +24% on the only session of yesterday. This renewed enthusiasm has spread to the entire semiconductor industry, as evidenced by the daily gains of Advanced Micro Devices (+11%), Applied Materials (+7%) and ASML Holding (+5%). Except, Intel, which remained on the sidelines, yielding not far from 5%.
If this boost from the Nasdaq is welcome, Wall Street did not end at the highest of the day. However, the context lent itself well to it since the financiers took note of a rather positive double-statistic on the American economy. First, US GDP was revised to 1.3% in the first quarter of 2023, above the first estimate of economists, who expected growth of 1.1%. And second, weekly jobless claims fell to 229,000 from 242,000 last week and 264,000 two weeks ago. The trend is clear: the US economy is still holding up and the labor market is holding up. Not bad, isn’t it, especially since we continually stuff your head with fears of recession.
I’m pushing an open door here since you can imagine, the equation is a tad more complex than that. This macroeconomic improvement is not really helping the financiers since it gives the Federal Reserve more leeway to raise its key rates without risking a hard landing for the American economy. In that regard, yesterday’s data might help change the odds on a quarter-point rate hike for the US central bank’s decision on June 14th. According to the CME’s FedWatch tool, this probability rose to 50% yesterday, before falling back to 38% overnight. What cool the libido of investors, already sufficiently affected by the negotiations on the ceiling of the American debt, which it seems, only hold more than 70 billion dollars to put everyone in agreement.
The macroeconomic component of the day will precisely be dominated by the expectation of PCE inflation figures in the United States in April, which will be unveiled at 2:30 p.m. This is a statistic closely watched by the Fed, so it might very well sway investor expectations one way or the other. Still in the macro register, durable goods orders will also be the center of attention at 2:30 p.m.
The week ended higher in Asia, with the Japanese market up 0.37% on the side of the Nikkei 225. Shanghai also climbed 0.53% while the Hang Seng in Hong Kong was closed due to a public holiday. In Australia, the ASX 200 ended with a gain of 0.23%. Leading indicators in Europe are hovering around balance with a slight bullish bias as of this writing.
Economic highlights of the day
Cap at 2:30 p.m. with Core PCE inflation in the United States and durable goods orders. Financiers will also take notice of US household spending and income, ahead of the consumer sentiment update at 4:00 p.m. The whole macro diary here.
The euro continues its bearish streak 1.074 USD. The ounce of gold is struggling to raise the bar to 1948 USD. Oil is losing ground with Brent from the North Sea at USD 75.90 a barrel and US light crude WTI at USD 71.70. US debt shows a 10-year yield of 3.806%. Bitcoin is trading at 26230 USD.
The main changes in recommendations
- Analog Devices: Goldman Sachs remains long but lowers its target from 210 to 204 USD.
- Avance Gas Holding: Pareto Securities raises its hold-to-buy recommendation and targets NOK 92.
- Caixabank: Barclays reinstated its cover with an overweight recommendation and a target of EUR 5.
- Elisa Oyj: Citi is raising its recommendation to sell to neutral.
- Faurecia: Jefferies raises its underperformance advice to buy and targets EUR 24 once morest EUR 16 previously.
- FD Technologies: JP Morgan begins its follow-up with an overweight recommendation and a target of 2500 GBX.
- Halfords Group: RBC Capital Markets downgrades its outperformance advice to sector performance with a target of 220 GBX.
- K+S AG: Baader Bank is downgrading its advice to buy to accumulate with a target reduced from 26 to 18 EUR.
- NN Group: HSBC raises its recommendation to hold to buy with a target of EUR 45.
- Nvidia: UBS maintains its long advice and raises its target from 315 to 475 USD.
- Oxford Instruments: HSBC begins its follow-up with a recommendation to hold and a target of 2900 GBX.
- Pierer Mobility: Jefferies is still buying and raising its target from 90 to 95 CHF.
- Rio Tinto: Morgan Stanley raises its online weighting advice to overweight with a target of 5800 GBX.
- Schoeller-Bleckmann Oilfield Equipment: Berenberg takes up his advice to keep buying and aims for 66 EUR.
- Snowflake: JP Morgan remains long but lowers its target from 165 to 155 USD.
- STMicroelectronics: Equita SIM Spa resumes its coverage with a recommendation to keep and a target price of 52 EUR.
- Tele2 AB: Citi raises its neutral buy recommendation with a target of 115 SEK.
- Telenor ASA: Citi resumes tracking with a neutral recommendation and a target of NOK 121.
- Telia Company: Citi raises its recommendation to sell to neutral.
- Valeo: Jefferies goes from underperformance to buy with a price target of EUR 22 once morest EUR 15 previously.
In France
Important (and less important) announcements
- Stellantis invests in the lithium-sulfur batteries of the American Lyten.
- Alstom signs a contract in Romania worth 400 million euros for the construction of a metro line.
- The United States Court of Appeals rules in favor of Atos in the TriZetto litigation.
- Sanofi appoints Frédéric Oudéa as Chairman of the Board of Directors.
- Casino, Guichard-Perrachon begins negotiations with its creditors, its quotation resumes today.
- Unibail-Rodamco-Westfield is continuing its debt reduction with two disposals, one in Florida and the second in Versailles.
- Coface’s profit increased by 17% in the first quarter.
- Gaztransport & Technigaz (GTT) signs a framework service contract with Eastern Pacific Shipping and its subsidiary CoolCo.
- The Chairman of Vetoquinol is stepping down, his Managing Director succeeding him as of July 1.
- Orpea sells a retirement home in Riga.
- Gaussin signs a partnership contract with Plastic Omnium.
- Quantum Genomics publishes its 2022 results.
In the world
Important (and less important) announcements
- Microsoft is appealing the UK regulator’s decision to block the $75 billion takeover of Activision.
- Raytheon Technologies wins a contract to develop new equipment for US Navy radars.
- Ralph Lauren exceeds its estimates in the fourth quarter thanks to Asian demand.
- JPMorgan is laying off a thousand former employees of First Republic Bank.
- Eli Lilly suspends plans to invest in a lab in London according to the Times.
- Meituan posted a profit of 3.36 billion yuan in the first quarter, compared with a loss of 5.70 billion yuan a year earlier.
- Lufthansa acquires a 41% stake in ITA Airways.
- Brussels approves the takeover of Credit Suisse by UBS unconditionally.
- Holcim completes its CHF 2 billion share buyback program.
- BASF starts a new supercomputer at its Ludwigshafen site.
- BAE Systems obtains a contract of 7 million dollars in the United States for a program of surveillance of the targets in space.
- Asos raises funds to support its recovery.
- Orsted acquires a 50% stake in Eversource Energy for $625 million.
- Main publications of the day: Meituan, Booz Allen Hamilton … The whole agenda here.
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