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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.

Uncertain prospects for the year ahead

12/08/2021 | 09:58am EST
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Volatility is high, with sessions at -4% followed by 3% gains, and investors don’t know what to make of the various signals they receive. The narrative has changed around the Omicron variant, which has gone from worrisome to being barely more than a flu. However, a China Evergrande default is getting likelier, and so is a rate hike.

There is no certainty, however. For example, a new British study published in the Lancet shows that Omicron can evade vaccine protection to a large extent. It could even be that this variant contributes to end the pandemic by taking precedence over all other variants, being highly contagious but not very dangerous. This is the theory developed by J.P. Morgan strategists a week ago, when they recommended buying the dip. Their position was cited as a somewhat daring curiosity, but has now become very popular.

Another cause for concern is Evergrande. Shares have plummeted after it missed a debt payment deadline, increasing the likelihood of a default. But it seems that Chinese authorities are seeking to gradually regain control to restart the economic engine. Beijing probably feels that its message of firmness has been passed on to companies that have strayed too far from the party line, whether they are in the real estate or technology sectors. The return of China as an economic powerhouse would obviously be a positive signal for equity markets.

Failing unemployment and inflation are boosting the chances of an acceleration in tapering asset purchases, while a sooner-than-expected rate hike is on the card.

At the same time, the expansion of the Delta variant is still cause for concern. It was the high Beta stocks that benefited from the bullish explosion of indexes yesterday. Retail traders flocked to these poor-quality stocks that have a habit of offering leverage during index euphoria. As a result, it was a bit of a penny stock party. That said, there were not many left behind. At the close, the S&P500 up 2.1%. Tech giants were the best performers, with Apple +3.5% and Nvidia +8%.

Let's change the register completely with a well-stocked political section today. Joe Biden and Vladimir Putin had a long discussion at a time when American secret services are alarmed by a project to invade Ukraine. Media reports suggest that the White House could have put the future of the Nordstream gas pipeline in the balance to weigh diplomatically. Meanwhile, the three parties of the new German coalition have agreed on a government contract. It will allow Olaf Scholz to be elected chancellor today in place of Angela Merkel, who will lose her status as the most powerful woman in the world, which she held for ten consecutive years in the Forbes ranking.

 

Economic highlights of the day:

The JOLTS survey on US job openings in October and weekly oil inventories are on the agenda. Earlier today, Japan announced a 3.6% annualized contraction of its third quarter GDP, while economists were only expecting a 3.1% contraction.

The dollar is down to EUR 0.8843 and so is gold to USD 1781. Oil retreated slightly after its recent rebound with Brent crude at USD 75.18 per barrel and USD 71.59 for WTI. US 10-year debt is paying 1.46%, while the French OAT remains in slightly negative territory over the same period. Bitcoin is hovering around USD 50,105.

 

On markets:

* Apple - Production of Apple's various iPhone 13 models fell by 20% in September and October compared to what was initially expected due to supply chain disruptions and power shortages in China, the Japanese business daily Nikkei reported, citing sources close to the matter. In addition, Credit Suisse has upgraded Apple to "neutral" with a price target of $150.

* Pfizer, BioNTech - The two companies said Wednesday that three doses of their COVID-19 vaccine had demonstrated the ability to neutralize the effects of the new Omicron variant of the coronavirus in laboratory tests. Alex Sigal, a professor at the Africa Health Research Institute in South Africa, had previously said the vaccine may only partially protect against Omicron. Pfizer shares gained 0.6% in premarket trading.

* Stanley Black & Decker - Sweden's Securitas announced Wednesday that it has reached an agreement to buy the electronic security business of U.S. rival Stanley Black & Decker for $3.2 billion, its largest acquisition to date.

* Meta - Facebook's parent company announced Wednesday that it would ban from all of its platforms activities controlled by the Burmese military, which took power in the country on Feb. 1.

* Ford Motor announced plans to invest $900 million in upgrading its factories in Thailand, where the Ranger pickup truck and Everest SUV are produced. Ford shares are up 0.45% in pre-market trading.

* Didi Global - Several hedge funds may have lost millions of dollars by investing in Didi Global, whose stock price has plummeted since the Chinese VTC services giant announced on Friday its intention to delist from Wall Street and list in Hong Kong, stock market advisers said.

* Visa on Wednesday announced the launch of a global cryptocurrency advisory service for banks and businesses amid growing interest in digital currencies.

* BlackRock - The world's No. 1 asset manager added Bank of New York Mellon, Citigroup and JPMorgan Chase & Co as custodians of its $2.3 trillion iShares subsidiary's index funds (ETFs) to diversify beyond its longtime partner State Street.

* The Good year Tire & Rubber is up 5.8% in premarket trading after Deutsche Bank upgraded its recommendation on the stock to "buy" from "hold."

