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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.

China blues

08/15/2022 | 09:08am EDT
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The week isn't up to great start on financial markets, as China's economic data released over the week-end was particularly disappointing.

Industrial production rose 3.8% year-on-year, vs 4.3% expected. Retail sales were up 2.7% compared with forecasts of 4.9%.

This led the People's Bank of China (PBOC) to intervene, in a bid to revive an economy weakened by Covid-related restrictions and a worsening housing slowdown. It just announced it was lowering the rate on 400 billion yuan ($59.33 billion) of one-year medium-term lending facility loans by 10 basis points to 2.75%, from 2.85%.

U.S. stock index futures were down this morning, as investors worry about the consequences of an economic slowdown in the world's second-largest economy.

Several macroeconomic indicators will be unveiled this week, in a context where even the most seasoned economists are confused. The classic performance monitoring tools are struggling. While experts are divided about whether or not the US is in recession, the labor market is showing a very different picture, with job creation soaring again in July and the unemployment rate at its lowest level since 1969.

It is in this context that the July US retail sales figures will be released on Wednesday. It will allow investors to take the pulse of the American consumer, knowing that private consumption represents about 68% of GDP. As long as the US consumer holds out, the Fed is supposed to have some leeway to try and bend the price surge with rate hikes. The figure will come the day after the latest quarterly results from Walmart and The Home Depot, which are also important real-world indicators. Target will also publish its results on Wednesday. These three companies will likely set the tone for the rest of the sector.

In other news, the legislative journey of the Biden health and climate plan was successfully completed over the weekend in the House of Representatives. It is therefore passed, although markets have already largely anticipated this positive outcome.

 

Economic highlights of the day:

The Empire Manufacturing index for August and the latest NAHB house price index are the two US statistics to follow today. All the macro agenda here. Earlier today, Japan reported lower than expected Q2 growth (+2.2% vs. +2.6% expected year-on-year).

The dollar gained some ground to EUR 0.9796. The gold ounce is trading at USD 1781. Oil is down, with North Sea Brent at USD 93.14 a barrel and US WTI light crude at USD 87.32. The yield on US 10-year debt is hovering around 2.83%. Bitcoin is trading just below USD 25,000.

 

On markets:

* Moderna - The UK Medicines Authority (MHRA) announced on Monday that it had approved as a booster dose Moderna's bivalent COVID-19 vaccine, which targets both the original SARS-CoV-2 strain and the Omicron variant of the virus that causes the disease.

* Alphabet - YouTube, a subsidiary of the company, is considering launching an online shop to market its streaming video services and has reopened discussions with entertainment groups to do so, the Wall Street Journal reported Friday.

* Kohl’s - Activist fund Starboard Value, which offered to buy the department stores' for about $9 billion in January, reduced its stake by more than 80 percent in the second quarter, according to a filing with securities regulators made public Friday.

* Apollo Global Management - Scandinavian airline SAS said on Saturday it had reached an agreement with Apollo on a $700 million financing deal.

* Nexstar Media, the largest owner of local television stations in the United States, announced that it has purchased a majority stake (75%) in the CW television network.

* Unity Software on Monday rejected a $17.54 billion bid by gaming software company Applovin and said it plans to pursue its acquisition of rival IronSource.

* New York Times - The company has hired Bank of America and law firm Sidley Austin to counter arguments from activist fund ValueAct, which owns nearly 7 percent of its stock and on Thursday called for a more aggressive business strategy, sources close to the matter said.

* The New York-listed shares of Turquoise Hill Resources were up 24 percent in premarket trading after the Canadian mining group rejected an offer from its largest shareholder Rio Tinto to pay $2.7 billion for the 49 percent of the company it does not yet own.

