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Central banks tense the markets

As at the beginning of last week, the US equity markets adopted the strategy of small steps to launch their weekly cycle. At the close, the Dow Jones was roughly in balance, while the S&P500 (+0.31%) and the Nasdaq (+0.41%) gained some ground. In Europe, the rise was more marked, with a broad STOXX Europe 600 index up 0.9% at the end of the session. Investors are not yet at the stage where they start to welcome good news, probably because there isn’t really any yet, but there is definitely a lull in behavior. The decline of the VIX volatility index towards 25 points illustrates this. Sorrowful minds might note that the VIX is very slow to settle down and they’re right, to some extent.

By saying there is no good news, I mean there is no REALLY good economic news. But there are some tremors. I can cite, for example, the fact that port activity in China has risen to 95% of normal. Or that agricultural prices have tended to relax in recent weeks. That the peak of inflation seems to have passed in the United States and that it is approaching in Europe. All this seems thin to hold against the headwinds, but let’s not forget that the financial markets seize the positive signs faster than they integrate the negative signals.

Nevertheless, the global economic predictive exercise is far too complicated at the moment, at least for us other inhabitants of the mountain who are a bit low-ceilinged. It’s much less risky now to announce that Elon Musk will cut his offer on Twitter, that Jair Bolsonaro will fire a fourth Petrobras chairman in 18 months, or that Boris Johnson will end up staying in office until the end. of time. Central banks are all converging on firmness, after spending years bubbling quietly congratulating themselves for the economic conditions created since the 2008 financial crisis. This morning, the Australian central bank raised its rates by 50 points basis to bring them to 0.85%. Only 3 of 29 economists polled by Bloomberg saw the RBA making such a violent rally. Until recently, 25 basis point moves were the industry norm. From now on, the base rate has increased to 50 points. Will the ECB have to go through this in the weeks to come? There will be some answers Thursday at the June meeting of the institution.

In the United States, the Fed is now only reasoning by double-tightening and the message of firmness has passed. The yield on US 10-year debt rose above 3% for the first time since mid-May. Is it the proximity of the publication of US inflation figures for May expected on Friday? Without a doubt. The yield had recently slipped towards 2.7% because medium-term inflation expectations had calmed down. This rise in rates is synonymous with a slight resurgence of tension. It also causes some collateral damage, such as the fall of the yen to a 20-year low against the dollar.

In terms of major macroeconomic events of the day, the World Bank is due to publish its economic outlook update and Janet Yellen, who is sort of Joe Biden’s finance minister, will be heard by US parliamentarians. If we are to believe the local press, the elected Republicans have planned to give him a bad quarter of an hour on inflation, both on his recent policies and on his role at the head of the Fed until 2017 On the company side, the month of June is traditionally hollow between two phases of quarterly publications. It should be noted that Apple announced its latest innovations yesterday evening at the start of its developer week and that Franchise Group is offering to buy Kohl’s for $8 billion. In Europe, things are still dozing after a public holiday for several countries yesterday for Pentecost.

Export-oriented Japanese equity markets continue to take advantage of the yen’s slide, like the 0.2% gain posted this morning by the Nikkei 225. On the other hand, the surprise reserved by the RBA is not to the taste of the Sydney Stock Exchange, where the ASX drops down 1.4% at the end of the course. The heart of China swings for its part between Hong Kong (-1%) and Shanghai (+0.1%). The CAC40 lost 0.57% to 6512 points shortly after opening.

Economic highlights of the day

German Factory Orders (8:00 am) and the latest US Trade Balance (2:30 pm) will frame the World Bank’s macroeconomic forecast update. The whole macro diary here. This morning, the Australian central bank (RBA) raised its main key rate by 50 basis points to bring it to 0.85%.

The euro retreats to 1.0682 USD. The ounce of gold is trading around 1841 USD. Oil remains high with Brent from the North Sea at 120.28 USD a barrel and US light crude WTI at 119.36 USD. The yield on US 10-year debt rose to 3.04%. Bitcoin drops back to $29,500.

