Global indices mostly ended in the red yesterday. Investors remain preoccupied by the poor performance of the Chinese economy and, above all, by the new surge in oil prices. The S&P500 lost 0.4% on the day. Oil stocks outperformed.

Energy is back at the center of the economic game, as soaring oil prices accentuate the scenario of a return to inflation. Saudi Arabia and Russia have set the world alight with their coordinated announcement that they are extending their voluntary production cuts until the end of the year. To give you an order of magnitude, we're talking about a million barrels a day for Saudi Arabia and 300,000 barrels a day for Russia. These announcements come at a time when the oil market has already been tightening for several months. This tightening is the result of OPEC's production controls, while oil demand remains fairly resilient. In this scenario, prices can only fall in two ways: either through the destruction of demand caused by prices that are too high (a rapid process), or through the emergence of new supply generated by profitable projects with a barrel price of USD 85-90 (a slower process).

For the time being, the bond market believes more in the first option, and is trending upwards. This morning, the yield on the 10-year US bond reached 4.26%. Even if the August high has not yet been reached, it's enough to make financiers nervous. They can still cling to the probabilities given by CME's FedWatch tool, which still gives a head start to a rate hike pause in September, but also in November. At the time of writing, the probability of a pause in rate hikes is 95% for this month and 60% for November. These probabilities are likely to change over the next few days, as a long series of speeches by US central bankers begins today.

For today's session, the highlight will the PMI services index, with the final reading of the US indicator for August, as well as the ISM services index. The Central Bank of Canada will announce its decision on key interest rates, which economists expect to remain at 5.0%.

US trade figures were just released by the Commerce Department. They highlight a 1.7 rise in imports, which widened the US trade deficit in July, although the expansion was smaller than expected. It rose to $65.0 billion in July, up from June's revised $63.7 billion. Exports gained 1.6 percent to $251.7 billion.

US equity futures were lower in pre-market trading as investors are still reeling from weak Chinese economic data and higher-than-expected inflation in Europe.

Dow Jones Industrial Average futures, S&P 500 futures declined 0.2%, and Nasdaq futures were all down 0.2%.

Economic highlights of the day:

Focus on US services activity with the final PMI for August and the ISM services index. The full agenda is here. 

The dollar is worth EUR 0.9314 and GBP 0.7965. The ounce of gold retreats to USD 1924. Oil retreats slightly, with North Sea Brent at USD 89.50 a barrel and US light crude WTI at USD 86.23. The yield on 10-year US debt reached 4.26%. Bitcoin is trading at around USD 25,700.

In corporate news:

  • Apple, Micron - China has banned state officials from using Apple iPhones and other foreign smartphones at work, the Wall Street Journal (WSJ) reported Wednesday, citing sources close to the matter.
  • Roku gained 8.6% in pre-market trading, as the video streaming company said on Wednesday that it would reduce its workforce by around 10% and limit new hiring.
  • Alphabet - Google reached an agreement in principle Tuesday in a lawsuit alleging that its Play Store in the U.S. had violated competition rules by overcharging customers, according to a court filing.
  • Amazon - The U.S. Federal Trade Commission may launch a lawsuit later this month against Amazon.com for failing to offer concessions to settle complaints about anti-competitive practices, the Wall Street Journal reported, citing sources familiar with the matter.
  • General Mills - Cheerios cereal maker advances 1.4% in pre-market trading after reaffirming its financial targets for 2024.
  • Chevron- The oil group and a union alliance will hold a final round of negotiations on Wednesday before a planned strike at two major liquefied natural gas (LNG) facilities in Australia due to a dispute over wages and working conditions.
  • Verizon - Verizon Business Network Services, a division of the U.S. telecommunications giant, has agreed to pay $4.1 million to address allegations that it failed to meet required cybersecurity standards, the Justice Department said Tuesday.
  • Coinbase- The crypto-currency exchange platform will launch a digital asset lending platform aimed at large institutional investors, a company spokesperson told Reuters on Tuesday. According to a regulatory filing, Coinbase has raised $57 million for its new platform.
  • Tellurian gained 4.4% in pre-market trading after the oil and gas company signed a supply agreement with Baker Hughes for its liquefied natural gas (LNG) export project in the USA.
  • Gitlab was up 6.2% in pre-market trading, as the software coding platform posted a surprise profit for the second quarter.

