Global shares continue their ascent, despite the prospect of further rate hikes, and despite the threat of recession too because it keeps getting pushed back. The contraction in corporate profits also won’t stop them. Then again, it's a good thing China’s economy isn’t booming, because all the ceilings would probably have been shattered by now. All this stems from both the incorrigible optimism of investors and a form of skepticism in conventional predictive benchmarks, which have generally failed to anticipate certain macroeconomic situations.

The market's obsession with ever more precise statistics has done nothing to improve the situation. Take the United States, for example. If recession is looming, how can we explain this buoyant labor market? Why are household confidence and consumption so robust when the economic news is so anxiety-inducing? With interest rates being raised so rapidly, how is it that the real estate market remains so robust?

In short, all these factors are helping to keep stocks on the rise, fueled as ever by the bets of the moment, chief among them the return of investors' faith in big tech. The market has the memory of a gold fish, so it quickly forgot how it overvalued companies that didn’t really have a business model. Yesterday, all Western stock markets were in the green. For US equities, the peaks of late 2021 are not far off. Europe has been struggling a little more lately, but that hasn't stopped local indices from flirting with their peaks too.

In the very short term, it's hard to see what could derail this routine. Dark clouds exist, of course, but they are relegated to the horizon: China, geopolitics, inflation... For the time being, the market is keeping its eyes riveted on corporate results, with the first big names taking to the stage, after the usual parade of Wall Street banks, which kicked off the earnings season. Today, it's ASML that's in the spotlight in Europe. The Dutch company is the closest thing Europe has to a tech monopoly, since it has a stranglehold on the market for the world's most advanced semiconductor production machines. Closer to the glitz of entertainment, Netflix is also on the agenda in the US, along with Tesla. Many less capitalized, less media-friendly companies are also on the scene today.

A good sign came from the UK today, where stocks outperformed after data showed headline British consumer price inflation dropped to 7.9% year-on-year in June, while 8.2% was expected by economists.

Economic highlights of the day:

June inflation figures for the UK and the Eurozone, as well as June US building permits are today’s main indicators. The full agenda is here. 

The dollar is flat against the euro at EUR 0.8913 and up 0.9% against the pound to 0.7743. The ounce of gold rises to USD 1975. Oil is trading within narrow limits, with North Sea Brent at USD 80.25 a barrel and US light crude WTI at USD 76.17. The yield on 10-year US debt has reached 3.77%. Bitcoin is trading at USD 29,900.

In corporate news:

  • Omnicom Group was down 5.9% in after-hours trading following Tuesday evening's release of lower-than-expected quarterly sales.
  • Goldman Sachs was up 0.3% in pre-market trading ahead of the publication of its quarterly results scheduled before the opening of trading in New York.
  • Netflix and IBM are due to kick off their quarterly tech releases after the close of trading on Wall Street on Wednesday.
  • Microsoft gained a further 0.6% in premarket trading on Wednesday, following an all-time share price high of $366.78, as the Redmond giant announced plans to increase prices by at least 53% for its Office suite, with the integration of new artificial intelligence features.
  • Tesla has requested the approval of local German authorities to make substantial changes to its plant near Berlin, one of the key stages in its ambitious plan to expand the site to become the largest of its kind in Europe. The automaker is also due to publish its quarterly results after the close of trading on Wall Street. The share price was up 0.3% in pre-market trading.
  • AT&T gained 3.7% in premarket trading, as the telecom operator said it had no immediate intention of removing lead cables from Lake Tahoe pending further analysis, in reaction to a report in the Wall Street Journal.
  • Estee Lauder announced on Tuesday that it had been the victim of a computer attack which affected some of its operations and gave access to some of its data.
  • Johnson & Johnson was ordered by a US court to pay $18.8 million to a Californian who accused the company of developing cancer through exposure to its baby powder.

Analyst recommendations:

  • Blackstone: Citigroup raises Price Target to $116 From $98, Maintains Buy Rating
  • Chipotle Mexican Grill: Wells Fargo raises Price Target to $2,400 From $2,050, Overweight Rating Kept
  • Computacenter: J.P. Morgan starts tracking at Overweight, targeting GBp 2700.
  • Eaton: Citigroup raises Eaton's Price Target to $235 From $190, Maintains Buy Rating
  • First Industrial: Citi initiated coverage with a recommendation of neutral. PT set to $57.
  • Forward Air: Baird upgrades to outperform from neutral. PT up 15% to $130.
  • Hancock Whitney: Piper Sandler downgrades to neutral from overweight. PT up 5.9% to $46.
  • Hershey:  BNP Paribas Exane upgrades to outperform from neutral. PT up 12% to $268.
  • Intel: Citigroup adjusts Intel Price Target to $34 From $29.50, Maintains Neutral Rating
  • Intuit: BNP Paribas Exane upgrades to neutral from underperform. PT up 7.4% to $532.
  • Meta Platforms: Jefferies keeps Buy rating. The target price is increased from USD 280 to USD 360.
  • Ocado: Barclays keeps in line rating and raises price target to GBp 640 to GBp 680.
  • Renewi: Berenberg initiates Buy coverage, targeting GBp 710.
  • Segro: BNP Paribas Exane upgrades from underperform to outperform, targeting GBp 900.
  • Shell: J.P. Morgan remains Overweight with a price target reduced from 2950 to 2750 GBp.
  • Snowflake: BNP Paribas Exane upgrades to neutral from underperform. PT down 8.1% to $173.
  • Tesla: Fubon Securities raised its recommendation on Tesla to buy from neutral. PT set to $330.