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Friday July 9 | Weekly market update |
 | The Delta variant is once again in the news, with health fears impacting the world's indices on Thursday. However, it is clear that financial markets are still resilient, especially Wall Street, which is not far from its highs thanks to the good performance of technology stocks. |
| Indexes The mood remains heavy in Asia, as evidenced by the Hang Seng, which has gone down 8 consecutive sessions before recovering today. The Hong Kong index has lost nearly 6% in five sessions. The Nikkei resisted a little better but had to settle for a weekly negative score of just under 3%. In Europe, the results were also mixed, but the day's rebound allowed European markets to limit the damage. The CAC40 lost nearly 0.5% this week, the DAX (-0.4%) did a little better while the Swiss index (+0.05%) reached a new all-time high at 12085 points. On Wall Street, the S&P500 is magnetized by its historical high. Daily declines were quickly exploited, allowing the U.S. flagship index to give up only 0.1% over the last five sessions. Similar weekly scores for the Nasdaq100 (-0.05%) and the Dow Jones (-0.1%). |
| Commodities Oil markets are poised for their first week of decline since May. OPEC+ is no stranger to this sudden change in mood, as the expanded organization failed to reach an agreement on the cartel's production levels after August. However, the decline in U.S. inventories allowed oil prices to recover at the end of the week. WTI is trading around USD 73 compared to USD 74 for the North Sea benchmark. This was an almost perfect week for the gold metal, which benefited from increased volatility across equity markets, but above all from the continued easing of bond yields. Gold is now close to the USD 1800 line. Silver, on the other hand, lost ground at USD 26. Still in the metals register, the week was relatively calm in the hard commodities segment, where prices fluctuated only slightly, with the exception of aluminum, which lost nearly 4% to trade at USD 2,435. As for agricultural commodities, the bullish pressure has completely dissipated on corn, which has lost nearly 10% in five sessions. It is not much better for wheat and soybeans, which have lost 7% and 4.8% respectively. Evolution of gold and silver since the beginning of the year  |
| Equity markets LOGITECH INTERNATIONAL S.A. (LOGN) The Swiss leader in high-end office automation accessories enters the Swiss benchmark index SMI. The world's leading watch manufacturer, The Swatch Group, is leaving. Richemont becomes the only representative of the watch sector among the twenty stocks in the selection. Over the year 2020, Logitech shares gained 87%, while the broad Swiss index, SMIM, lost seven. The computer peripherals company benefited from the consequences of health restrictions including teleworking and the craze for video games. A trend that did not stop in 2021. The stock is up 34% since the first of January. Logitech has excellent fundamentals: revenues and margins in strong growth, for at least 4 years. As well as a free cash flow always positive over the same period. The strong cash flow recently generated by the company has allowed it to make regular acquisitions since the beginning of the year. The company also intends to pass on this cash to its shareholders through a dividend increase and share buyback programs. The stock is currently trading at a PER of 30. Logitech's performance over a sliding year  |
| Bond market Bond yields continued to fall, against the backdrop of the rise of the Delta variant, which has reawakened fears of less vigorous global growth than expected. U.S. T-bonds are at 1.34% for 10 years and 0.20% for 2 years. The reaction is a little less marked in Europe, where the debt of the strictest countries in terms of budget remains solidly anchored in negative territory, from -0.19% in the Netherlands to -0.36% for the Swiss Confederation. The German Bund is at -0.31%. The French OAT is close to zero at 0.04%. "The new concerns about the economy reinforce the confidence that central banks will slowly move away from their ultra-expansionary inflation policy," said an industry expert. |
| Foreign exchange market Badly battered in recent weeks, the euro seems to have bottomed out against the dollar, just below the USD 1.18 threshold. The single currency returned to around USD 1.186 at the end of the week, while staying away from its best levels of the year. The return of upward slopes in some countries has weighed on confidence. Meanwhile, the Chinese currency showed little reaction to a surprise announcement from Chinese authorities, who hinted at the possibility of a new package of monetary support measures. The yuan barely budged against the dollar at CNY6.4789. Safe-haven currencies shuddered on Thursday as equity markets fell, notably the Swiss franc (up to USD1 per CHF0.91557) and the yen (USD1 per JPY110.15), but without creating a sustained movement. |
| Economic calendar Many figures were on the agenda in the Eurozone and the US this week. The US services PMI was below expectations, at 60.1 respectively, down 3.9 points (vs. 63.40 initially expected). The US services ISM for June 60.1 instead of 63.4 expected and the Chinese Caixin services PMI for June fell sharply (50.3 points vs. 55.1 points in May) US weekly jobless claims came in at 373k, well above the expected figure of 345k. UK GDP grew by 0.8% in May, compared to +1.5% expected. Rounding out the week, German industrial production was weaker-than-expected at 0.3%, down from 0.2% (vs. 0.5 originally expected) and China reported slightly lower-than-expected inflation in June (1.1% vs. 1.2% expected). |
| More fear than harm Investors wishing to protect their portfolio are wondering how to arbitrate their positions and set aside capital gains to spend the summer in peace. Markets are concerned that central banks (especially the Fed) will tighten their monetary policy on asset purchases more quickly than expected. The rapid global expansion of the various Covid-19 variants (Delta in the lead) is not helping matters. We will have to wait until Tuesday to see the U.S. consumer price index (CPI) relating the level of inflation and Wednesday for producer prices (PPI). Central banks are no longer concerned with seeing the inflation level above 2%. The proof is that the ECB is targeting 2% inflation in the medium term, as opposed to "close to 2%" previously. A semantic difference that could have its importance in the flexibility of its policy. However, all these events do not seem to surprise markets, with investors buying all the declines without flinching. For now, there was more fear than harm. |
