Well, it's time for the traditional half-year review. In the first half of 2023, equity markets recovered much more spectacularly than expected, after a year of sharp contraction in 2022, marked by the bursting of the speculative bubble in tech stocks fueled by free money.

To illustrate this progression, I'm going to hand out some awards:

  • The prize for greed goes to the Nasdaq 100, which posted its best ever first half-year with a gain of 38.75%. When it hits the ceiling, the Nasdaq tries to bounce back until it hits the ceiling again, and the ceiling keeps getting higher and higher.
  • The prize for the index that beats the Nasdaq 100 goes to Argentina's Merval (+110%). The problem is that inflation in Argentina averaged 105% over the first five months of the year, compared with around 5.5% in the United States.
  • The prize for best European index goes to the Greek ATHEX (+36.7%), boosted by its large contingent of financial stocks sensitive to rate hikes.
  • The prize for best Asian index went to Japan's Nikkei 225 (+27.2%). Contrary to forecasts, it was Japan that woke up and not China. In Japan, the cost of money is still at rock-bottom, as the central bank remains at odds with its Western peers.
  • Last-in-class prizes go to Finland (-8.4%), China (-6.5%), Belgium (-4.3%) and British mid-caps (-2.3% for the FTSE Mid 250).

The S&P 500 did not shine as brightly as the Nasdaq, but nonetheless posted its best first half-year since 2019, with a 15.9% gain to 4450 points. This is much better than forecasts. I looked at the summary table of the forecasts made by the major banks at the end of November 2022, and it's not pretty. On average, they saw the S&P500 at around 4,200 points on December 31, 2023. We are currently 5.6% higher. If the collective intelligence is right, the second half of the year is likely to be far less lucrative than the first. Whether this means anything remains to be seen.

This week's macroeconomic agenda includes a number of important items. Released last night, China's Caixin manufacturing PMI showed less deterioration than expected in June, helping to reinforce the day's gains in Asia. Tomorrow, Wall Street will be closed for the national holiday, while the Australian central bank will make its rate decision. The big statistic of the week is Friday's US employment figures for June.

 

Today's economic highlights:

Refined versions of the June manufacturing PMIs will be published throughout the day, especially in the eurozone and the United States, along with the ISM manufacturing. The full agenda is here. 

The dollar is worth EUR 0.9177 and GBP 0.7891. The ounce of gold is stable at USD 1912. Oil rallies, with North Sea Brent at USD 76.04 a barrel and US light crude WTI at USD 71.37. The yield on 10-year US debt reached 3.84%. Bitcoin remains in contact with USD 30,500.

 

In corporate news:

  • Tesla announced record second-quarter deliveries on Sunday, beating the Wall Street consensus. The automaker's share price gained 6.3% in pre-market trading.
  • Apple was forced to significantly reduce production forecasts for its Vision Pro augmented reality headset due to the complexity of its design, the Financial Times reported. The group lost 0.1% in pre-market trading.
  • Moderna said on Monday that it had filed an application with the European Medicines Agency for a vaccine against the XBB.1.5 variant of COVID-19.
  • Great Ajax was up 5.6% in pre-market trading, as Ellington Financial reached a definitive agreement to buy the real estate group.
  • XPeng gained 10.8% in premarket trading, as the Chinese electric vehicle manufacturer reported a 27% increase in second-quarter sales.
  • Chinese companies listed in the U.S. rise in the pre-market, as investors anticipate further support for the economy following disappointing business data.
  • Bitcoin Depot soared 90% in pre-market trading, ahead of its first day of trading following its merger with acquisition vehicle (SPAC) GSR II Meteora Acquisition on June 30.

 

Analyst recommendations:

  • Amazon.com: DBS Bank initiated coverage with a recommendation of buy. PT up 15% from last price to $150.
  • Croda: Stifel downgrades to hold from buy. PT up 3.6% to GBp 5,800.
  • EasyJet: JP Morgan retains its Neutral opinion on the stock. The target price has been revised upwards and is now set at GBp 570, compared with GBp 550 previously.
  • JD Sports Fashion: RBC remains Outperform with a target cut from 200 to 185 GBp.
  • Just Eat Takeaway: Goldman Sachs remains neutral with a price target raised from 1330 to 1359 GBp.
  • NatWest: Jefferies remains Buy with a price target reduced from GBp 420 to GBp 380.
  • Tesla: Goldman Sachs gives a Neutral rating to the stock. Previously set at USD 248, the target price has been raised to USD 275.
  • Walgreens Boots: Morgan Stanley downgrades PT to $27 from $37. Maintains underweight rating.