 

Analyst recommendations:

  • Air Products: BMO Capital Markets upgrades  to outperform from market perform. PT up 19% to $321.
  • American Equity Investment Life: Evercore ISI downgrades to in-line from outperform, adjusts price target to $44 from $42.
  • Auto Trader: JPMorgan downgrades auto trader to underweight from neutral.
  • Bunzl: Goldman Sachs increases PT to 27.50 pounds sterling from 26.50 and maintained the sell rating.
  • Coca-Cola HBC: Citigroup lifts PT to 22.00 pounds sterling from 18.25 pounds and kept its neutral rating.
  • Dollar General: BMO Capital Markets downgrades to market perform from outperform.
  • Comcast: Atlantic Equities downgrades Comcast Corp. Class A to neutral from overweight. PT up 10% to $44.
  • Cullen/Frost: Compass Point Research & Trading raised its recommendation to buy from neutral.PT set to $152, implies a 11% increase from last price.
  • Deliveroo: Jefferies remains Buy with target reduced from £240 to £190
  • Equifax: Atlantic Equities downgrades to neutral from overweight. PT up 1.2% to $225.
  • Paycom Software: KeyBanc adjusts price target to $432 from $390, reiterates overweight rating.
  • Poshmark: Barclays upgrades to overweight from equal-weight. PT jumps 44% to $17.
  • Seagen: SVB Securities adjusts price target to $152 from $159, keeps outperform rating.
  • Trainline: J.P. Morgan upgrades from Overweight to Neutral targeting GBp 420.
  • Truist Financial: Compass Point Research & Trading LLC cut its recommendation to neutral from buy. PT up 6.3% to $55.

© MarketScreener.com 2022
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Stocks mentioned in the article
ChangeLast1st jan.
AIR PRODUCTS & CHEMICALS, INC. 2.73% 239.06 Delayed Quote.-23.51%
ALPHABET INC. 3.35% 98.83 Delayed Quote.-33.97%
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY 1.34% 37.79 Delayed Quote.-4.19%
APOLLO GLOBAL MANAGEMENT, INC. -2.37% 46.5 End-of-day quote.-35.80%
AUTO TRADER GROUP PLC 1.59% 523.2 Delayed Quote.-30.41%
BANK OF AMERICA CORPORATION 3.10% 31.125 Delayed Quote.-32.12%
BUNZL PLC 0.43% 2772 Delayed Quote.-4.33%
COCA-COLA HBC AG -2.14% 1853.5 Delayed Quote.-25.87%
COMCAST CORPORATION 4.42% 30.615 Delayed Quote.-41.72%
CULLEN/FROST BANKERS, INC. 2.76% 135.83 Delayed Quote.4.88%
DELIVEROO PLC 4.72% 88.76 Delayed Quote.-59.58%
DOLLAR GENERAL CORPORATION 2.97% 246.42 Delayed Quote.1.71%
EQUIFAX INC. 0.98% 173.12 Delayed Quote.-41.45%
MODERNA, INC. 2.08% 120.69 Delayed Quote.-53.44%
NEXSTAR MEDIA GROUP, INC. 3.22% 172.22 Delayed Quote.10.51%
PAX DOLLAR (USDP/USD) -0.23% 0.9997 End-of-day quote.-0.02%
PAYCOM SOFTWARE, INC. 1.66% 335.48 Delayed Quote.-20.52%
POSHMARK, INC. -0.73% 15.555 Delayed Quote.-7.99%
SEAGEN INC. 0.65% 137.72 Delayed Quote.-11.49%
TARGET CORPORATION 2.40% 151.93 Delayed Quote.-35.88%
THE HOME DEPOT, INC. 3.38% 285.13 Delayed Quote.-33.51%
TRAINLINE PLC -0.44% 314.3 Delayed Quote.13.15%
TRUIST FINANCIAL CORPORATION 2.99% 44.83 Delayed Quote.-25.64%
TURQUOISE HILL RESOURCES LTD. 1.17% 41.38 Delayed Quote.96.63%
UNITY SOFTWARE INC. 6.51% 33.92 Delayed Quote.-77.72%
WALMART INC. 2.19% 132.51 Delayed Quote.-10.36%
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