 

Analyst recommendations:

  • Abrdn: HSBC upgrades from hold to buy targeting GBp 300.
  • Alibaba: Macquarie reinstates coverage at Outperform with $162 price target
  • Ambarella: Stifel adjusts Ambarella PT to $215 From $200, maintains Buy rating
  • Becton Dickinson: Piper Sandler cut the recommendation to neutral from overweight. PT up 3.9% to $260
  • Broadcom: Credit Suisse lifts PT to $620 from $580, keeps Outperform rating
  • Costco Wholesale: Oppenheimer adjusts PT to $580 from $550, maintains Outperform rating
  • Essex Property Trust: JPMorgan adjusts Essex Property Trust PT to $363 From $359, maintains Overweight rating
  • Evercore: Morgan Stanley cut the recommendation on Evercore Inc. Class A to equal-weight from overweight. PT up 13% to $156
  • Fidelity National Information Services: Barclays adjusts Price Target to $141 From $154, maintains Overweight rating
  • JD.com: Macquarie reinstates at Outperform with $112 price target
  • London Stock Exchange: Jefferies initiates a Buy rating on the stock, targeting GBp 8500.
  • Marriott International: Cowen adjusts Marriott International's PT to $180 from $170, keeps Outperform rating
  • Marvell Technology: KGI Securities starts coverage at Outperform with $105 price target
  • Mimecast: Baird downgrades Mimecast to Neutral from Outperform, adjusts PT to $80 From $85
  • Ocado: Jefferies upgrades from Underperform to Hold with a target of GBP 1,850.
  • Sage: Morgan Stanley raises to Overweight from equal-weight targeting GBP 970.
  • SVB Financial: Wells Fargo Securities upgrades to overweight from equal-weight. PT rises 26% to $900
  • Whitecap Resources: Whitecap Resources rises more than 4%, RBC raises Price Target to $11
  • Wynn Resorts: Union Gaming Research raised the recommendation to buy from hold. PT rises 39% to $120

© MarketScreener.com 2021
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Stocks mentioned in the article
ChangeLast1st jan.
ABRDN PLC -1.48% 240.3 Delayed Quote.1.25%
ALIBABA GROUP HOLDING LIMITED -0.49% 130.73 Delayed Quote.10.76%
AMBARELLA, INC. -3.89% 149.07 Delayed Quote.-23.20%
APPLE INC. -1.18% 170.92 Delayed Quote.-2.53%
BIONTECH SE -9.31% 177.59 Delayed Quote.-23.97%
BLACKROCK, INC. -2.04% 831.2656 Delayed Quote.-7.31%
BROADCOM INC. -1.99% 584.25 Delayed Quote.-10.38%
COSTCO WHOLESALE CORPORATION -1.87% 492.98 Delayed Quote.-11.40%
DIDI GLOBAL INC. 2.78% 4.805 Delayed Quote.-6.22%
ESSEX PROPERTY TRUST, INC. -1.24% 339.54 Delayed Quote.-2.35%
EVERCORE INC. -3.86% 127.945 Delayed Quote.-1.93%
FIDELITY NATIONAL INFORMATION SERVICES, INC. -2.75% 114.8 Delayed Quote.8.14%
FORD MOTOR COMPANY -2.06% 24.6514 Delayed Quote.21.28%
JD.COM, INC. 0.43% 73.9601 Delayed Quote.5.21%
LONDON STOCK EXCHANGE PLC 0.62% 7478 Delayed Quote.7.24%
MARRIOTT INTERNATIONAL, INC. -1.80% 159.75 Delayed Quote.-1.48%
MARVELL TECHNOLOGY GROUP LTD -3.86% 79.69 Delayed Quote.-5.13%
META PLATFORMS, INC. -3.43% 320.06 Delayed Quote.-1.32%
METALLURGICAL CORPORATION OF CHINA LTD. 4.59% 2.28 End-of-day quote.14.57%
MIMECAST LIMITED -0.56% 79.885 Delayed Quote.0.99%
OCADO GROUP PLC 0.38% 1463.778 Delayed Quote.-13.08%
PFIZER, INC. -1.94% 53.885 Delayed Quote.-6.94%
RUBBEREX CORPORATION (M) BERHAD 0.00% 0.5 End-of-day quote.-3.85%
S&P 500 -1.53% 4589.7 Delayed Quote.-2.17%
SAGE GROUP PLC -1.56% 797.6 Delayed Quote.-4.97%
STANLEY BLACK & DECKER, INC. -1.30% 190.13 Delayed Quote.2.14%
SVB FINANCIAL GROUP -4.68% 669.95 Delayed Quote.3.86%
VISA, INC. 0.43% 215.68 Delayed Quote.-0.94%
WHITECAP RESOURCES INC. -1.23% 8.83 Delayed Quote.19.49%
WYNN RESORTS, LIMITED 0.61% 92.07 Delayed Quote.7.56%
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