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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.

Yes, the global economic recovery is slowing

09/15/2021 | 09:40am EDT

Is lower-than-expected inflation in the US a good or bad thing? The answer is not as clear cut today as it was a few weeks ago. Weaker-than-expected inflation data in the US was the main focus yesterday, closely followed by weak economic data coming from China. When Beijing sneezes, the financial world can catch a cold.

The US inflation data for August announced yesterday provoked contradictory feelings on equity markets. But with Wall Street ending at the day in the red, investors seem to have settled, at least in the short term. There are two main camps: those who think that the price surge is temporary and those who predict that it will become a permanent feature. The temporary team, who scored some points yesterday, wants to believe that the Fed will not have to raise rates prematurely to fight inflation, since it is transitory. Meanwhile, the permanent team believes that those who believe the Fed’s transitory inflation theory are naïve and that the central bank will be forced to act on the quantity of money in circulation, thus compromising growth. Each side makes good points, but no one knows how this will turn out.

Still, the U.S. central bank has probably gained some leeway. Yesterday's data means that it does not have to rewrite its basic marketing scenario for the time being, which is to sell a gradual reduction in its monetary support, while ensuring that key rates will remain still for long enough not to spook markets. This is all the more important, since hopes of a never-ending economic boom are being dampened by the deteriorating statistics from the world's two largest economies. The latest just came from the U.S., where August Industrial Production rose 0.4% Vs. 0.5% expected.

In China, the August production and consumption figures released earlier today confirmed recent fears of a slowdown. But can it be otherwise? Beijing has been raiding its flagship companies all summer long - and continues to do so. Added to this is the collapse of former real estate star Evergrande, which, according to information obtained by Bloomberg, will not meet its interest payments on September 20. More generally, if the less favorable economic dynamics are confirmed, the markets may quickly turn to the sustainability of the 2021 earnings targets, which are rather ambitious and partly justify the current valuation levels of a large number of companies.

Wall Street ended in the red yesterday, with the Nasdaq falling for the 8th time in 10 sessions. This morning, the mood is still a bit heavy but futures were slightly in the green. But the rise in volatility means that futures are currently poor indicators, as they were in the previous two sessions. On Monday, they were pointing up while the markets finally opened down, while yesterday, it was the opposite. The day will be marked by a series of macroeconomic data.

 

Today's economic highlights:

Refined inflation figures for August in the UK and France and European industrial production for July  are published in Europe, while in the US we have the Empire State index for September, industrial production for August and weekly oil stocks. China announced lower than expected figures for August industrial production (5.3% vs. 5.8%) and retail sales (2.5% vs. 6.9%). Japanese machinery orders were also below expectations (0.9% vs. 2.4%).

The dollar/euro pair is trading at EUR 0.8467. Gold is down to USD 1796. Oil is up to USD 74.84 for Brent and USD 71.75 for WTI. In the sovereign debt market, the 10-year T-Bond yield is down 4 points to 1.29% and the Bund yield is down 1 point to -0.34%. Bitcoin is trading slightly above USD 47,000.

 

On markets:

* Microsoft announced on Tuesday evening a share buyback program for up to $60 billion, as well as an 11% increase in the quarterly dividend paid to shareholders. The stock gained 1.2% in pre-market trading.

* Apple is up 0.3% in pre-market trading. The stock had lost 0.96% on Tuesday after the presentation of new versions of its iPhone, its iPad tablet and its connected watch Apple Watch.

* Regeneron Pharmaceuticals - The pharmaceutical company announced Tuesday night that the U.S. government will order an additional 1.4 million doses of its antibody-based COVID-19 treatment, REGEN-COV, for a total of nearly three million. The stock is up 1.5% in pre-market trading.

* U.S. online retail giant Amazon has partnered with Deliveroo to allow users of its Prime loyalty service to receive free meal delivery in the U.K., the Financial Times reported Wednesday

* Google, Alphabet’s main subsidiary, was fined $177 million on Tuesday by South Korean authorities for abuse of a dominant position, said Wednesday that its presence in the country had benefited consumers to the tune of nearly 12,000 billion won.

* Theravance fell 34.1% in pre-market trading after its experimental treatment for neurogenic orthostatic hypotension (nOH), a form of low blood pressure, failed.

 

Analyst recommendations:

