I propose today’s menu is a special inflation, with a wait-and-see attitude for starters/main course/dessert. More seriously, the stock markets are going into pause mode while waiting for several key economic data, the centerpiece of which is none other than the PCE (Personal Consumption Expenditures) consumer price index in the United States, scheduled for this afternoon. Will it reawaken investors’ appetite for risky assets or, on the contrary, cut it short? Answer at 2:30 p.m.
Red was the order of the day on the financial markets, particularly in Europe since the old continent’s markets are under pressure in the run-up to the legislative elections in France. As such, the yield on French debt returns to close to its level reached after the announcement of the dissolution of the National Assembly, at 3.20%, as does the risk premium required by investors to hold debt. French debt since the gap between the yields of the French OAT and the German Bund widens to 80 basis points. These tensions weigh on the Paris stock market (-1.03%), which realizes the big difference in performance with the German Dax (+0.28%). American stocks diverged, but with rather superficial daily gains like the S&P500 which increased by 0.09%.
Outside of Tech, I note that in Europe as in the United States, the sanctuary prize of the moment is awarded to the energy sector, that is to say mainly companies in the oil sector. Energy is therefore returning to the center of the economic game, on the one hand because oil prices have turned upside down, and perhaps a little because it is the sector that we buy when we don’t know what to really buy anymore.
As stated in the introduction, the highlight of this week is truly written this afternoon with the publication of the PCE inflation for the month of May, a key parameter for the Federal Reserve. This is the kind of statistic that has the weight to clarify things a little: will it confirm the scenario preferred by the markets that think that inflation is quietly moving towards its preferred level of 2%? For those who love numbers, core inflation (core PCE) should increase by 0.1% in April and May according to economists’ expectations. Beware of the bad surprise that could remotivate Jerome Powell and his acolytes to maintain a swift and wary posture and wave the threat of a strategic status quo on key rates in September. At this stage, the CME’s FedWatch tool shows a probability of 65% in favor of a first rate cut in September.
In addition to American inflation, financiers are focusing on political news, which is also taking place on the other side of the Atlantic with the first face-off between Joe Biden and Donald Trump since 2020. Did the debate turn to the advantage of the former Republican president? In any case, this is what emerges from the analyses of observers, who note that the probability of a Trump victory in the next election increased last night. This is enough to trigger some tensions when the Chinese markets open, since a Trump 2.0 presidency would mark the return of greater American protectionism. Still on the political front, Ursula von der Leyen has been reappointed to her post as President of the European Commission and is thus seeking a second term.
In Asia-Pacific, Tokyo advanced by 0.46%, thus closing the month of June with a rise of around 2.2%. The yen continued its slide to USD 161, marking a 37-year low. Initially anchored in the red, the Chinese indices marked a rebound, like the Hang Seng which rose by 0.51%. Elsewhere, the Australian ASX evolved around equilibrium while India and South Korea gained 0.36% and 0.25% respectively. On the old continent, the leading indicators suggest a start to the session in the green.
Today’s economic highlights
Heading for 2:30 p.m. with Core PCE inflation in the United States. Financiers will also take note of the spending and income of American households, before the Chicago PMI index (3:45 p.m.) and the revision of consumer sentiment (4:00 p.m.). All the macro agenda here.
L’euro rebounded to 1.071 USD. L’once d’or increases to 2321 USD. Oil resumes its rise, with a Brent North Sea crude at $85.60 per barrel and a light US crude WTI at 81.2 USD. The performance of the American debt over 10 years reached 4.32%. The bitcoin stabilizes around USD 61,600.
The main changes in recommendations
- Adidas: Barclays maintains its overweight recommendation and raises the price target from EUR 243 to EUR 252.
- Air France-Klm: Barclays downgrades from overweight to market weight with a price target reduced from 15 EUR to 9.50 EUR.
- Airbus Se: Morgan Stanley maintains its overweight recommendation and reduces the price target from EUR 190 to EUR 160.
- Amazon: Wells Fargo maintains its overweight recommendation with a price target raised from $234 to $239.
- Asml Holding: Morgan Stanley maintains its overweight recommendation and raises the price target from EUR 1,000 to EUR 1,100.
- Basf Se: Berenberg maintains its buy recommendation and reduces the price target from EUR 58 to EUR 54.
- Burberry Group Plc: Stifel maintains its hold recommendation with a reduced price target of 1150 to 1050 GBX.
