Today on Wall Street: Pockets of volatility remain

06/08/2021 | 08:54am

U.S. indexes are mixed, ahead of data on the trade deficit and job openings. The period leading up to the release of half-year corporate results in July is often a bit quiet on markets, at least in terms of news. However there are still sources of volatility on markets.

In the United States, market performance has been hesitant but positive: Wall Street seems to need a breather after the frantic run of the last few years. "The stock market is a device for transferring money from the impatient to the patient,” Warren Buffett once said. But patience was not much needed in recent quarters to benefit from equity markets. 

Investors need volatility, not only to thrill but also because there are opportunities to be seized. Illustration with Biogen yesterday, which almost reconciled investors with the medical sector. The American biotech company ended the session up 38% with a capitalization of $60 billion, after obtaining marketing authorization for Aduhelm, the first anti-Alzheimer's drug approved since 2003. Aduhelm was a controversial candidate, given that a panel of experts recommended to reject it as it founds benefits were too low. However, the American drug agency chose to override this recommendation, an extremely rare event. The average cost of the treatment will be $56,000 per year for an American citizen.

Another leading source of volatility for the 2020/2021 season, Bitcoin and its myriad of variations has made a comeback. Not because it's back down to $33,000 a piece, but because U.S. cyberpolicemen have managed to get their hands on part of the ransom paid by oil pipeline operator Colonial Pipeline in April to recover its systems after a major cyberattack. The FBI obtained, under undisclosed conditions, the private key to the hackers' wallet, in which they found 69.6 Bitcoins. The ransom was valued at $2.3 million at current prices, but was worth $4.4 million in mid-April. Colonial had paid about $5M. The use of cryptocurrencies by organized crime is a recurring criticism. The relatively quick recovery of part of the ransom shows that states are not totally helpless, at least those with significant resources. The story does not say whether Colonial Pipeline will keep the Bitcoins that will probably be returned, or whether the company will prefer to convert them into good old dollars.

 

Economic highlights of the day:

The ZEW survey in Germany, the U.S. trade balance and the JOLTS job openings survey are on the agenda. Earlier today, Japan announced a 3.9% contraction of its Q1 GDP, while economists were fearing a 5% drop identical to the first assessment.

The dollar is at EUR 0.8215. Gold is trading just below $1,895 per ounce. Oil is losing ground at USD 68.58 per barrel WTI and USD 70.78 per barrel Brent. The yield on 10-year U.S. debt drops to 1.56%. Bitcoin is down to USD 33,000.

 

On markets:

* The Boeing Company gained 1.5% in pre-market trading after SouthWest Airlines announced an order for 34 more 737 MAX planes.

* Tesla - Sales of electric cars manufactured in China by the group jumped 29% in May to 33,463, figures released Tuesday by the China Automobile Federation show, while the market as a whole was up only 1.1%. In addition, Jerome Guillen, who oversaw Tesla's electric pickup program, has left the company. The stock gained 2.5% in pre-market trading.

* Apple has begun preliminary discussions with Chinese groups CATL and BYD to supply batteries for a future electric vehicle, four sources close to the matter said.

* Nvidia has asked Chinese competition authorities to review its proposed $40 billion takeover of British semiconductor designer Arm, the Financial Times reported Tuesday, citing sources close to the matter.

* Fastly lost 1.8% in pre-market trading after a technical incident rendered many websites, including those of major media, inaccessible worldwide due to a failure of some of the group's services.

* Marvell Technology gained 5.8% in premarket trading after it reported better-than-expected quarterly results.

* KKR - Independence Energy, controlled by the private equity group, announced Tuesday a merger agreement with Contango Oil & Gas to create a new group with a capitalization of about $4.8 billion.

* Tilray - The Nasdaq-listed stock of the Canadian cannabis producer is up 4% in pre-market trading after the group announced the launch of a new medical cannabis brand, Symbios.

 

Analyst recommendations:

  • Amgen : Oppenheimer changes PT to $277 from $272, keeps Outperform rating
  • Biogen: Piper Sandler raises price target to $384 From $260, maintains Neutral rating
  • DS Smith: Jefferies remains Buy with a price target raised from GBP 470 to GBP 480.
  • EasyJet: Goldman Sachs upgraded from neutral to buy with a target of GBP 1,150.
  • Halfords: RBC starts tracking at Outperform targeting GBp 450.  
  • International Consolidated Airlines: Goldman Sachs upgraded from Buy to Neutral with a target of GBp 204.
  • J Sainsbury : Jefferies downgrades to Hold from Buy, maintains PT
  • Legal & General : Goldman Sachs initiates coverage with Buy
  • Pets at Home: RBC starts tracking sector performance with a GBp 450 target. 
  • Ryanair: Goldman Sachs advises its customers to buy the stock. The target price is reviewed upwards from EUR 17.90 to EUR 19.20.
  • PPD: Mizuho Securities raises PT to $38 from $47.50, maintains Neutral rating
  • RH : JPMorgan raises price target to $750 from $610, maintains Overweight rating
  • Uber Technologies : Wolfe Research changes PT to $67 from $65, keeps Outperform rating
  • Walgreens Boots Alliance : Mizuho Securities adjusts PT to $37 from $55, maintains Neutral rating

 

Romain Fournier
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