Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

Today on Wall Street: There's a bit of caution in the air

07/19/2021 | 09:54am EDT

It seems clear that Covid-19 didn't disappear with the summer break and it looks like a new wave is around the corner. Indices have lost ground ahead of three intense weeks that are bound to shape the second half of 2021.

The rush of corporate half-year results has started. The 2021 vintage, from July 19 to August 6, will see all major listed companies report in a short amount of time. Also within this time frame, there are monetary policy decisions from the European Central Bank on July 22 and from the Fed on July 28, and a few important macroeconomic indicators on top of that.

The next weeks are important for several reasons. On the corporate side, investors are looking to see if the promised earnings boom will materialize. There is no longer a consensus on this point, largely because of a pandemic that is far from under control. It’s very likely that we'll quickly get back to talking about what is culturally, economically and politically acceptable. This debate had taken a back seat in the first half of the year, as we had returned to the binary thinking of vaccination and the end of restrictions. As is often the case, the reality is more complex. Governments now know that immunity targets will be difficult to reach, given the lack of confidence in vaccination, so they will start thinking in terms of the capacity of their health systems to cope with the pandemic. In such a context, the framework for a long and unbridled recovery is less clear. The updated business outlook will tell us a bit more about their confidence and the scenarios they have constructed for the rest of the year and beyond.

Another hot topic is monetary policy. Some central banks are starting to set new, more sober policy targets. This has been the case since mid-June in the US. It has been latent in the UK. The ECB has set a new inflation target but is not as advanced as its peers. The resurgence of coronavirus around the world, and particularly in Europe, may force the central bank to maintain a dovish rather than a hawkish policy. But the orthodox faction of the ECB, whose leaders are usually the German and Dutch representatives, is likely to lash out. This mismatch between the monetary policies of major central banks is a source of distortion and confusion for markets.

Business results and monetary policies are accompanied by a few other significant events, as I wrote above before getting lost in the pandemic-monetary reflections. First, Opec+ reached an agreement to increase production without clashing, and will continue the pumping control agreement until the end of 2022. Oil prices were under pressure since last week because of a less flamboyant economic outlook than expected and the environmental offensive of the European Commission. They remain bearish after the announcement of the Opec+, which formalizes a production slightly higher in the medium term than what was envisaged. At the end of the week, we should also keep an eye on July's Flash PMI indicators, which are good barometers of business morale since they survey purchasing managers. The following week, the US, German and French GDPs for the second quarter will be published.

Finally, there will be quite a few emblematic corporate earnings reports this week. In particular BlackRock, International Business Machine, Netflix, Johnson & Johnson, ASML, The Coca-Cola Company, Microsoft, SAP, Novartis, Roche and Unilever.

 

Economic highlights of the day:

The July house price index compiled by the US NAHB is the main indicator today.

The dollar is trading at EUR 0.8461. The ounce of gold lost some height at USD 1811. In the oil market, the agreement reached by Opec+ pushed Brent down to USD 70.98 USD and WTI to USD 69.0 The yield on US debt falls to 1.28% on 10 years. Bitcoin is trading around USD 30,600.

 

On markets:

* Zoom Video Communications announced Sunday that it has reached an agreement to buy cloud software provider FIVE9 in a deal valued at about $14.7 billion (€12.5 billion). Five9 stock gained 8.4% in pre-market trading and Zoom gave up 2%.

* Pershing Square Tontine Holdings announced on Monday that it would not pursue the acquisition of a 10% stake in Universal Music Group (UMG) from Vivendi, with the deal now to be led by U.S. billionaire William Ackman's investment fund.

* Autodesk - The U.S. software company announced Monday that it has ended negotiations to buy its Australian competitor Altium a few weeks after the latter rejected an offer of 5.5 billion Australian dollars.

* Johnson & Johnson is considering placing its disputed assets, such as its talcum powder products, into a new entity that could later seek bankruptcy protection, according to seven sources close to the matter. The U.S. conglomerate's stock is down 0.7% in premarket trading.

* Alibaba and Baidu - China's two largest Wall Street-listed companies are each down 2.1% in premarket trading, hurt by fears of a Chinese government anti-monopoly ruling against technology giants.

* International Business Machines (IBM) released its second quarter results on Monday after the close of the U.S. markets.

 

Analyst recommendations:

GlaxoSmithKline: Barclays maintains its Sell rating on the stock. Previously set at GBp 1250, the target price has been raised to GBp 1300.

International Consolidated Airlines Group: Bestinver Securities initiates coverage with a recommendation of buy. PT up 32% to 210.41 pence

Qualcomm: Goldman Sachs raised its recommendation to neutral from sell. PT raised by 5.9% to $148

Rio Tinto: J.P. Morgan remains Overweight with a target cut from GBP 8310 to GBP 8250.

