The stock markets are currently in the middle of the second-quarter earnings releases, specifically in the USA. Just over half of the 500 companies in the S&P500 have already reported their figures. The results are not a big shock; earnings have decreased due to the steady economy, but they generally exceed expectations. Major listed companies tend to guide analysts subtly to publish results slightly above the expected figures, which is a common practice mentioned in these columns.

As we await corporate results, the focus is on the macroeconomy at the start of the week. Chinese PMI activity indicators were released last night, showing mixed results. The manufacturing index is slightly higher than expected but still in contraction territory, while the services index is in the expansion zone but below forecasts. This creates uncertainty in China's economy. However, investors are optimistic, believing that Beijing will implement stimulus measures due to the challenging situation. According to state media, plans for supporting consumer industries and financing SMEs through a stock market are in progress. As a result, Chinese indices are off to a positive start this week.

On the macro front, European inflation estimates for July are expected to show a further decline. Recently, both the Fed and ECB raised their rates by a quarter-point. Now, it's anticipated that the Bank of Australia and the Bank of England will follow suit, with rate hikes expected tomorrow and Thursday, respectively.

News to get the week off to a good start:

In the Asia-Pacific markets, the Nikkei 225 has recorded seven consecutive months of positive growth, with a 1% rise in the final session of July. This means that the Japanese market has seen only positive months in 2023. Australia's ASX 200 performed even better with a 2.7% increase in July, though it has experienced fluctuations throughout the year.
 
As for other main markets in the region, Bombay, Seoul, Shanghai, and Hong Kong were all in the green during the last session of July. However, in Europe, leading indicators suggest a bearish opening. The CAC40 lost 0.1% to 7466 points at the opening, while the SMI remained flat at 11314 points.

Economic highlights of the day

In the US, the Chicago PMI will be published at 9:45am. The first estimate of July inflation in the eurozone has been announced this morning. Full agenda here.

The dollar is trading at 0.9071 EUR and 0.7786 GBP. The ounce of gold is trading at 1964 USD. Oil gains some ground, with North Sea Brent at 85.25 USD a barrel and US light crude WTI at 81.38 USD. The yield on 10-year US debt reaches 3.99%. Bitcoin is trading at 29,400 USD.

In corporate news:

  • Holding company Loews Corporation reported net income of $360 million, or $1.58 per share, in the second quarter of 2023, compared with $167 million, or 0.68 cents per share, a year earlier. The year-on-year increase in net income was due to higher net income from its consolidated subsidiaries and higher net investment income from the parent company. In this quarter, its CNA subsidiary, which specializes in property insurance, posted attributable net income of $255 million, up from $170 million.
  • American carmaker Tesla plans to reduce the prices of several of its Model 3 and Model Y vehicles in Hong Kong by between 6% and 11.9% from August 4, the Hong Kong Economic Times reported on Monday. In its second-quarter results, Tesla reported a gross margin that fell to a four-year low, while its boss Elon Musk announced that he would continue the price war with rivals.
  • Walmart, the US supermarket giant, has paid $1.4 billion to buy hedge fund Tiger Global's stake in its Indian e-commerce company Flipkart and has also acquired Accel's remaining 1% stake in the group, Wall Street reported. The acquisition of Tiger Global's and Accel's shares gives Walmart around 77% of Flipkart, up from 72% previously.

Analyst recommendations:

  • Booking Holdings: Melius Research LLC initiated coverage with a recommendation of buy. PT set to $3,500.
  • Comcast: Rosenblatt Securities raised the target to $43 from $39. Maintains neutral rating.
  • Expedia Group: Melius Research LLC initiated coverage with a recommendation of hold. PT up 12% to $135.
  • Marriott International: Melius Research starts with a recommendation of buy. Price target set to $230.
  • MDC Holdings: Wedbush maintains neutral rating. Price target increases to  $51 from $28. 
  • Meritage Homes: UBS raised the target to $188 from $155. Maintains buy rating.
  • Polaris: UBS maintains neutral rating. Price target upgrades to $137 from $122.
  • Saia: UBS maintains buy rating. PT up to  $500 from $360
  • SouthState: Truist Securities raised the target to $86 from $74. Maintains buy rating.
  • Sun Communities: UBS cut the target to $152 from $168. Maintains buy rating.