Indices generally showed a wait-and-see attitude in Europe, while in the United States the presumed cheap purchases of technology stocks propelled the Nasdaq 100 to the top of the index charts. The companies’ stream of promising results continued yesterday with the strong release from Netflix, which soared more than 7%. Despite a decline in the number of subscribers, the Californian firm unveiled results above analysts’ expectations and above all reassured about its prospects.
Concerning the general atmosphere, the level of wait-and-see attitude increased at the same time as questions about the future orientations of monetary policies. And it will be discussed today, monetary policy, with the July meeting of the ECB, which is not in a very comfortable situation. Inflation is rising firmly on the old continent and rates are still at rock bottom. To recall a few orders of magnitude, inflation in the euro zone increased to 8.6% in June on an annual basis, against +8.1% in May according to Eurostat data. With a great deal of disparity, moreover, since the lowest annual rates were observed in Malta (6.1%), France (6.5%) and Finland (8.1%) while the highest were recorded to the east with Estonia (22%), Lithuania (20.5%) and Latvia (19.2%).
It is obvious that the euro zone is experiencing an increasingly serious inflation problem. This is why voices are rising among the hawks of the ECB, the orthodox fringe of the Institution, which calls for stronger actions to curb galloping inflation. The question of the day is whether the ECB will apply its very gradual and cautious normalization process with a 25 basis point hike in its key rates or whether it will opt for a more marked tightening with a 50 basis point hike. basis, the aim being to avoid reacting too slowly and too late in its fight against rising prices. This question is not insignificant since it highlights a real headache for the ECB, which must both curb inflation while avoiding a surge in financing costs for the peripheral countries of the euro zone. In short, a real balancing act. In this respect, the comments around the ECB’s anti-fragmentation tool will also focus investors’ attention, especially with the turmoil of Mario Draghi’s government in Italy which has generated strong tensions on the bond markets. The purpose of this tool, which the ECB calls the “transmission protection mechanism”, is to prevent excessive bond yield premia and borrowing spreads between major eurozone creditors, such as, randomly…between Germany and Italy. We will know more at midday since the ECB will publish the press release of its decision at 1:45 p.m. and Christine Lagarde will comment on the choices at a press conference from 2:30 p.m.
Let’s end this long digression dedicated to central banks by making a detour to Japan, since the BOJ has opted for the status quo despite the increase in inflation forecasts beyond its 2% target. It must be said that the archipelago has a special relationship with rising prices after years of losing battles to get the country out of deflation. The BOJ therefore raised its inflation forecast for the current year from 1.9% to 2.3% this morning and also reduced its forecast for economic growth from 2.9% to 2.4%.
On the business side, there are still a lot of publications today, with some big names like Roche, AT&T, Philip Morris, SAP, Anglo American or Nokia.
Leading indicators are hesitant in Europe. In Asia Pacific, the Chinese places are falling. Japan is posting a small increase as I write these lines thanks to the weakness of the yen, considered favorable to this highly exporting economy, the only one among the most powerful in the world not to have signaled the end of its ultra – accommodating.
Economic highlights of the day
It’s ECB meeting day, with a decision at 1:45 p.m. and a press conference from 2:30 p.m. In the United States, up to weekly jobless claims and the Philly Fed index (2:30 p.m.). All the macro agenda here.
euro rose to 1.022 USD. The ounce of gold loses ground to 1692 USD. Oil is stabilizing with a Brent from the North Sea at 106 USD per barrel and an American light crude oil WTI at $98.90. The performance of the american debt at 10 years stabilizes at 3.02% over 10 years. the bitcoin is trading at 22900 USD.
The main changes in recommendations
- Ahold Delhaize: HSBC goes from hold to buy with a target price of 29 EUR.
- Amazon: Jefferies remains long but with a price target reduced from 163 to 150 USD.
- ASML Holding: Credit Suisse is still buying, but with a price target reduced from 960 to 920 EUR.
- Barry Callebaut AG: Barclays lowers its target price from 2570 to 2550 CHF.
- Castellum AB: Barclays downgrades to underweight with a target price of 135 SEK.
- Credit Suisse: Goldman Sachs remains neutral with a price target reduced from 7.70 to 7 CHF.
- Forbo Holding AG: UBS remains neutral with a reduced price target of 1820 to 1360 CHF.
- GSK PLC: Citi resumes neutral tracking with a price target of 1975 GBX.
- HelloFresh: Kepler Cheuvreux goes from buy to hold with a target price of 33 EUR.
- Netflix: Credit Suisse is still neutral with a price target reduced from 360 to 263 USD.
- Novartis: Goldman Sachs remains long with a price target raised from 103 to 107 CHF.
- The Swatch Group: Jefferies begins its follow-up to hold with a price target of 260 CHF.
In France
Important (and less important) announcements
- Thales is revising its annual forecast upwards thanks to a record order book.
- Dassault Aviation recorded order intake of 16.3 billion euros in the first half.
- Airbus is studying several options for next-generation fighter jets, but is focusing on FCAS according to its CEO.
- Sartorius Stedim Biotech posts 77% increase in first-half profit.
- Publicis is raising its overall outlook for fiscal 2022.
- Interparfums raises its annual targets after a 19.7% increase in activity in the first half.
- Technip Energies wins a contract to extend a Neste Oyj refinery.
- Getlink returns to profit in the first half thanks to the return of tourist flows.
- The European Commission orders 1.25 million doses of vaccine against covid-19 from Valneva.
- Ipsos achieves a record operating margin in the first half.
- CFM (Safran) confirms the purchase of 112 engines by easyJet
- SEB SA made a profit of 72 million euros in the first half.
- Mersen is revising its targets for the 2022 financial year upwards.
- Argan raises its annual targets after an “exceptional” performance in the first half.
- Despite headwinds, Orpea’s turnover increased by 11.70% in the first half.
- Gaztransport & Technigaz receives an order from DSME for the design of tanks for six LNG carriers.
- Groupe Crit’s turnover increased by 15.80% in the second quarter.
- Maurel takes stock of its activity in the first half.
- Gaussin creates a new subsidiary in the United Kingdom.
- The Blockchain Group, Nextedia, Bio-uv, Arcure, Pharmasimple SA and Sogeclair unveil their accounts.
In the world
Important (and less important) announcements
- Tesla does better than expected in the second quarter despite a Covid-related factory closure in China.
- Coinbase Global assures that the group is not exposed to the solvency problems of Celsius, Three Arrows Capital and Voyager.
- EU to step up antitrust probe into Apple after Spotify’s recent complaints.
- General Dynamics obtains a $272.9 million contract from the US Navy.
- Carnival Corporation launches $1 billion common stock offering.
- Qatar Airways plans to reinstate its order with The Boeing Company for 25 737 Max.
- Ford plans to cut thousands of jobs to finance electric according to Bloomberg.
- SAP SE is revising its annual guidance downwards.
- Roche’s turnover increased by 5% in the first half.
- Rising costs weigh on Givaudan’s profitability in the first half.
- ABB LTD intends to spin off its Accelleron turbocharging business. The departure of Russia weighs on profits in the second quarter.
- Credit Suisse sells part of its operations in Mexico to Actinver.
- Nokia is on track to top its net sales forecast for the current fiscal year.
- Evolution’s revenues are up 34% in the second quarter.
- BE Semiconductor reports lower third-quarter revenue.
- Main publications of the day: Roche Holding, Danaher Corporation, AT&T Inc, Philip Morris… The whole agenda here.
Readings and videos