Analyst recommendations:

  • Aes corp: RBC Capital maintains its outperform rating with a reduced target price of USD 23.
  • American electri: RBC Capital downgrades to hold from outperform. PT reduced from USD 103 to USD 90.
  • American water w: RBC Capital maintains its outperform rating with a reduced target price of USD 169.
  • Amgen inc: HSBC maintains its buy recommendation with a target price of USD 320.
  • Ashmore group pl: Panmure Gordon & Co. Limited maintains its hold recommendation with a target price of GBP 285.
  • Associated british foods: Bernstein maintains its outperform rating with a target price raised from 2500 to GBP 2600.
  • B&m european: Shore Capital maintains a hold recommendation on the stock with a target price of GBP 640.
  • Barratt dev: Peel Hunt downgrades to hold from add. PT down 18% to GBP 440.
  • Broadcom inc: BNP Paribas Exane maintains its outperform recommendation with a raised target price from 1000 to USD 1030.
  • Centerpoint ener: RBC Capital maintains its outperform rating with a reduced target price of USD 33.
  • Cms energy corp: RBC Capital maintains its sector perform rating with a reduced target price of $64.
  • Crowdstrike: Daiwa Securities maintains its buy recommendation with a target price raised from 187 to USD 194.
  • Delta air li: BNP Paribas Exane maintains its outperform recommendation with a target price raised from 64 to USD 65.
  • Dominion energy: BMO Capital Markets upgrades to outperform from market perform. PT down 7.4% to USD 50.
  • Duke energy corp: RBC Capital maintains its sector perform rating with a reduced target price of USD 101.
  • Edison international: RBC Capital maintains its outperform rating with a reduced target price of $81.
  • Enphase energy: Morgan Stanley maintains its equal weight/in-line rating with a reduced target price of USD 159.
  • Entergy corp: RBC Capital maintains its outperform rating with a reduced target price of USD 117.
  • Exelon corp: RBC Capital maintains its sector perform recommendation with a reduced target price of $45.
  • Fedex corp: JP Morgan maintains a neutral recommendation with a target price increase from 251 to USD 305.
  • First solar: Morgan Stanley maintains its underweight/in-line rating with a target price increase from 180 to USD 206.
  • Firstenergy corp: RBC Capital maintains its outperform rating with a reduced target price of USD 41.
  • Gilead sciences: HSBC downgrades to reduce from hold. Target price lowered from 122 to USD 71.
  • Gulf keystone pe: Fearnley Securities maintains a buy recommendation with a reduced target price of GBP 269.
  • Intercontinental: Morgan Stanley maintains its equalwt/in-line rating with a reduced target price of USD 118.
  • Lululemon ath: Daiwa Securities maintains a neutral recommendation with a target price increase from 365 to USD 405.
  • Nextera energy: RBC Capital maintains its outperform rating with a reduced target price of USD 89.
  • Ppl corp: RBC Capital downgrades to hold from outperform. PT reduced from USD 33 to USD 30.
  • Salesforce: Daiwa Securities maintains its buy recommendation with a target price increase from 255 to USD 275.
  • Sempra: RBC Capital maintains its outperform rating with a reduced target price of USD 82.
  • Solaredge techno: Morgan Stanley maintains its equal weight/in-line rating with a reduced target price of USD 240.
  • Southern co: RBC Capital maintains its outperform rating with a target price increased from 78 to USD 80.
  • Southwest air: BNP Paribas Exane maintains its outperform recommendation with a reduced target price of USD 34.
  • United airlines: BNP Paribas Exane maintains its outperform recommendation with a raised target price from 80 to USD 88.
  • Walgreens boots: Morningstar maintains its buy recommendation with a reduced target price of USD 36.
  • Wh smith plc: Investec maintains its buy recommendation with a reduced target price of GBP 1830.
  • Whitbread plc: Deutsche Bank maintains its buy recommendation with a target price increased from 4000 to GBP 4050.
  • Zscaler inc: RBC Capital maintains its outperform rating with a raised target price from 162 to USD 185.