In the euro zone, the EC confidence indices deteriorate marginally, from 6.8 to 6.5 in services (vs. 6.3 expected), from -9.9 to -10.1 in industry (- 9.6 expected) and from 96.1 to 95.9 in the economy (vs. 96.1 expected).
Economy
US statistics are mixed. New home sales fall by 11.3% m/m in May, much more than expected. House sales prices are less resilient than expected but increase by 0.2% m/m in April (FHFA). Household confidence falls from 101.3 to 100.4 in June, but less than expected (100). The PCE inflation measure decelerates y/y in line with expectations to 2.6%. In the eurozone, EC confidence indices deteriorate marginally, from 6.8 to 6.5 in services (vs. 6.3 expected), from -9.9 to -10.1 in industry (-9.6 expected) and from 96.1 to 95.9 in the economy (vs. 96.1 expected). Finally, in China, industrial profits slowed from 4% to 0.7% y/y, the manufacturing PMI for June remained below 50, at 49.5 while the Caixin came out at 51.8 (+0.1, vs 51.5 expected).
Planetary boundaries
According to the International Energy Agency’s World Energy Investment 2024 report, investments in clean energy and infrastructure are expected to reach $2 trillion in 2024, or 2/3 of total energy investments, compared to 1/3 when the Paris Agreement was signed in 2015. However, the Agency warns that only 15%, or 300 of this $2 trillion, is invested by emerging countries excluding China: a figure that is insufficient to achieve the objectives.
Obligations
In the US, inflation continues its downward trajectory (PCE 2.6% y/y) while the economic surprise index is now at its lowest since August 2022. Nevertheless, long-term rates recovered over the week (10Y +14bp/30Y +16bp), with the market not expecting any real weakness in activity to come. The employment report this Friday will give us the trend for the start of Q3. In Europe, initial inflation estimates are in line with expectations. Rates also ended higher (10Y Bund +8bp) and the Bund-OAT spread stood at 80bp before this morning’s easing (-5bp).
Sentiment des traders
Bourse
This morning, European markets are heaving a sigh of relief, the worm (the left) is not in the fruit. In the US, after waiting all last week for the PCE, we will have to wait until Friday for the NFP. The wait will be shorter since the week will be cut off from July 4th across the Atlantic, but the result may be the same with an erratic market.
Devises
Following the first round of elections in France where the RN obtained 34% of the votes against 29% for the Popular Front, the EUR is trading higher this morning: the EUR/USD is at 1.0775 and the EUR/CHF at 0.9685. This is explained by the fact that some analysts think that it will be difficult for the RN to have an absolute majority. The pound is rising a few days before the legislative elections, GBP/USD 1.2685 and GBP/CHF 1.1400 currently. Gold is stable at 2325 USD/oz.
Markets
Developed equities gained 0.1% over the week (Japan +2.6%, Europe -0.7% pending the French elections: CAC40 -2%), the rise in rates (6-12 bp) penalizing bonds (US -0.8%, Bund -0.5%, Italy -0.9%). Oil remains firmer (+0.6%) than copper (-1%). The Euro and European stock futures rebounded this morning, on the assumption that neither extreme will obtain an absolute majority in France. To watch this week: June manufacturing and services ISM, Fed “minutes”, business orders and employment report in the United States; in the Eurozone: consumer and producer price index, unemployment rate and retail sales, French election result projections; services PMI (official and Caixin) in China.
Swiss market
To follow this week: retail trade turnover May (OFS), services turnover April (OFS), PMI purchasing managers indices June, unemployment June (Seco), inflation June (OFS), accommodation statistics May (OFS), consumer climate June (Seco) and currency reserves at the end of June (BNS). Dottikon, Burckhardt and Cosmo will hold their AGM.
Actions
ANGLO AMERICAN (exit from Satellites): Grosvenor metallurgical coal mine fire (c. 4% of EBITDA). The extent of the damage is not known at this stage and the uncertainty over the closure time or even a reopening will weigh on the stock in the short term. This incident comes at a time when the metallurgical coal assets are being put up for sale as part of the refocusing, which were seen as the easiest to sell and could generate value. The execution of the strategic plan is key to enable the stock to continue its outperformance. Given this uncertainty and the impact it may have on the refocusing timetable, we are exiting Anglo.
According to Taiwanese media Ctee, APPLE (Core Holdings) has increased its orders for A18 chips from TSMC (Satellites) to produce 90 to 100 million iPhones of the 16 series. The iPhone 16, which will be released in September 2024 and is expected to incorporate new AI features, will also benefit from improved specifications for the camera, microphone and memory.
ASSA ABLOY (Core Holdings) acquires Canadian Wesko Locks, a specialist in electronic locking systems and employing 70 people for CAD 22 million in sales in 2023, or 0.1% of acquired turnover.
SCHNEIDER ELECTRIC (Satellites): after raising S&P’s credit rating to A in April, Moody’s raises its outlook from stable to positive by confirming its A3 rating, equivalent to A- at S&P.
Chart of the day
Performance
