Wall Street stock index futures sharply extended gains after the US CPI showed that inflation cooled for a 12th consecutive month in June, especially grocery prices. Consumer prices gained 3% from a year earlier, down from 4% in May, according to the Labor Department. On a monthly basis, prices advanced 0.2%, which is lower than the 0.3% expected in a Bloomberg consensus.

The core CPI, which exclude volatile food and energy items, was also lower than expected. It advanced by 0.2% mom, vs 0.3% expected. The annual increase is 4.8%, the lowest since October 2021.

This marks a major slowdown compared with May, and a continuation of the downturn initiated several months ago. Investors are keen to see a slowdown in price overheating because they assume, and rightly so, that it will make the Fed's monetary policy less punitive.

Equity markets got off to a flying start this week, gradually erasing losses from last week, after another economic stimulus in China.

Yesterday, Microsoft managed to turn the tables in its quest to buy Activision. The American antitrust authorities had asked the courts to block the deal, ruling that it would harm competition by making one of the world's biggest video game publishers captive to the software giant and owner of the Xbox console. But a California judge refused to go along, ruling that the FTC had failed to demonstrate that a threat existed. The regulator may appeal. But in the meantime, its British counterpart has suspended its own legal action against the transaction, suggesting that the scales are now clearly tipping in Microsoft's favor, whereas the case was rather badly off the mark. Broadcom's takeover of VMware, another major U.S.-American deal, is likely to receive EU approval, once the proposed concessions have been validated. VMware is worth $65 billion, Activision $71.5 billion. And while we're on the subject of consolidation in the tech sector, Nvidia is still trying to get its hands on Arm. The Californian's takeover of the British chip designer was blocked by the antitrust authorities last year, but the Financial Times understands that Nvidia will ask to be one of the reference minority shareholders in Arm's IPO, currently being organized by its owner Softbank. This would be in the same capital proportions as the sums previously stated: Nvidia had offered $66 billion to buy this strategic semiconductor player. In the context of the IPO, rumors range from simple to double for the valuation: $40 to $80 billion. In addition to their size, the three deals I've just mentioned have in common the fact that they reinforce the hegemony of the major American players in the tech sector.


Economic highlights of the day:

The dollar is down to EUR 0.9038 and GBP 0.7714. The ounce of gold is up to USD 1946. Oil is up, with North Sea Brent at USD 79.91 a barrel and WTI US light crude at USD 75.33. The yield on 10-year US debt climbed to 4.07%. Bitcoin is trading at around USD 30,700.


In corporate news:

  • NVidia is in talks with Arm, owned by SoftBank, to become an investor in the chipmaker's Wall Street IPO in September, the Financial Times reported on Wednesday.
  • Walt Disney is exploring options to sell or find a partner to create a joint venture for its digital and TV business in India, a source familiar with the matter said on Wednesday.
  • On Wednesday, the European Commission authorized Broadcom’s proposed acquisition of VMWare, subject to commitments offered by the latter, notably with regard to competitor Marvell Technology.
  • Domino's Pizza announced on Wednesday that it had signed a new agreement with Uber, enabling its U.S. customers to order pizzas on the Uber Eats and Postmates applications.
  • Coty - Kim Kardashian is in talks with Coty to buy a minority stake in its beauty brand, according to the Wall Street Journal, citing people close to the matter.
  • Illumina, a genetic testing company, was fined 432 million euros by the European Commission on Wednesday for carrying out a merger project with GRAIL (1,000 euro fine) before it was approved by the Commission, in violation of EU rules.
  • IBM plans to use in-house-designed artificial intelligence chips to reduce the operating costs of its cloud computing service, a company executive said on Tuesday.


Analyst recommendations:

  • Activision Blizzard: Stifel downgrades to hold from buy. PT up 4.4% to $95.
  • AstraZeneca: UBS upgrades from Neutral to Buy. The target price is revised upwards from GBp 13000 to GBp 12500.
  • Citigroup: Societe Generale downgrades Citigroup to Hold from Buy, adjusts PT to $50 from $67
  • Integra LifeSciences: Jefferies upgrades to buy from hold. PT up 28% to $53.
  • international Consolidated Airlines: Deutsche Bank downgrades to Neutral. Previously set at GBp 200, the target price is lowered to GBp 165.
  • Jack Henry: Goldman Sachs initiated coverage with a recommendation of neutral. PT up 5% to $173.
  • Jefferies: Morgan Stanley upgrades to equal-weight from underweight. PT up 7.1% to $36.
  • Lazard: Morgan Stanley upgrades to overweight from equal-weight. PT up 31% to $43.
  • Marsh & McLennan: Baptista Research  initiated coverage with a recommendation of hold. PT set to $199.
  • Microsoft: Guotai Junan Securities initiated coverage with a recommendation of overweight. PT set to $384.80.
  • Model N: Jefferies initiated coverage with a recommendation of hold. PT set to $40.
  • Sealed Air: Baird upgrades to outperform from neutral. PT up 14% to $49.