Last week was very good overall for stock markets, even if Friday's close was a bit all over the place, without straying too far from equilibrium. Investors continue to try to predict the economic future through the prism of central bank policies. They believe that the monetary tightening cycle is closer to the end than the beginning, and that the economy is still holding up well in the face of high interest rates. On Friday, the University of Michigan's U.S. Consumer Confidence Index went into overdrive, a sign that the average US citizen doesn't seem ready to cut back on spending. All this resistance is making central bankers a little nervous: they don't want inflation to take off again.

The week kicked off with a battery of statistics from China, with new areas of weakness and a few bright spots. Second-quarter GDP is not growing as much as expected, the rebound in retail sales is rather weak and the property market experienced its sharpest contraction in 2023 in June. On the bright side, industrial production performed better than expected. Chinese indices and the yuan took a nosedive. Investors have new reasons to be disappointed with China's momentum, which also means they have new reasons to believe that the authorities will eventually reach into their pockets to kick-start the machine. This flurry of bad news leads investors to dream that public spending will take over to create an electroshock and finally prove them right about the rebound in Chinese equities.

On Friday, earnings season officially kicked off with JPMorgan Chase, Wells Fargo and Citigroup all posting a profit boost from higher rates. This week, we have reports from Tesla, ASML, IBM, Rio Tinto, SAP, Netflix and Johnson & Johnson, to name but a few. What’s the overall forecast among analysts? Corporate earnings will fall, but less than analysts feared. Of the 30 companies in the S&P 500 that have reported earnings as of Friday, 80% beat analyst expectations, according to Refinitiv data.

Another important event this week, the G20 meets on Monday and Tuesday in India to discuss taxation and public debt.

On the week's macro agenda, there's the June US retail sales (Tuesday). ECB head Christine Lagarde speaks today, but her American peers are entering a blackout period ahead of the Fed's decision on July 26.

Wall Street's main stock indexes opened flat today, after last week's strong gains, as investors adopt a wait-and-see attitude ahead of several earnings reports from large corporations.

 

Economic highlights of the day:

The US Empire Manufacturing index for July is today’s main indicator. The full agenda is here.

The dollar is flat at EUR 0.8906 and GBP 0.7655. The ounce of gold is trading at USD 1947. Oil has lost a little height, with North Sea Brent at USD 79.10 a barrel and US light crude WTI at USD 74.66. The yield on 10-year US debt fell to 3.76%. Bitcoin retreated to USD 30,200.

 

In corporate news:

  • Tesla gains 1.8% in pre-market trading after tweeting that it has built its first electric Cybertruck van at its Austin, Texas plant.
  • United Airlines and its pilots reached a far-reaching wage agreement on Saturday, with pilots benefiting from cumulative pay rises ranging from 34.5% to 40.2% over four years, the Air Line Pilots Association said.
  • Activision Blizzard climbed 4.5% in pre-market trading, after Microsoft and Sony signed an agreement guaranteeing the continued availability of Call of Duty, a video game published by Activision Blizzard, on Sony's gaming platforms.
  • Meta Platforms lost 1.2% after the Norwegian Data Protection Authority declared that Meta would be fined $100,000 per day for privacy violations, unless it took corrective measures.
  • Ford loses 1.1% in pre-market trading, as the automaker announces price cuts for some of its trucks.
  • Paramount Global lost 2.6% in premarket trading as one of its major shareholders, National Amusements, held talks with the group's creditors to renegotiate part of its debt, the WSJ reported on Friday.
  • Argenx jumps 23% after announcing that its treatment for chronic inflammatory demyelinating polyneuropathy (CIDP) has achieved its primary objective, with patients showing a 61% reduction in the risk of relapse compared to placebo.
  • Acumen Pharamaceuticals gained 43.3% in pre-market trading after the company said on Sunday that its Alzheimer's disease drug had been well tolerated in test phases.
  • BridgeBio Pharma was up 64% after announcing that its experimental oral drug to treat a type of heart disease significantly reduced hospitalization in an advanced trial.
  • Coya Therpaeutics - The stock is up around 11% in pre-market trading after an encouraging test of its experimental Coya 301 treatment to treat Alzheimer's disease.

Analyst recommendations:

  • Alphabet: CICC initiated coverage of Alphabet Inc. Class A with a recommendation of outperform. PT set to $151.
  • AT&T: Citi downgrades to neutral from buy. PT up 10% to $16.
  • Burberry: Goldman Sachs remains Buy with a price target reduced from GBp 2790 to GBp 2730.
  • Cohu: B Riley Securities upgrades to buy from neutral. PT up 26% to $50.
  • Conagra: Morgan Stanley downgrades to equal-weight from overweight. PT up 12% to $37.
  • Epam Systems: HSBC initiated coverage with a recommendation of hold. PT set to $255.
  • Johnson Matthey: Bernstein maintains its Market Perform rating with a price target reduced from 1900 to 1800 GBp.
  • Just Eat: Deutsche Bank remains Buy with a price target reduced from 3120 to 2135 GBp.
  • Compass Minerals: Loop Capital Markets initiated coverage with a recommendation of buy. PT set to $58.
  • Old Dominion: Barclays initiated coverage with a recommendation of equal-weight. PT set to $375.
  • Paccar: Jefferies upgrades to buy from hold. PT up 34% to $115.
  • Progressive: J.P. Morgan upgrades to overweight from neutral. PT up 25% to $146.
  • Saia: Barclays initiated coverage with a recommendation of overweight. PT set to $420.
  • Spectris: J.P. Morgan downgrades to underweight from neutral. PT down 15% to 3,100 pence.
  • Spirax: J.P. Morgan upgrades to overweight from neutral. PT up 14% to 11,900 pence.
  • State Street: J.P. Morgan downgrades to underweight from neutral. PT up 4.3% to $71.
  • Telephone and data systems: Citi downgrades to neutral from buy. PT set to $8, implies a 4.7% increase from last price.
  • Travelers: Baptista Research LLP initiated coverage with a recommendation of hold. PT set to $190.
  • Truist Financial: Baptista Research LLP initiated coverage with a recommendation of hold. PT set to $37.90.
  • Twilio: Piper Sandler downgrades to neutral from overweight. PT up 6.1% to $71.
  • Williams Cos: CIBC Capital Markets initiated coverage with a recommendation of neutral. PT up 7.8% to $36.
  • Yelp: Goldman Sachs upgrades to buy from neutral. PT up 23% to $47.
  • Yeti Holdings: KeyBanc Capital Markets downgrades to underweight from sector weight. PT down 20% to $34.