- Commerzbank: HSBC maintains its buy recommendation with a price target raised from EUR 18 to EUR 21.
- Covestro: Jefferies maintains its buy rating with a price target raised from EUR 60 to EUR 62.
- DSV: Deutsche Bank maintains its buy recommendation and reduces the price target from DKK 1450 to DKK 1425.
- EQT: Citigroup remains neutral with a price target raised from SEK 335 to SEK 345.
- Givaudan: Bank Vontobel AG maintains its buy recommendation and raises the price target from CHF 4,700 to CHF 4,850.
- Hermès International: Citi maintains its neutral recommendation with a price target reduced from 2380 to 2300 EUR.
- Kbc Groupe Nv: AlphaValue/Baader Europe moves from reducing to accumulating with a price target raised from 63.80 to 77.40 EUR.
- Ovh Group: Morgan Stanley remains at market weighting with the price target raised from EUR 5.90 to EUR 6.10.
- Partners Group: Citigroup maintains its buy recommendation with a price target reduced from 1365 CHF to 1330 CHF.
- Qualcomm, Inc.: Bernstein maintains its outperform recommendation and raises the price target from 220 to 240 USD.
- Repsol: Jefferies remains to be retained with a price target raised from 15 EUR to 16 EUR.
- Saint-Gobain: Jefferies remains a buy with a price target raised from 85.50 to 87.50 EUR.
- Shell Plc: Jefferies maintains its Buy rating with a price target raised from GBP 30 to GBP 32.
- Swatch Group: HSBC maintains its hold recommendation with a price target reduced from CHF 250 to CHF 210.
- Universal Music Group Nv: Barclays maintains its overweight recommendation and raises the price target from EUR 30 to EUR 31.
- Wise Plc: Berenberg maintains its buy recommendation and reduces the price target from 1140 to 1045 GBX.
- Zealand Pharma A/S: Jefferies maintains its Buy rating with a target price raised from DKK 790 to DKK 1,100.
In France
Important (and less important) announcements
- Saudi Aramco could take a 10% stake in the joint venture of Renault and China’s Geely Automobile to make internal combustion engines.
- The CEO of L’Oréal is lowering his growth forecasts for the global beauty market.
- Moody’s revises Schneider Electric’s outlook from stable to positive.
- Arnaud Lagardère once again becomes CEO of the Lagardère group.
- Voltalia announces the success of its 3rd employee shareholding plan.
- David Layani, founder of Onepoint, resigns from Atos board of directors.
- Icade and Sogeprom sign the sale of offices in Lyon.
- Infotel takes a 30% stake in the capital of Altanna.
- Argan claims a 26.5% drop in gas consumption recorded in 2023.
- Viridien launches the consolidation of its shares.
- The governance of Vergnet is evolving with the resignation of Mr. Vincent de Mauny from his mandate as Chairman of the Board of Directors.
- The Neovacs Board of Directors has decided not to financially support Pharnext’s creditor repayment plan.
- Phaxiam Therapeutics announces the success of its capital increase.
- They have published / They must publish: Graines Voltz, Poujoulat
In the world
Important (and less important) announcements
- Nokia acquires Infinera Corporation for $2.3 billion.
- Microsoft is partnering with Amazon to bring Xbox Cloud Gaming to select Fire TV devices.
- Meta Platforms to begin testing AI chatbots on Instagram.
- Apple is studying technology to make it easier to replace iPhone batteries.
- Invesco launches US climate-focused ETF with $1.6 billion in Finnish funding.
- Keysight Technologies chosen by Allion Labs for Intel Thunderbolt 5 certifications.
- Vista Outdoor Postpones Special Meeting of Shareholders on Merger Vote
- Coinbase Global files suit against the SEC and FDIC for failure to comply with Freedom of Information Act requests.
- Pfizer and BioNTech receive a positive opinion from the European Medicines Agency (EMA) for a new Covid-19 vaccine.
- Tata Steel will cease operations at its British factory earlier than planned.
- Toyota Motor is recalling 11,000 vehicles in the United States.
- EQT sells its majority stake in idealista for a valuation of 2.9 billion euros
- Genmab closes its DKK 3.5 billion share buyback programme early.
- Redeia issues 500 million euros of green bonds.
- Trifork acquires majority stake in Sapere Group.
Main publications of the day: Geely Automobile, J.Front Retailing, DCM Holdings Co… The whole agenda here.
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