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OFFON

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.

Markets take a breather after the purge

09/30/2021 | 10:08am EST
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After a big purge session on Tuesday, stock markets rebounded yesterday in the United States, even if technology stocks largely cut into index gains. Even the Nasdaq, which recorded its third consecutive session of decline, was more than cut off. Believe it or not, the mood is for a continued rebound today, despite shortages, inflation, the energy crisis and the Democrats' worries.

In finance, some things are completely unpredictable, and some things are a foregone conclusion. It doesn't take a particularly good fortune teller to anticipate bad macroeconomic figures in China in September, as the country has been in the spotlight of negative news, both in terms of energy shortages that have affected activity and the Evergrande financial scandal. As a result, industry performed poorly in September, as reflected in the PMI indicators released last night. The manufacturing component of this closely watched index fell below 50 points, reflecting an economic contraction. The good news is that the market was expecting this. The other good news is that the services component came out surprisingly strong.

Apparently, Chinese authorities are willing to cut their energy champions a little slack to meet demand. If Bloomberg's explanation is correct, China's coal supply shortage is believed to be rooted in a law passed last March that tightened regulations in the sector to prevent mining accidents, which were on the rise at the time. This law has pushed company managers to limit production accelerations, leading to the current imbalance. Coal is now so expensive in China that most power plants are operating at a loss, according to the financial agency. This Chinese energy crisis is having a butterfly effect, causing shockwaves everywhere and adding to the confusion about the disruption of supply chains.

In the UK, for example, soaring energy prices forced three small energy suppliers into bankruptcy yesterday, bringing the number of bankruptcies in the sector to ten in two weeks.

The United States is somewhat less affected by this energy crisis. And it has other things to worry about. The White House is in a delicate position with its promises of investment plans. Its majority is too slim and too fragile on Capitol Hill to hope for a free hand, so it must seek a bipartisan agreement. Both on the infrastructure plan, which provides for an envelope of over $1,000 billion, and on the $3,500 billion social project. The first seemed to be a foregone conclusion, especially since it has been severely cut back from the initial ambitions, but nothing is clear anymore. As for the second, it seems almost certain that it is stillborn as it stands, at least in this proportion. The Republicans hold the cards since their support is essential to push back the debt ceiling, without which the US Treasury is no longer allowed to refinance. Call it what you will, blackmail or negotiation: in any case, the Democrats will be forced to compromise. Joe Biden has lost the initiative as well as his standing in the polls. And he faces dissension within his own party. His grace period is well and truly over and this will not be without economic consequences in the United States.

 

Economic highlights of the day:

British Quarterly GDP, French September inflation and German and European employment figures precede German September inflation. In the US, weekly jobless claims and quarterly GDP come along the Chicago PMI. This morning, Japan released poor monthly production and consumption figures. In China, the September manufacturing PMI entered the contraction zone (49.6 points) according to the official reading and is just shy of 50 points according to the Caixin marker. On the other hand, the services PMI was much stronger than expected (53.2 points).

The dollar is up to USD 0.8625. Gold falls to USD 1,738 per ounce. Oil is down to USD 76.68 per barrel of Brent and USD 73.30 per barrel of WTI. Ten-year rates are easing slightly to 1.52% for the T-Bond and -0.21% for the Bund. Bitcoin is recovering 5% to USD 43,000.

 

On markets:

* Merck & Co announced Thursday that it will buy Acceleron Pharma for $11.5 billion, an acquisition that is expected to strengthen its portfolio of rare disease treatments.

* Perrigo - The pharmaceutical company gained 14.5% in pre-market trading after announcing an out-of-court settlement with the Irish tax authorities over a dispute dating back to 2018 that calls for a payment of €1.64 billion.

* Virgin Galactic jumped 10% in pre-market trading after announcing that it had obtained the green light from the U.S. federal authorities to resume its flights.

* Facebook - Russia could fine the social network up to 10 percent of its annual revenue in the country for what it considers repeated failures to remove illegal content, the daily Vedomosti reported Thursday.

* Olaplex Holdings - The hair care brand is set to debut on the Nasdaq on Thursday after setting its IPO price at $21 per share, valuing it at $13.6 billion.

* Lordstown - The electric-car maker's stock was up 6.9 percent in pre-market trading after Bloomberg News reported that the company is preparing to sell a factory to Foxconn Technology.

