While investors are trying to figure out what central banks have in store for them, markets have lost some volatility. The week will be marked by an ECB meeting, the latest US inflation figures and updated forecasts from the World Bank and the OECD.
The decline recorded on Friday's session have prevented U.S. indexes to string together a second consecutive week of gains. Wall Street lost about 1% of the 6.5% it gained in the last week of May. After 22 weeks in 2022, the US Nasdaq 100 remains the ugly duckling with a 23% drop.
The background music remains unchanged: investors are looking for the low points in an economic environment that has become much more complex than anything we have seen in recent years. I say economic, but I should say economic and geopolitical, because the two have always been intimately linked. But sometimes we tend to forget the importance of this link and history comes to remind us. I'll take a few examples from the weekend to illustrate this.
First, the White House has confirmed that it is working on lifting certain tariffs imposed on China to ease the inflationary stranglehold. Biden would therefore be ready to reverse these flagship measures of the Trump era. I imagine there are other issues behind this appeal, otherwise the US would be implicitly acknowledging that it depends on Chinese production to stabilize its economy.
As another example of the geopolitical upheaval that is taking place on the economy, Washington has allowed Chevron, ENI and Repsol to export Venezuelan oil to Europe to compensate for the banning of Russian oil. A decision that would certainly not have been implemented if Vladimir Putin had not invaded Ukraine. In the same vein, the energy chaos could help Iran to regain its place on the world stage, even if the United States refuses to involve the ongoing negotiations with Tehran in the current turmoil.
It is also geopolitics that is allowing Saudi Arabia to raise the price of its crude sales in July, as it announced this weekend. The barrel has risen to USD 120. No wonder that in this game, the only sector that is doing really well in the stock market in 2022 is oil.
On the economic calendar, all eyes will be on the May consumer price data and five-year inflation forecasts in the US, to be announced on Friday. Meanwhile, the World Bank (Tuesday) and the OECD (Wednesday) will release their updated economic outlooks. On Thursday, Christine Lagarde will enter the arena for the ECB's June meeting. The central bank will probably blow the whistle on the end of the asset purchase program and refine the timing of its rate hikes. The first round of rate hikes will likely come in July.
Economic highlights of the day:
There's no major indicators today.
The dollar is trading at EUR 0.9335. The ounce of gold is trading around USD 1853. Oil remains high with North Sea Brent crude at USD 120.55 per barrel and U.S. light crude WTI at USD 119.68. The yield on 10-year US debt is gaining some ground at 2.94%. Bitcoin is gaining 4% to USD 31,500.
* Apple, which opens its traditional annual developers' conference on Monday, is up 1.6 percent in premarket trading after giving up 3.9 percent on Friday following news of a possible agreement in Europe to adopt a universal charger for all smartphone and tablet manufacturers.
* Tesla took 4.1% in pre-stock, regaining some of the ground lost Friday related to doubts expressed by its CEO, Elon Musk, on the economic outlook and the need for a reduction of about 10% of the workforce of the car manufacturer. The billionaire went back on his words on Saturday, assuring that the group's total workforce would increase over the next 12 months.
* Chinese authorities will wrap up their investigation into Didi Global and are preparing to allow the VTC giant to redeploy its app in China this week, the Wall Street Journal reported. The soared 50% in pre-market trading.
* Amazon - The division by 20 of the nominal value of the share of the world's number one online retailer is effective as of this Monday. The stock gained about 1% in pre-market trading to $123.73.
* Alphabet - An Australian court on Monday ordered Alphabet subsidiary Google to pay 715,000 Australian dollars to a former member of parliament for defamatory videos posted on YouTube.
* Abbott Laboratories announced Saturday that it will reopen its infant formula plant in Sturgis, Michigan, raising hopes that the unprecedented shortage of infant milk in the U.S. will be resolved.
* Starbucks - The coffee chain announced Monday that Howard Schultz will remain as interim CEO until March 2023 while a successor is found. The stock is up 1.7% in pre-market trading.
* Spirit Airlines gained 6.2 percent in premarket trading after rival JetBlue Airways upped its bid to $31.50 per share from $30 per share, days after Frontier Group Holdings, the other bidder, improved its offer.
* Anaplan announced Monday that private equity group Thoma Bravo had lowered its bid to $9.6 billion from $10.7 billion. The stock was down about 4% in pre-market trading.
* Nike - Stifel lowered its price target to $150 from $160 to take into account the expected impact on quarterly results of containment measures in China.
- American Express: Edward Jones upgrades to buy from hold. Performance Metrics.
- American Software: B Riley Securities upgrades to buy from neutral. PT up 35% to $23.
- Aveva: Citigroup upgrades from neutral to sell targeting GBp 2000.
- BAE Systems: Jefferies remains Buy with a price target raised from GBp 875 to GBp 890.
- Bristol-Myers Squibb: Raymond James downgrades to market perform from outperform.
- CrowdStrike: Stifel adjusts price target to $205 from $250, reiterates buy rating.
- DoorDash: DA Davidson adjusts price target to $82 from $135, reiterates neutral rating.
- Enquest: Barclays downgrades from Overweight to Underweight targeting GBp 23.
- Etsy: UBS adjusts price target to $90 from $180, maintains neutral rating.
- Hunting: Barclays downgrades from Overweight to Underweight targeting GBp 360.
- John Wood: Barclays moves from Equal-weight to Overweight targeting GBp 340.
- Johnson Matthey: HSBC downgrades from buy to hold targeting GBp 2350.
- Lululemon Athletica: Bernstein upgrades to market perform from underperform; price target is $300.
- Okta: Citigroup adjusts price target to $130 from $105, maintains neutral rating.
- Regeneron: Jefferies initiated coverage with a recommendation of underperform. PT down 15% to $536.
- ResMed: RBC Capital Markets upgrades to outperform from sector perform. PT rises 17% to $244.
- Roblox: Citigroup adjusts price target to $52 from $59, reiterates buy rating.