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OFFON

Romain Fournier

Chief Editor
Having worked in the British, French and Swiss financial press, Romain is able to report on local and international issues, as comfortable in French as in the language of Shakespeare, Romain Fournier leads the editorial team at Marketscreener. Fine connoisseur of the English-speaking markets, Romain delivers an editorial every day on US and UK markets.

Inflation data stuns Fed officials

11/10/2021 | 08:43am EST
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Wall Street was down this morning, as investors awaited the release of the latest U.S. inflation figures. After several good sessions due to a flurry of stock market records on the Western markets – yesterday marked a consolidation phase that dragged most indexes down. the Nasdaq was hit by Tesla's 12% drop after Elon Musk's latest Twitter antics. Persistent inflation remains a major concern for investors, and the monthly U.S. consumer price figures will help them assess the impact of high prices on the Federal Reserve's rate policy.

While forecasts ranged from 0.4 to 0.7%, after 0.4% in September, the CPI  data came in at 0.9% in the US in October, way above the highest estimations. On an annualized basis, the CPI reached 6.2% against 5.9% expected. This new reading will give ammunition to those in the Fed that called for a rate hike next year. The US 2-year bond shot up 0.8 basis points after the announcement. This comes after the publication of China's consumer price index, which gained 1.5% year-on-year in October, while producer prices jumped 13.5%.

These statistics helped push western stock market leading indicators into the red today, while at the same time pushing Asian indices even lower. The main determinants of today's session are therefore to be found on the side of US inflation. How Fed officials will react is still anybody's guess.

Meanwhile, the geopolitical calendar also seems to have been enriched by a new date since a "virtual meeting" is scheduled next week between Joe Biden and Xi Jinping. The Chinese president said earlier today that he is willing to work with the Americans to "overcome their differences" on regional and global policy issues.

There is also some new developments on the Chinese real estate front, which the Fed now seems to view as a threat to global financial stability. Developer Fantasia Holding was losing half its value in Hong Kong earlier today after trading resumed. The stock had been suspended since September 29, pending a sale to replenish its coffers. At the same time, China Evergrande Group, through which the real estate scandal arrived in China, is due to honor a $148 million loan on its offshore bonds today. So watch out, as this is a factor of volatility on markets that are a little more nervous this morning than they were last week.

 

Today's economic highlights:

Many inflation figures today, including Germany and the United States, along with weekly jobless claims, wholesale inventories, and weekly oil inventories.

The euro/dollar pair is little changed at EUR 0.8655. The ounce of gold is trading at USD 1825. In the oil market, the barrel stabilized after rebounding yesterday, at 84.60 USD for Brent and USD 83.70 for WTI. Bond yields are falling on 10 years, at 1.45% in the US and -0.3% in Germany. Bitcoin falls back to USD 66,400.

 

On markets:

* A U.S. federal judge on Tuesday night denied Apple's request to stay the ruling in the lawsuit against Epic Games, the publisher of "Fortnite." Apple announced immediately its intention to appeal while it must offer before December 9 to developers the possibility of putting a link in their software to use other means of payment on the App store, its application store.

* The European Union's General Court on Wednesday rejected an appeal by Google, Alphabet's main subsidiary, against a €2.42 billion fine imposed on the digital giant by the European Commission in 2017 for impeding competition. The stock is down 0.85% in pre-market trading.

* Tesla’s stock is indicated up 0.2% at the opening of Wall Street after two sessions of decline that erased $200 billion in market capitalization following a Twitter consultation launched by Elon Musk, the group's boss, on a sale of some of its shares.

* Six major automakers, including Ford and General Motors, are to commit on Wednesday to phase out the production of combustion-powered vehicles worldwide by 2040 as part of global efforts to reduce carbon emissions, the British government said in a statement.

* Amazon, Rivian Automotive - The electric vehicle automaker, in which the e-commerce giant is a shareholder, has priced its initial public offering at $78, well above the $72-74 per share guidance range announced Friday. The group hopes to raise more than $11.93 billion in its Nasdaq debut this Wednesday.

* DoorDash announced Tuesday night that it is buying Finnish meal delivery rival Wolt Enterprises in a deal valued at $8.1 billion (about €7 billion). The share price jumped 16.3% in pre-market trading.