State Street: DA Davidson adjusts price target to $91 from $89, buy/add rating kept

Tate & Lyle: Jefferies remains Buy with a price target raised from GBP 850 to GBP 880.

Trainline: Berenberg remains Buy with a price target reduced from GBp 520 to GBp 350 .

Travis Perkins: J.P. Morgan upgrades to overweight from neutral. PT up 20% to 2,000 pence.

Virgin Money UK: Investec raised to buy from hold. PT raised 11% to 205 pence.

Yara: Berenberg remains Hold with a price target raised from GBp 465 to GBp 480.

 


ę MarketScreener.com 2021
Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED -0.46% 151.19 Delayed Quote.-35.04%
ASML HOLDING N.V. 2.04% 753.8 Real-time Quote.89.61%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.03% 0.6215 Delayed Quote.-1.76%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.03% 0.7296 Delayed Quote.-6.01%
AUTODESK, INC. 2.00% 292.16 Delayed Quote.-6.20%
BAIDU, INC. 0.39% 160.5 Delayed Quote.-25.78%
BARCLAYS PLC 1.42% 183.8 Delayed Quote.25.42%
BITCOIN - EURO -1.53% 37593.61 Real-time Quote.58.03%
BITCOIN - UNITED STATES DOLLAR -1.51% 44105.94 Real-time Quote.50.87%
BRITISH POUND / EURO (GBP/EUR) -0.01% 1.169 Delayed Quote.4.12%
BRITISH POUND / US DOLLAR (GBP/USD) -0.01% 1.37207 Delayed Quote.-0.42%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.06% 0.672337 Delayed Quote.3.98%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.06% 0.7889 Delayed Quote.-0.40%
EURO / US DOLLAR (EUR/USD) -0.03% 1.17365 Delayed Quote.-4.31%
FIVE9, INC. -0.13% 170.82 Delayed Quote.-2.05%
GLAXOSMITHKLINE PLC -1.20% 1415.8 Delayed Quote.5.37%
INDIAN RUPEE / EURO (INR/EUR) 0.18% 0.011559 Delayed Quote.3.32%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.12% 0.013566 Delayed Quote.-1.13%
INTERNATIONAL BUSINESS MACHINES CORPORATION 1.56% 136.73 Delayed Quote.6.95%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. -1.18% 172.04 Delayed Quote.7.77%
INVESTEC GROUP 1.66% 60.52 End-of-day quote.65.17%
JOHNSON & JOHNSON 0.57% 164.86 Delayed Quote.4.75%
LONDON BRENT OIL 0.05% 77.33 Delayed Quote.44.45%
MICROSOFT CORPORATION 0.33% 299.56 Delayed Quote.34.68%
NETFLIX, INC. 0.44% 593.26 Delayed Quote.9.71%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.06% 0.70678 Delayed Quote.-2.64%
NOVARTIS AG 0.89% 77.31 Delayed Quote.-7.58%
PERSHING SQUARE HOLDINGS, LTD. -0.13% 37.7 Real-time Quote.7.71%
PERSHING SQUARE TONTINE HOLDINGS, LTD. -0.10% 19.72 Delayed Quote.-28.86%
QUALCOMM, INC. 0.68% 133.91 Delayed Quote.-12.10%
RIO TINTO PLC 0.13% 4847.5 Delayed Quote.-11.19%
S&P 500 1.21% 4448.98 Delayed Quote.15.92%
S&P GSCI CRUDE OIL INDEX 1.44% 401.7865 Delayed Quote.47.36%
STATE STREET CORPORATION 3.26% 85.86 Delayed Quote.17.97%
TATE & LYLE PLC 0.69% 701.4 Delayed Quote.4.00%
TRAINLINE PLC 0.16% 376.4 Delayed Quote.-18.88%
TRAVIS PERKINS PLC 1.57% 1746 Delayed Quote.15.68%
UNILEVER PLC -0.86% 3991 Delayed Quote.-9.13%
UNIVERSAL MUSIC GROUP N.V. -3.67% 23.25 Real-time Quote.0.00%
US DOLLAR / EURO (USD/EUR) 0.02% 0.852021 Delayed Quote.4.51%
VIRGIN MONEY UK PLC 1.84% 205 Delayed Quote.51.97%
VIVENDI SE 1.59% 10.895 Real-time Quote.-58.70%
WTI 0.03% 73.296 Delayed Quote.46.78%
YARA INTERNATIONAL ASA 2.74% 419.8 Real-time Quote.17.92%
ZOOM VIDEO COMMUNICATIONS, INC. -0.63% 276.19 Delayed Quote.-18.12%