The record of the US broad index at the close yesterday is quite telling, as we find at the top Apple, Microsoft, Amazon or Facebook. These are blue chips that have never been far from investors' first choices in recent months, despite their occasional passions for cyclicals, crypto-currencies or commodities.
These stocks are also, perhaps most importantly, benefiting from the end of investors' honeymoon with the Chinese technology segment, since Beijing decided to tighten regulation, wielding the baseball bat rather than the tweezers. The massive destruction seems to affect all strata of the digital industry. The latest example was yesterday, with the introduction of a stricter quota of allowed video game hours for young people in China. The increasing number of regulatory tightening measures currently being implemented in several sectors is having a negative impact on the Chinese economy, especially as the post-pandemic recovery peak has been passed and the return of the coronavirus to certain areas of the country has reduced local activity.
All of this is illustrated in the official Chinese PMI indicators for August, released today, which show that the manufacturing part is barely expanding, as the indicator stands at 50.1 points, just above the 50-point boundary, which separates contraction from economic growth. As for the Services PMI, it fell from 52.1 in July to 47.5 in August, so it is clearly in the contraction zone. In services, the weakness is attributable to a negative cocktail that includes the government’s tightening regulation in several areas, including digital, finance, real estate and education, but also the temporary closure of some port areas because of the delta variant or the constrained tourist flows.
Investors, who are relentless optimists, believe that Beijing will eventually take stimulus measures. After all, authorities have not formally adopted huge spending plans to counter the effects of coronavirus as the West has done. The result is a strong belief that Xi Jinping's arsenal is still well stocked and that he can deploy it on demand to support the economy. But beware, he’s also ready to pounce on companies or sectors that may deviate from the communist party’s economic model.
Economic highlights of the day:
European inflation for August, US house prices, the Chicago PMI and the Conference Board consumer confidence are the main indicators of the day.
The dollar is down to EUR 0.8450, as is the ounce of gold at USD 1811. Oil is down at USD 71.44 per barrel for Brent and USD 68.32 for WTI. In the sovereign debt market, the U.S. 10-year yield falls to 1.27%, while the Bund yield stands at -0.44%. Bitcoin is trading slightly above USD 47,900.
* The Boeing company - Ryanair announced Tuesday that it hopes to place an order with Boeing for 100 to 200 MAX 10 aircraft, a variant of the 737-MAX, if it can reach an agreement on the price of the aircraft before next summer with the U.S. aircraft manufacturer.
* Uber - The Russian internet group Yandex announced on Tuesday the purchase for 1 billion dollars of Uber's shares in several of their joint ventures specialized in VTC services and meal delivery. In pre-market trading, Yandex gained 1.1%.
* Zoom Video Communications - The video conferencing specialist's stock is down 11% in pre-market trading on what was seen as a disappointing third-quarter forecast, which could reflect a slowdown in its growth compared to last year, a period marked by confinements to fight the COVID-19 epidemic.
* South Korea's parliament voted Tuesday to ban major app store operators such as Apple and Alphabet subsidiary Google from imposing their payment systems on software developers, which results in a commission being charged on user purchases.
* The spread of the Delta variant of the coronavirus could affect the fragile recovery of the U.S. restaurant industry, the National Restaurant Association warned Tuesday, as chains such as McDonald's, Taco Bell and KFC began closing their venues.
*The proposed acquisition of semiconductor specialist Magnachip Semiconductor by Wise Road Capital, a Chinese private equity firm, poses a security risk to the United States, the U.S. Treasury Department said Monday.
- Adagio Therapeutics : Jefferies starts adagio therapeutics at buy with $60 price target
- Alliance Data : BofA Securities upgrades to buy from neutral; price target is $121
- AppLovin : Macquarie initiates coverage at Outperform with $90 Price Target
- AT&T : Citigroup adjusts price target to $32 from $34, reiterates buy rating
- BancorpSouth Bank : Raymond James upgrades to Strong Buy from Outperform; Price Target is $36
- CMO Group: Liberum starts tracking as Buy with a target of GBP 230.
- Dianomi: Liberum initiates a buy rating on the stock, targeting GBp 410.
- Eagle Materials: Berenberg upgrades to buy from hold. PT jumps 18% to $185
- Indivior: Jefferies remains Buy with a price target raised from GBP 220 to GBP 260.
- Intercontinental Hotels: Societe Generale upgraded from hold to buy with a target of GBp 5710.
- Magnite : Macquarie starts coverage at outperform with $39 price target
- PubMatic : Macquarie initiates coverage at outperform with $37 price target
- Reach Plc: Liberum starts tracking as Buy, targeting GBP 475.
- RedHill Biopharma : Cantor Fitzgerald starts at overweight with $22 price target
- Synaptics Incorporated : KeyBanc adjusts price target to $220 from $190, keeps overweight rating
- Textron : Cowen raises to outperform from market perform, price target to $95 from $75
- The Weir Group: Peel Hunt upgrades from Hold to Buy with a target of GBP 2,250.
- Tyler Tech: BTIG LLC raised the recommendation to buy from neutral. PT up 23 % to $585
- Zoom Video Communications : KeyBanc adjusts price target to $398 from $428, keeps overweight rating