The main changes in recommendations

  • Air France-KLM: Berenberg remains on sale with a price target reduced from 3.10 to 1.10 EUR.
  • Allianz: Barclays remains overweight with a target reduced from EUR 230 to EUR 225.
  • Anglo American: Jefferies pass to retain bought aiming for 4500 GBp.
  • CGG: Societe Generale went from holding to buying, targeting EUR 1.50.
  • Dassault Systèmes: Jefferies goes from holding to underperformance by targeting EUR 33.
  • Digital Bros: Stifel starts buying tracking by targeting EUR 10.10.
  • Interroll: Credit Suisse remains neutral with a price target reduced from 3356 to 2990 CHF.
  • JD Sports Fashion: Berenberg remains long with a reduced target price of 285 to 200 GBp.
  • LEM Holding: Mirabeau remains to be kept with a price target reduced from 2000 to 1980 CHF.
  • National Grid: Citigroup goes from neutral to sell, targeting 998 GBp.
  • Novo Nordisk: JP Morgan goes from neutral to overweight by targeting 925 DKK.
  • Pirelli: Jefferies remains to be kept with a price target reduced from 5.90 to 5.20 EUR.
  • Rémy Cointreau: Societe Generale goes from sell to hold, targeting EUR 185.
  • Shop Apotheke: Barclays remains overweight with a reduced target from EUR 138 to EUR 136.
  • The British Land: Barclays moves from underweight to overweight by targeting 580 GBp.
  • Zur Rose: Deutsche Bank remains long with a price target reduced from 420 to 180 CHF.

In France

Important (and less important) announcements

  • Orange, Carrefour, Edenred and Sopra Steria detach their dividends.
  • Capgemini acquires the British Rufus Leonard.
  • Technip Energies wins a study contract for a lithium conversion plant in France.
  • Sanofi launches its 2022 global employee share ownership plan open to 86,000 employees.
  • Valeo Siemens exceeded its target of €4 billion in order intake in 2021/2022.
  • Voltalia launches its second employee shareholding plan.
  • Hydrogen Refueling Solutions and Burckhardt Compression accelerate their partnership on large capacity hydrogen stations
  • Horisont Energi signs a memorandum of understanding with Lhyfe for ammonia production plants powered by green hydrogen.
  • United Cloud chooses Witbe in Europe.
  • Global Bioenergies received its first orders from cosmetics players for several tons of Isonaturane 12.
  • Sensorion launches proof-of-concept trial of SENS-401 approved in France.
  • OSE Immunotherapeutics presents four posters at the 2022 ASCO Annual Meeting.

In the world

Important (and less important) announcements

  • D’Ieteren releases its dividend.
  • Centrica holds its general assembly.
  • Kohl’s begins negotiations for a takeover by Franchise Group at 60 USD per share.
  • Apple presented several innovations yesterday, essentially improvements to existing systems plus a new MacBook Air with a new M2 processor and a deferred payment system.
  • The 20-to-1 Amazon stock split took effect yesterday. The stock gained 2%.
  • Biffa received an offer denominated at 445 GBp per share from Energy Capital Partners.
  • EQT and Mubadala will acquire Envirotainer for €2.8 billion.
  • Ted Baker’s suitor throws in the towel.
  • Deutsche Bank has relocated several hundred Russian IT experts to Berlin, the Handelsblatt reported.
  • MFE-Mediaforeurope (formerly Mediaset) raised the cash portion of its takeover bid for Mediaset Espana by 16.1%.
  • Holcim wants to sell its majority in Lafarge Cement Zimbabwe.
  • Pearson is selling its Courseware businesses in Italy and Germany for $203 million.
  • Galenica and Aevis take shares in Well.
  • The Swatch Group wins a lawsuit against Samsung.
  • Main publications of the day: Norwegian Air, SII, Quadient… The whole agenda here.

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