2023-06-26 06:12:00
Change of mood on the markets, which are cashing in on the resurgence of inflation. This is causing resistance and singularly complicates the task of financiers insofar as its persistence forces central bankers to maintain a punitive approach to rates. The problem is that the latest economic statistics are clearly bad, enough to raise the specter of a recession, or even, in the worst case, that of stagflation. The week that is starting will just add grist to the mill since it will be marked by a battery of macroeconomic indicators, but above all by a swarm of interventions by central bankers.
Beginning of the week obliges, we start this column with the general atmosphere on the actions. Wall Street has started to reverse gear following several weeks of growth (five precisely for the broader S&P500 index). Red also dominated European markets last Friday: the French CAC40 fell 0.55%, the German Dax almost doubled while the British Footsie did not do much better, yielding 0.54%. Only the Swiss SMI came out with a small increase of 0.34% thanks to the resilience of its defensive heavyweights such as Roche, Nestlé and Novartis. It is therefore time for caution, not to be confused with panic since overall, the European indices are simply approaching their level at the beginning of June. In Asia, the Japanese Nikkei is also opting for a break while China is still dragging its feet despite the monetary easing measures implemented by Beijing.
Let’s not stray from the register of monetary policies since central banks will keep the spotlight this week with comments and press conferences from central bankers from all sides since today opens the annual forum of the European Central Bank which will be held until Wednesday in the beautiful town of Sintra, Portugal. This forum brings together central bank governors, academics and other financial market representatives to exchange views on current policy issues from a long-term perspective. Looking through the program of the event, I learn that the debates of this edition will be devoted to macroeconomic stabilization in a context of volatile inflation. In other words, how not to ruin an economy too much by fighting inflation. Christine Lagarde is due to deliver a speech tonight, but financiers will be most interested in a roundtable on Wednesday followingnoon between ECB President Jerome Powell (Fed), Andrew Bailey (BoE) and Kazuo Ueda (BoJ) .
Let’s change the subject with the macro program of the week, which is rather dense. The market has an appointment today with the Ifo index of German business confidence, ahead of durable goods orders and especially the Conference Board’s US consumer confidence index tomorrow. Thursday is the first German inflation estimate for June that is circled in red in our diaries, ahead of US PCE inflation on Friday. I spoke of caution above and given this program, it is likely that financiers will continue to limit their initiatives while waiting for the publication of these statistics.
At the microeconomic level, the calendar of companies is also expanding with publications concerning big names in consumption such as Associated British Foods, Alimentation Couche-Tard, Constellation Brands or Nike and Hennes & Mauritz in another register.
In addition, a few words on the news that should not be missed this weekend. I am obviously referring to Russia and the abortive mutiny (or even the coup d’etat) of the paramilitary group Wagner once morest the power in place. There was a lot of chaos between Friday evening and Saturday evening with a return to calm yesterday. At this time, we have many more questions than answers and it is therefore far too early to measure how this short-lived uprising can affect Putin’s power and the war in Ukraine.
In a completely different register, the financial news of the moment is driven by bitcoin, which has regained favor with investors by reaching its highest level in more than a year at 30,600 USD. This gives me the opportunity to do a bit of publicity for my colleague Laurent Pignot, who will be hosting a webinar tomorrow dedicated to the challenges of these new technologies. If this interests you, the registration link is here.
European leading indicators are stable this morning. In Asia, Japan is evolving not far from equilibrium since the Nikkei is down 0.03% at the time of writing these lines. In China, the mood is heavier due to weak tourism data during the three-day Dragon Boat Festival. The CSI300 lost 1.20% while the Hang Seng limited its decline to -0.30%. Elsewhere, South Korea advanced 0.33% while Australia lost around 0.40%.
Economic highlights of the day
The German Ifo on the business climate will be the main statistic of the session and will be released at 10:00 am. The whole macro diary here.
The euro loses some ground once morest the dollar at 1.09 USD. The ounce of gold stabilizes at 1925 USD. Oil is treading water with Brent from the North Sea at USD 74 a barrel and US light crude WTI at USD 69.30. US debt shows a 10-year yield of 3.723%. Bitcoin is trading at 30300 USD.
The main changes in recommendations
Bachem Holding: Citi initiates its follow-up with a sell recommendation and a target of CHF 74.BASF: Baco Sabadell resumes its coverage with a buy recommendation and a target of EUR 57.BE Semiconductor: Deutsche Bank downgrades its advice to buy to hold.Cranswick: RBC Capital moves from sector performance to outperformance and targets 4000 GBX.Endesa: Morgan Stanley raises its advice from underweight to weighted in line and targets 23 EUR.Fugro NV: AlphaValue raises its recommendation from sell to accumulate. Hypoport: BNP Paribas Exane goes from neutral to outperformance and targets EUR 160.Kering: JP Morgan remains neutral but adjusts its target downwards from EUR 610 to 600.Lloyds Banking Group: JP Morgan lowers its advice from neutral to underweight and targets 42 GBX.NN Group NV: JP Morgan raises its recommendation from neutral to overweight by targeting 47 EUR.PolyPeptide Group: Citi initiates its hedge with a neutral recommendation and a target of 23 CHF.Sartorius AG: Citi initiates its hedge at buy with a price target of EUR 375. Siegfried Holding: Citi initiates its cover with a neutral recommendation and a target of CHF 800. Siemens Energy: Citi goes from long to neutral and targets EUR 18. Jefferies also goes neutral with a target of EUR 16.50.Sika: Barclays maintains its overweight advice and raises its target from 330 to 390 CHF.Tesla: Goldman Sach downgrades its advice and switches from buy to neutral and revises downwards its target from 248 to 185 USD.UBS: Barclays remains underweight and adjusts its target downwards from 16.50 to 16 CHF.Viaplay Group: Jefferies downgrades its advice and goes from outperformance to hold and aims for 50 SEK.Westwing Group SE: Baader Helvea switches from accumulating to buying and targets EUR 12.
In France
Important (and less important) announcements
Saudi Aramco and TotalEnergies award 11 billion dollars in contracts for the construction of the Admiral project in Saudi Arabia. Renault is accelerating the development of Alpine Racing via a 200 million euro equity investment from an investor group (Otro Capital , RedBird Capital Partners and Maxium Effort Investments). Pernod Ricard signs a memorandum of understanding to sell its Clan Campbell whiskey brand. A drug from Sanofi and Swedish Orphan Biovitrum for a rare blood disease prevents hemorrhages in children in a trial of advanced phase. Euronext sells an 11.1% stake in the compensation company LCH SA to LCH Group Holdings for 111 million euros. The labor inspectorate ordered a “temporary administrative closure” of part of the site of the ArcelorMittal steelworks in Fos-sur-Mer, near Marseille.Casino, Guichard-Perrachon finalizes the sale of its residual stake in the Brazilian company Assaí.Olivier Heckenroth resigns from the chairmanship of the supervisory board of Rubis.Dassault Aviation and Dassault Systèmes will create a teaching and research chair at the Institut Polytechnique de Paris.Eramet repays in full its bond loan for a total amount of 500 million euros.Scor appoints Fabrice Brégier as Chairman of the Board of Directors. Latécoère announces the departure of its Chairman of the Board of Directors, Pierre Gadonneix, and the appointment of Thierry Mootz as Chairman and Chief Executive Officer. Genomic Vision issues a third tranche of Ocabsa for 1.92 million euros. They have/will publish: MedinCell
In the world
Important (and less important) announcements
Readings and videos
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