* General Electric - At a hearing before the French Senate's economic affairs committee, EDF CEO Jean-Bernard Lévy said Wednesday that discussions with General Electric on the takeover of Arabelle turbines had not yet been concluded.

* Coinbase Global - The cryptocurrency exchange platform reported Tuesday night a nearly 30% drop in third-quarter trading volume from the second quarter due to lower volatility and declining prices for bitcoin and other cryptocurrencies. The stock falls 13% in after-hours trading.

* Unity Software - The video game publisher's stock is down 4.4% in pre-market trading after the group announced that it would buy visual effects studio Weta Digital for $1.63 billion.

 

Analyst recommendations:

  • AstraZeneca: Barclays still consider the stock as a Buy opportunity. The target price has been revised upwards and is now set at GBp 11000, compared with GBp 10000 previously.
  • AudioBoom Group:  Finncap initiated coverage with a recommendation of corporate. PT rises 47% to 1,600 pence.
  • Babcock: Barclays cut the recommendation to equal-weight from overweight. PT up 9% to 352 pence=
  • ConocoPhillips: Societe Generale cut the recommendation on ConocoPhillips to hold from buy. PT up 1.7% to $77
  • Five9: JPMorgan adjusts price target to $160 from $213, maintains neutral rating
  • General Electric: Deutsche Bank raised the recommendation to buy from hold. PT up 18% to $131
  • International Consolidated Airlines Group: Goldman Sachs is keeping its Neutral rating. The target price is revised upwards from GBp 190 to GBp 180.
  • Johnson Service: HSBC upgrades to buy from hold. PT up 31% to 170 pence
  • Parker-Hannifin: BMO Capital adjusts price target to $400 from $375, keeps outperform rating
  • PayPal: Atlantic Securities adjusts pt to $280 from $315, maintains overweight rating
  • Qiagen: Deutsche Bank still considers the stock as a Buy opportunity.
  • Standard Chartered: Jefferies remains Buy with a target price raised from GBp 736 to GBp 794.
  • Tencent Music Entertainment Group: Citigroup downgrades to neutral from buy, adjusts pt to $8.50 from $9

© MarketScreener.com 2021
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Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 0.35% 2567.94 Delayed Quote.-9.70%
AMAZON.COM, INC. 1.33% 2861 Delayed Quote.-13.30%
APPLE INC. -0.49% 159.64 Delayed Quote.-8.98%
ASTRAZENECA PLC 0.81% 8381 Delayed Quote.-4.17%
AUDIOBOOM GROUP PLC -0.34% 1470.05 Delayed Quote.5.73%
BABCOCK INTERNATIONAL GROUP PLC 2.03% 322.5 Delayed Quote.-0.91%
COINBASE GLOBAL, INC. -0.26% 184.9 Delayed Quote.-24.13%
CONOCOPHILLIPS 0.36% 83.16 Delayed Quote.15.02%
DOORDASH, INC. 0.34% 112.74 Delayed Quote.-21.19%
FIVE9, INC. 5.14% 126.13 Delayed Quote.-6.69%
FORD MOTOR COMPANY -1.26% 19.97 Delayed Quote.-1.83%
GENERAL ELECTRIC COMPANY 0.63% 91.1 Delayed Quote.1.94%
GENERAL MOTORS COMPANY -1.20% 51.3699 Delayed Quote.-10.22%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. 0.49% 148.28 Delayed Quote.3.51%
JOHNSON SERVICE GROUP PLC -0.40% 148 Delayed Quote.0.68%
PARKER-HANNIFIN CORPORATION 0.22% 309.27 Delayed Quote.-1.24%
PAYPAL HOLDINGS, INC. -0.84% 159.2 Delayed Quote.-14.00%
QIAGEN N.V. 0.25% 48 Delayed Quote.-12.40%
S&P 500 0.28% 4353.65 Delayed Quote.-7.47%
STANDARD CHARTERED PLC 3.63% 505.4 Delayed Quote.8.81%
TENCENT MUSIC ENTERTAINMENT GROUP -3.13% 6.14 Delayed Quote.-9.64%
TESLA, INC. -1.47% 921.8999 Delayed Quote.-12.00%
UNITY SOFTWARE INC. 3.87% 107.085 Delayed Quote.-22.43%
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