On Friday, Wall Street went into reverse after several weeks of gains (five to be precise for the broad S&P500 index). The Nasdaq 100 lost 1%, the Dow Jones fell 0.6% and the S&P 500 was down 0.7%. Red also dominated the European stock markets on Friday: France's CAC40 shed 0.55%, Germany's Dax almost doubled, while the UK's Footsie did little better, shedding 0.54%. Only the Swiss SMI managed a small rise of 0.34%, thanks to the resilience of defensive heavyweights such as Roche, Nestlé and Novartis.

Central banks will be in the spotlight this week, with many comments and press conferences due, starting today with the opening of the European Central Bank's annual forum, which runs until Wednesday in the beautiful Portuguese town of Sintra. Christine Lagarde is due to give a speech later today, but financial analysts will be particularly interested in a round-table discussion on Wednesday afternoon between the ECB President, Jerome Powell (Fed), Andrew Bailey (BoE) and Kazuo Ueda (BoJ).

On the macro agenda, we have the German Ifo business confidence index, followed by durable goods orders and the Conference Board's US consumer confidence index tomorrow. On Thursday will come the first estimate of German inflation for June, before US PCE inflation on Friday. It's likely that investors will continue to limit their initiatives while awaiting the publication of these statistics.

On the microeconomic front, the corporate calendar is also expanding, with earnings from such big names in consumer goods as Associated British Foods, Alimentation Couche-Tard, Constellation Brands and, on a different note, Nike and Hennes & Mauritz.

Futures on all three Wall Street indexes were flat this morning, on worries that hawkish moves from central banks will takes us closer to recession.

Last week, Jerome Powell warned of more interest rate hikes ahead. Most Fed officials see at least two more quarter-point rate hikes by the end of 2023.

Investors are also keeping an eye on the situation in Russia and Ukraine after the aborted revolt by Russian mercenaries from Wagner over the weekend.

 

Economic highlights of the day:

The German Ifo business climate report will be the session's main statistic. For the full macro agenda, click here. 

The dollar is down 0.1% to EUR 0.9159 and up 0.1% to GBP 0.7870. The ounce of gold is up 0.2% to USD 1930. Oil is treading water, with North Sea Brent at USD 74.2 a barrel and US light crude WTI at USD 69.30. US debt has a 10-year yield of 3.723%. Bitcoin is trading at USD 30300.

 

In corporate news:

  • IBM is said to be close to agreement on a 5 billion of the Apptio group, which offers cloud computing cloud computing services and enterprise management software, according to the Wall Street Journal.
  • Ford - U.S. auto safety officials said Saturday they are safety officials said Saturday they are investigating Ford's recall of 710,000 SUVs between 2020 and 2022, to determine whether the measures were adequate.
  • Solarwinds said Friday that some of its executives had received a Wells Notice from the SEC, the US regulator, following massive data leaks related to the in 2020, linked to a failure of the company's software supplier. The SEC issues Wells Notices to companies when it is considering coercive measures against them. 
  • Pfizer abandons the development of an obesity and diabetes drug, as competition between as competition among US pharmaceutical companies in the segment. The stock loses 2% in pre-market trading.
  • PacWest Bancorp gained 6.2% in pre-trade after the group announced that it had sold a loan portfolio a $3.5 billion loan portfolio to private equity group private equity group Ares Management.
  • Lucid Group gained 10.2% in pre-market trading after the electric vehicle manufacturer announced that announced an agreement with luxury carmaker Aston Martin with luxury carmaker Aston Martin, securing a stake in the British in exchange for its electric motor and electric vehicle technology.
  • Virgin Galactic gains 6.7% in pre-market trading, the company announced that its first commercial space flight on June 29.

 

Analyst recommendations:

  • Alphabet A: UBS lowers its recommendation to Neutral versus Buying. The target price has been revised upwards and is now set at $132, compared with $123 previously.
  • Celanese: BMO Capital Markets downgrades to market perform from outperform. PT up 87% to $119.
  • Cranswick: RBC Capital upgrades from sector perform to outperform and targets GBp 4000.
  • Lloyds Banking Group: JP Morgan lowers its recommendation from neutral to underweight and targets GBp 42.
  • M&G: HSBC downgrades to hold from buy. PT up 11% to 210 pence.
  • The Sherwin-Williams: BMO Capital Markets upgrades to outperform from market perform. PT up 11% to $275.
  • Tesla: Goldman Sach downgrades its recommendation from buy to neutral and lowers its target from $248 to $185.