* Apollo Global Management - The private equity group announced that a group of funds will buy part of Mitsubishi Chemical's business for 85 billion yen

 

Analyst recommendations:

  • Barclays: Jefferies remains at Buy with a target price raised from GBP 300 to 315.
  • Comcast : Pivotal adjusts pt to street high of $75 from $72, maintains buy rating
  • Comerica Incorporated: Wedbush raises price target to $88 from $82, maintains outperform rating
  • Concentrix : Barrington lifts price target to $202 from $182, maintains outperform rating
  • Electrocomponents: Jefferies remains at Buy with a price target raised from GBp1230 to GBp1250.
  • GFL Environmental: National Bank adjusts pt to ca$50 from ca$46, maintains outperform rating
  • Ferguson: Jefferies remains Buy with a price target raised from GBp 11,560 to GBp 12,067.
  • Fifth Third Bancorp: Wedbush raises price target to $50 from $43, maintains outperform rating
  • First Republic Bank: Wedbush adjusts pt to $230 from $225, maintains outperform rating
  • Jabil: Stifel raised its recommendation to buy from hold. PT up 19% to $68
  • M&T Bank: Wedbush raises price target to $169 from $158, maintains neutral rating
  • Nabors: ATB Capital upgrades to outperform from underperform. PT rises 43% to $136
  • Netflix : Benchmark raises price target to $493 from $448, maintains sell rating
  • Papa John's International: Wedbush raises price target to $140 from $130, maintains outperform rating
  • Public Service Enterprise Group:  Vertical Research Partners upgrades to buy from hold. PT up 13% to $69
  • S&P Global: Morgan Stanley lowers price target to $483 from $498, maintains overweight rating
  • SVB Financial : Wedbush adjusts svb financial pt to $775 from $700, maintains outperform rating
  • Starbucks: Atlantic Equities cut its recommendation to neutral from overweight. PT down 6.4% to $105
  • Thor Industries: Wedbush adjusts pt to $140 from $126, maintains neutral rating
  • Trainline: Berenberg remains at Buy with a price target raised from GBP 350 to GBP 440.

ę MarketScreener.com 2021
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Stocks mentioned in the article
ChangeLast1st jan.
ACCELERON PHARMA INC. -0.52% 178.75 Delayed Quote.39.71%
APOLLO GLOBAL MANAGEMENT, INC. -3.50% 70.78 Delayed Quote.44.51%
BARCLAYS PLC 2.94% 189.58 Delayed Quote.25.59%
BELIEVE 0.76% 17.834 Real-time Quote.0.00%
COMCAST CORPORATION -3.01% 49.98 Delayed Quote.-4.62%
COMERICA INCORPORATED -3.27% 82.53 Delayed Quote.47.74%
CONCENTRIX CORPORATION -4.32% 166 Delayed Quote.68.19%
ELECTROCOMPONENTS PLC 0.83% 1219 Delayed Quote.38.77%
EVERGRANDE PROPERTY SERVICES GROUP LIMITED -1.29% 3.82 End-of-day quote.-57.27%
FACEBOOK INC -4.01% 324.46 Delayed Quote.18.78%
FERGUSON PLC 2.44% 11745 Delayed Quote.29.05%
FIFTH THIRD BANCORP -1.95% 42.15 Delayed Quote.52.88%
FIRST REPUBLIC BANK -2.23% 209.66 Delayed Quote.42.69%
GFL ENVIRONMENTAL INC. -3.81% 49.23 Delayed Quote.32.66%
JABIL INC. -4.05% 58.46 Delayed Quote.37.46%
LORDSTOWN MOTORS CORP. -1.68% 4.68 Delayed Quote.-76.67%
M&T BANK CORPORATION -3.65% 146.61 Delayed Quote.15.17%
MERCK & CO., INC. 0.03% 74.91 Delayed Quote.-8.42%
NABORS INDUSTRIES LTD. -6.63% 81.46 Delayed Quote.39.89%
NETFLIX, INC. -3.31% 641.9 Delayed Quote.18.71%
OLAPLEX HOLDINGS, INC. 0.75% 26.95 Delayed Quote.0.00%
PAPA JOHN'S INTERNATIONAL, INC. -3.40% 121.92 Delayed Quote.43.69%
PERRIGO COMPANY PLC -2.05% 36.71 Delayed Quote.-17.91%
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED -2.74% 62.49 Delayed Quote.7.19%
S&P GLOBAL INC. -1.98% 455.73 Delayed Quote.38.63%
STARBUCKS CORPORATION -0.98% 109.64 Delayed Quote.2.49%
SVB FINANCIAL GROUP -4.44% 692.33 Delayed Quote.78.51%
THOR INDUSTRIES, INC. 0.24% 105.71 Delayed Quote.13.41%
TRAINLINE PLC 2.64% 279.8 Delayed Quote.-41.25%
VIRGIN GALACTIC HOLDINGS, INC. -1.54% 16 Delayed Quote.-32.57%