In the euro zone, retail sales contracted more than expected (-0.5% m/m vs -0.3% est.) in April and Q1 GDP growth is confirmed at +0.3% t/t.
Economy
The statistics published in the United States are mixed. If the manufacturing ISM disappointed by falling from 49.2 to 48.7 (vs. 49.5 expected) in May, that of services pleasantly surprised by rebounding from 49.4 to 53.8 (vs. 51 expected). Job creations (+272,000) exceeded expectations (180,000), but the unemployment rate rose from 3.9 to 4% in May. The acceleration of hourly wages to +4.1% y/y will not reassure the Fed. In the euro zone, retail sales contracted more than expected (-0.5% m/m vs -0.3% est.) in April and Q1 GDP growth is confirmed at +0.3% t/t. Finally, in China, the manufacturing and services PMIs rose more than expected, from 51.4 to 51.7 and 52.5 to 54 respectively in May. International trade surprised by its dynamism in May (exports: +7.6% y/y and imports: +1.8% y/y).
Planetary boundaries
According to the “World Energy Investment report” from the International Energy Agency, China is the leading investor in green energies in 2024, at more than $600 billion, or 3.7x its investments in fossil fuels, ahead of Europe with more than 400 billion dollars (i.e. 5.5x its investments in fossil fuels) and the United States with more than 300 billion dollars, the leading investors in fossil fuels (nearly 300 billion dollars) .
Obligations
US employment data was mixed with an unemployment rate rising and job creation above expectations (272k vs 180k). In a context of high rate volatility, the 10Y reached a low of 4.27% before settling at 4.43% (-6bp). Before the FED meeting this Thursday, the market expects a first rate cut in December only. In Europe, as expected, the ECB lowered its key rate by 25bp to 3.75%. EU rates had integrated the movement and ended slightly lower (10Y Bund -4bp/BTP -4bp), rather driven by US data.
Trader sentiment
Sotck exchange
After stronger than expected job creation in the US, the week was in the red in Europe. We will expect important macro figures in the US (CPI, PPI) and the FOMC meeting this Wednesday (no change). Apple is expected to introduce new products today at its annual conference. Volatility should be present.
Currencies
The good US employment figures supported the $ which is trading this morning at $/CHF 0.8975, sup. 0.8820 res. 0.9150. The rise of far-right parties in France and Germany as well as the dissolution of the National Assembly by E. Macron have strongly penalized the € against the main currencies: €/$ 1.0758 €/CHF 0. 9660, our ranges: €/$ sup. 1.0649 res. 1.0910 €/CHF more 0.9520 res. 0.9790. The £ is down at 1.2715 sup. 1.2515 res. 1.2860. Gold corrects to $2,295/oz, higher. 2285 res. 2368.
Markets
The ECB’s decision to cut rates was expected and its impact was moderate on 10-year sovereign rates (USD: -5bp; EUR: -4bp). Equities benefited from this (US: +1.3%; Europe: +1%; emerging countries: +2.3%). The USD index appreciated moderately (+0.2%), penalizing gold (-0.7%) and oil prices fell by 2.6% following OPEC’s announcements. The results of the European elections and the announcement of early legislative elections in France could weigh on European assets. To follow this week: consumer and producer price indices, Fed meeting, confidence of SMEs (NFIB index) and households (Univ. of Michigan) in the United States; Sentix investor confidence, industrial production and trade balance in the Eurozone; consumer and producer price indices in China.
Swiss market
To be monitored this week: May consumer climate (Seco), May air traffic statistics (Flughafen Zürich), May production-import price index (OFS) and summer vacation forecasts for 2024 (Switzerland tourism). Valiant will present its new strategy.
Actions
ADOBE (Core Holdings) will publish its Q2 on June 13. The stock has significantly underperformed since the start of the year (-19%), but the group will need to show a resumption of sales growth in the second half to allow a re-rating (Adobe is trading at a PE fwd of 24x while the software sector trades at 31x).
ASML (Satellites) has received orders for more than a dozen high-precision EUV (High NA) machines. The CFO indicated that commercial negotiations with TSMC are almost finalized, and that large orders related to “2nm” technology are expected to start arriving between the second and third quarters of 2024. TSMC, Intel, SK Hynix, Samsung and Micron will be the main customers adopting this new machine.
ASTRAZENECA (Core Holdings) confirms its success in oncology by presenting a certain number of clinical results at ASCO, including: 1/ Enhertu in second line in hormonally positive breast cancers weakly expressing the HER2 protein (HR+/HER2 low-ultra low) showed an improvement in progression-free survival (PFS) of 37%; 2/ Tagrisso in unresectable, stage III non-small cell lung cancer with EGFR mutation showed an improvement in PFS of 84%, giving rise to a new “standing ovation” for AstraZeneca (a fairly rare occurrence).
Chart of the day
Performance
