The US inflation data for August announced yesterday provoked contradictory feelings on equity markets. But with Wall Street ending at the day in the red, investors seem to have settled, at least in the short term. There are two main camps: those who think that the price surge is temporary and those who predict that it will become a permanent feature. The temporary team, who scored some points yesterday, wants to believe that the Fed will not have to raise rates prematurely to fight inflation, since it is transitory. Meanwhile, the permanent team believes that those who believe the Fed’s transitory inflation theory are naïve and that the central bank will be forced to act on the quantity of money in circulation, thus compromising growth. Each side makes good points, but no one knows how this will turn out.
Still, the U.S. central bank has probably gained some leeway. Yesterday's data means that it does not have to rewrite its basic marketing scenario for the time being, which is to sell a gradual reduction in its monetary support, while ensuring that key rates will remain still for long enough not to spook markets. This is all the more important, since hopes of a never-ending economic boom are being dampened by the deteriorating statistics from the world's two largest economies. The latest just came from the U.S., where August Industrial Production rose 0.4% Vs. 0.5% expected.
In China, the August production and consumption figures released earlier today confirmed recent fears of a slowdown. But can it be otherwise? Beijing has been raiding its flagship companies all summer long - and continues to do so. Added to this is the collapse of former real estate star Evergrande, which, according to information obtained by Bloomberg, will not meet its interest payments on September 20. More generally, if the less favorable economic dynamics are confirmed, the markets may quickly turn to the sustainability of the 2021 earnings targets, which are rather ambitious and partly justify the current valuation levels of a large number of companies.
Wall Street ended in the red yesterday, with the Nasdaq falling for the 8th time in 10 sessions. This morning, the mood is still a bit heavy but futures were slightly in the green. But the rise in volatility means that futures are currently poor indicators, as they were in the previous two sessions. On Monday, they were pointing up while the markets finally opened down, while yesterday, it was the opposite. The day will be marked by a series of macroeconomic data.
Today's economic highlights:
Refined inflation figures for August in the UK and France and European industrial production for July are published in Europe, while in the US we have the Empire State index for September, industrial production for August and weekly oil stocks. China announced lower than expected figures for August industrial production (5.3% vs. 5.8%) and retail sales (2.5% vs. 6.9%). Japanese machinery orders were also below expectations (0.9% vs. 2.4%).
The dollar/euro pair is trading at EUR 0.8467. Gold is down to USD 1100%. Oil is up to USD 74.84 for Brent and USD 71.75 for WTI. In the sovereign debt market, the 10-year T-Bond yield is down 4 points to 1.29% and the Bund yield is down 1 point to -0.34%. Bitcoin is trading slightly above USD 47,000.
* Microsoft announced on Tuesday evening a share buyback program for up to $60 billion, as well as an 11% increase in the quarterly dividend paid to shareholders. The stock gained 1.2% in pre-market trading.
* Apple is up 0.3% in pre-market trading. The stock had lost 0.96% on Tuesday after the presentation of new versions of its iPhone, its iPad tablet and its connected watch Apple Watch.
* Regeneron Pharmaceuticals - The pharmaceutical company announced Tuesday night that the U.S. government will order an additional 1.4 million doses of its antibody-based COVID-19 treatment, REGEN-COV, for a total of nearly three million. The stock is up 1.5% in pre-market trading.
* Google, Alphabet’s main subsidiary, was fined $177 million on Tuesday by South Korean authorities for abuse of a dominant position, said Wednesday that its presence in the country had benefited consumers to the tune of nearly 12,000 billion won.
* Theravance fell 34.1% in pre-market trading after its experimental treatment for neurogenic orthostatic hypotension (nOH), a form of low blood pressure, failed.
- Abcam: Berenberg remains a hold with a target raised from GBp 1,350 to GBp 1,400.
- Applied Materials : Susquehanna downgrades to neutral from positive
- Bakkavor: HSBC upgrades from hold to buy with a target of 150 GBp.
- Bio-Techne: KeyBanc Capital Markets raised the recommendation to overweight from sector weight. PT up 18% to $600
- Canadian National Railway : TD Securities downgrades to hold from buy, keeps CA$165 price target
- Chevron: J.P. Morgan downgrades Chevron Corp. to neutral from overweight. PT up 15% to $111
- Centene : Mizuho Securities raises PT to $75 From $67, maintains Neutral rating
- Compass: HSBC upgrades from hold to buy with a target of GBp 1,700.
- Darktrace: Berenberg remains Buy with target raised from GBP 750 to 850.
- Flutter: Wells Fargo starts tracking at Overweight, targeting GBp 18,100.
- John Wood: Berenberg remains long with a reduced target of GBP 290 to 280.
- Leslie : Berenberg upgrades to buy from hold, lifts price target to $30 from $28
- Malibu Boats : Berenberg Bank adjusts pt to $86 from $100, maintains buy rating
- Moneysupermarket: Liberum reiterates its hold rating with a target of GBP 260.
- NASDAQ 100 : Atlantic Equities adjusts PT to $220 from $216, maintains overweight rating
- New Gold: Canaccord Genuity adjusts new gold price target to CA$2 from CA$2.75, maintains buy rating
- Oracle: JP Morgan maintains its Buy rating on the stock. The target price has been raised to USD 89 from USD 77.
- Range resources: J.P. Morgan raised the recommendation to neutral from underweight. PT up 8.8% to $20
- RegenXBio : SVB Leerink adjusts price target to $44 from $40, maintains market perform rating
- Segro: Jefferies remains Hold with target raised to GBp1,300 from GBp1,100.
- SM Energy: J.P. Morgan upgrades to overweight from neutral. PT up 33% to $27