Nearly 60% of companies in the broad Wall Street S&P500 index have published their half-year results, with a trend that is confirmed: they mainly exceed expectations, with an average growth rate of profits in the second quarter of 85.1%, not seen since the fourth quarter of 2009. You can imagine that we owe these numbers to a very favorable base effect, but overall, corporate activity is returning to pre-pandemic levels. Another highlight is that analyst firms continue to raise their Q3 NBI estimates, but at a slower pace than in Q2.
On oil markets, geological tensions increase. Iran has a new president, Ebrahim Raissi, who must solve a complex equation, namely to get his country out of an economic and health crisis. But the recent deadly attack on an oil tanker off the coast of Oman complicates things, as the United States and the United Kingdom believe that Iran is behind this. Needless to say, this further isolates Tehran and puts off the return of its oil to world markets, exacerbating buying pressure on oil, which is one of the strongest rising commodities in 2021.
In fact, it is not only oil that is on the rise in the fossil fuel family, as natural gas and coal prices are literally soaring this year. Gas prices hit record highs this summer, due to a decline in inventories following a cold winter, which are struggling to be replenished due to the buying frenzy in Asia and production disruptions in the North Sea. As a result, while electricity demand is growing as economies recover from containment, natural gas supply is becoming scarcer, contributing to higher US, European and Asian benchmarks. This effect is spreading to coal. As the world goes green, booming electricity demand and soaring gas prices make coal more competitive for power generation. Coal is gaining ground in the United States, Asia and Europe. According to the International Energy Agency, electricity production from coal is expected to grow by 5% in 2021 and will increase by another 3% next year, possibly reaching unprecedented levels.
Economic highlights of the day:
European producer prices are published today along with US factory orders.
The dollar is trading at EUR 0.8415. Gold is gaining some ground at USD 1809 per ounce. Oil fell to USD 71.80 a barrel of Brent and USD 70.1 a barrel of WTI. US debt yields are back on the downside at 1.17% over 10 years. Bitcoin is still below the USD 40,000 line.
* Alibaba on Tuesday reported weaker-than-expected first-quarter sales as its e-commerce business suffered from growing competition from JD.Com and Pinduoduo.
* Eli Lilly reported a 2% drop in quarterly profit on Tuesday, hurt by slowing demand for its COVID-19 treatments with vaccination in the U.S. The stock is losing 2% in pre-market trading.
* Interactive Software and Zynga lost from 1.1% to 4.5%. Take-Two Interactive Software also reported lower-than-expected adjusted second-quarter sales Monday night and postponed the release of two video games.
* Dupont - The industrial group raised its annual guidance again and reported profit growth in the second quarter as rising demand offset higher raw material and logistics costs.
* Translate Bio, a specialist in messenger RNA-based therapies and vaccines, is to be acquired by Sanofi for $3.2 billion, the French group announced. Translate Bio's stock rose 29% in premarket trading.
* Pepsico announced on Tuesday that it has sold a majority stake in the North American fruit juice brands Tropicana and Naked to private equity firm PAI Partners for $3.3 billion (€2.8 billion), confirming a report by the Wall Street Journal.
* KKR - The U.S. private equity firm reported that its profit more than doubled in the second quarter, thanks to a sharp increase in transaction fee income and asset sales.
* Discovery reported better-than-expected second-quarter revenue on increased subscribers to its video-on-demand service.
* ConocoPhillips nearly doubled its second-quarter profit on higher oil and gas prices and production.
* Under Armour gained nearly 5% in premarket trading after raising its annual sales target and reporting better-than-expected quarterly results as demand for sporting goods increased with the reopening of gyms.
* Phillips 66 reported an adjusted quarterly profit, the first in a year, as demand rebounded with the easing of travel restrictions.
* Marriott International - The hotel group reported a quarterly profit Tuesday versus a loss a year earlier.
* Micron announced Monday night that it will pay a quarterly dividend for the first time, at $0.10 per share.
- Applied Industrials: Loop Capital Markets initiated coverage with a recommendation of buy. PT up 26%
- Epam Systems: Jefferies raised the recommendation on Epam Systems Inc. to buy from hold. PT up 20% set to $670
- Fastenal: Loop Capital Markets initiated coverage with a recommendation of hold. PT down 5% to $52
- Krispy Kreme : HSBC starts Krispy Kreme at Buy with $25 Price Target
- Magenta Therapeutics: J.P. Morgan cut the recommendation to neutral from overweight. PT down 1.5% to $7
- MSC Industrial: Loop Capital Markets initiated coverage with a recommendation of hold. PT up 5.5% to $92
- Meggit: Berenberg cut the recommendation to hold from buy. PT up 2% to 750 pence
- Old Dominion: Goldman Sachs downgrades to neutral from buy. PT up 5.3% to $281
- On Semi: Morgan Stanley raised the recommendation to equal-weight from underweight. PT down 3.8% to $42
- Planet Fitness: Stifel raised the recommendation to buy from hold. PT up 14% to $85
- Playtech: Morgan Stanley raised the recommendation to equal-weight from underweight. PT up 13% to 420 pence
- XPO Logistics: Goldman Sachs raised the recommendation to buy from neutral. PT up 23% to $103
- Watsco: Loop Capital Markets initiated coverage with a recommendation of hold. PT up 6.7% set to $300
- Wesco: Loop Capital Markets initiated coverage of Wesco International Inc. with a recommendation of buy. PT set to $125, implies a 19% increase from last price. Wesco average PT is $123.82.
- WW Grainger: Loop Capital Markets initiated coverage with a recommendation of buy. PT up 19% to $525