B.1.1.529 brings turmoil to markets

11/26/2021 | 09:08am

The main threat is not always the one we had anticipated. The monthly survey conducted by Bank of America among a large panel of institutional investors at the beginning of November, shows that 33% of professionals cited inflation as the biggest risk to markets. Interest rate hikes came in second place (22%), followed by China (20%) and asset bubbles (16%). Only 5% of investors cited the coronavirus as the major risk at the moment. Of course, we will have to wait for the dust to settle, but the return of the pandemic to the forefront is indeed the determining factor of this end of November on stock markets.

This new highly mutated and contagious version of Covid-19, named B.1.1.52, was discovered in Botswana and South Africa. It has also been identified in at least one person in Hong Kong from South Africa. To avoid the disastrous Indian precedent (many countries were slow to put in place restrictions on India when the epidemic exploded in the country), many countries have already placed travel restrictions with South Africa. In the absence of additional information, it is difficult to form an opinion, but markets have chosen to play it safe, which explains the big sell-offs seen in Asia and Europe.

Wall Street was closed yesterday for Thanksgiving and will only open for half a session today. Futures were all down by between 1 et 2.25% in pre-market trading.

The return of the pandemic to the forefront brings back the specter of restrictive measures and uncertainties, despite the experience gained over the past 21 months. It also forces us to think again about allocations, risks and exposures.

 

Today's economic highlights:

The dollar is down 0.7% to EUR 0.8856, while the ounce of gold is approaching USD 1800 again. Oil fell heavily to USD 78.06 for Brent and USD 74.0 for WTI. Sovereign debt yields fell sharply to 1.56% for the US 10-year and -0.25% for the German Bund. The bitcoin lost 7.6% and returned under USD 55,000 per unit.

 

Analyst recommendations:

  • CoreSite Realty: RBC Capital lifts 's price target to $170 from $136, sector perform rating kept
  • Deere & Company: Morgan Stanley adjusts pt to $485 from $442, maintains overweight rating
  • EasyJet: UBS's has upgraded his rating from Neutral to Buy. The target price is unchanged and still at GBp 760.
  • Inchcape: Jefferies remains Buy with target price raised from GBp1090 to GBp1140.
  • Intercontinental Hotels Group: Jefferies double upgrades to buy from underperform
  • Johnson Matthey: Morgan Stanley upgrades from Overweight to Overweight with a target of GBP 2,400.
  • JPMorgan Chase: Zacks lowers price target to $175 from $180, maintains neutral
  • Land Securities Group: Goldman Sachs raises price target to 8.50 pounds sterling from 8.30 pounds and maintained its neutral rating.
  • Nordstrom: DA Davidson cuts price target to $29 from $34, neutral rating kept
  • Nvidia: First Shanghai Securities raised the recommendation to buy from hold. PT up 16% to $380
  • Simon Property Group: Argus adjusts price target on  to $180 from $142, maintains buy rating
  • SSE: RBC upgrades from Outperform to Sector Perform with a target of GBp 1800.
  • The TJX Companies: Argus adjusts price target to $88 from $86, reiterates buy rating
  • Warner Music group: Credit Suisse adjusts price target to $50 from $48, keeps outperform rating
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