  • Abcam: Berenberg remains a hold with a target raised from GBp 1,350 to GBp 1,400.
  • Applied Materials : Susquehanna downgrades to neutral from positive
  • Bakkavor: HSBC upgrades from hold to buy with a target of 150 GBp.
  • Bio-Techne: KeyBanc Capital Markets raised the recommendation to overweight from sector weight. PT up 18% to $600
  • Canadian National Railway : TD Securities downgrades to hold from buy, keeps CA$165 price target
  • Chevron: J.P. Morgan downgrades Chevron Corp. to neutral from overweight. PT up 15% to $111
  • Centene : Mizuho Securities raises PT to $75 From $67, maintains Neutral rating
  • Compass: HSBC upgrades from hold to buy with a target of GBp 1,700.
  • Darktrace: Berenberg remains Buy with target raised from GBP 750 to 850.
  • Flutter: Wells Fargo starts tracking at Overweight, targeting GBp 18,100.
  • John Wood: Berenberg remains long with a reduced target of GBP 290 to 280.
  • Leslie : Berenberg upgrades to buy from hold, lifts price target to $30 from $28
  • Malibu Boats : Berenberg Bank adjusts pt to $86 from $100, maintains buy rating
  • Moneysupermarket: Liberum reiterates its hold rating with a target of GBP 260.
  • NASDAQ 100 : Atlantic Equities adjusts PT to $220 from $216, maintains overweight rating
  • New Gold: Canaccord Genuity adjusts new gold price target to CA$2 from CA$2.75, maintains buy rating
  • Oracle: JP Morgan maintains its Buy rating on the stock. The target price has been raised to USD 89 from USD 77.
  • Range resources: J.P. Morgan raised the recommendation  to neutral from underweight. PT up 8.8% to $20
  • RegenXBio : SVB Leerink adjusts price target to $44 from $40, maintains market perform rating
  • Segro: Jefferies remains Hold with target raised to GBp1,300 from GBp1,100.
  • SM Energy: J.P. Morgan upgrades to overweight from neutral. PT up 33%  to $27

© MarketScreener.com 2021
Stocks mentioned in the article
ChangeLast1st jan.
ABCAM PLC -0.30% 1645 Delayed Quote.6.13%
ALPHABET INC. -3.04% 2751.33 Delayed Quote.56.98%
AMAZON.COM, INC. -2.90% 3335.55 Delayed Quote.5.47%
APPLE INC. -0.53% 148.69 Delayed Quote.12.06%
APPLIED MATERIALS, INC. 1.94% 135.93 Delayed Quote.57.51%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.01% 0.7464 Delayed Quote.-3.02%
BAKKAVOR GROUP PLC -1.13% 122 Delayed Quote.50.62%
BELIEVE 0.45% 17.578 Real-time Quote.0.00%
BIO-TECHNE CORPORATION 1.57% 505.26 Delayed Quote.59.11%
BITCOIN (BTC/EUR) -1.77% 51793.74 Real-time Quote.120.95%
BITCOIN (BTC/USD) -1.81% 60224.05 Real-time Quote.110.19%
BRITISH POUND / US DOLLAR (GBP/USD) 0.05% 1.3758 Delayed Quote.0.85%
CANACCORD GENUITY GROUP INC. 0.28% 14.09 Delayed Quote.26.25%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.03% 0.8085 Delayed Quote.2.95%
CANADIAN NATIONAL RAILWAY COMPANY 1.98% 167.5 Delayed Quote.19.69%
CENTENE CORPORATION 0.36% 69.24 Delayed Quote.15.34%
CHEVRON CORPORATION 0.95% 112.8 Delayed Quote.33.57%
COMPASS GROUP PLC -0.89% 1442 Delayed Quote.5.80%
COMPASS, INC. 2.87% 12.89 Delayed Quote.0.00%
DARKTRACE PLC -0.47% 945.5 Delayed Quote.0.00%
DELIVEROO PLC -5.46% 273.5 Delayed Quote.0.00%
EURO / US DOLLAR (EUR/USD) -0.03% 1.1643 Delayed Quote.-4.82%
FLUTTER ENTERTAINMENT PLC 0.77% 169.8 Real-time Quote.1.74%
HSBC HOLDINGS PLC 0.01% 434.8 Delayed Quote.14.77%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.17% 0.013337 Delayed Quote.-2.42%
JOHN WOOD GROUP PLC -2.04% 225.5 Delayed Quote.-27.31%
LESLIE'S, INC. -1.93% 21.8 Delayed Quote.-21.44%
LONDON BRENT OIL 1.41% 85.7 Delayed Quote.63.93%
MALIBU BOATS, INC. 0.39% 69.68 Delayed Quote.11.60%
MICROSOFT CORPORATION -0.51% 309.16 Delayed Quote.39.00%
MONEYSUPERMARKET.COM GROUP PLC -2.13% 220.8 Delayed Quote.-15.04%
NASDAQ 100 -0.87% 15355.065261 Real-time Quote.20.18%
NASDAQ COMP. -0.82% 15090.200353 Real-time Quote.18.06%
NEW GOLD INC. 2.34% 1.75 Delayed Quote.-37.50%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.02% 0.7153 Delayed Quote.-0.36%
ORACLE CORPORATION 2.02% 98.25 Delayed Quote.48.86%
RANGE RESOURCES CORPORATION 4.72% 24.65 Delayed Quote.267.91%
REGENERON PHARMACEUTICALS 0.53% 572.36 Delayed Quote.18.47%
REGENXBIO INC. 3.17% 36.14 Delayed Quote.-20.33%
S&P 500 -0.11% 4544.9 Delayed Quote.21.13%
S&P GSCI CRUDE OIL INDEX 2.33% 459.0594 Delayed Quote.68.69%
SEGRO PLC 0.74% 1290.5 Delayed Quote.35.98%
SM ENERGY COMPANY 3.53% 30.8 Delayed Quote.403.27%
TELOS CORPORATION -1.81% 26.65 Delayed Quote.-19.19%
THERAVANCE BIOPHARMA, INC. -1.03% 7.72 Delayed Quote.-56.56%
WELLS FARGO & COMPANY 0.66% 50.66 Delayed Quote.67.86%
WTI 2.23% 84.151 Delayed Quote.70.78%