Although the spotlight is still on corporate communications, which have multiplied since last night, with such heavyweights as Meta Platforms, it was the Fed that occupied investors' day yesterday. Last night, the US central bank raised rates by a quarter-point, as planned. Fed Funds are now in the 5.25% to 5.50% range.

In terms of narrative, the market experienced uncertainty due to the Federal Reserve's cautious stance. While the Federal Reserve remains patient about raising rates, it does not anticipate inflation reaching the 2% target before 2025. Furthermore, the Fed acknowledges that the US economy has withstood the impact of previous rate hikes, but there is still a long way to go before inflation returns to its target. The prevailing theory suggests that inflation is expected to decelerate, and the Fed's decisions will be data-dependent, made at each meeting based on the latest available data. Federal Reserve Chairman Jerome Powell could not provide definite guidance on the Fed's decision in September. He stated, 'It's certainly possible that we will raise the federal funds rate at the September meeting if the data warrant it, and it's also possible that we will choose to hold steady at that meeting.' Consequently, the S&P 500 experienced significant fluctuations yesterday, initially falling into the red but later moving into positive territory before closing near equilibrium.

The interest-rate drama continues today, with the European Central Bank set to announce its key interest rates. The central bet is a 25bp rate hike here too, bolstered by decelerating inflation, which is still a long way from the ECB's target. Still on the macroeconomic front, the focus this weekend is on economic indicators. Today, investors will take note of the first estimate of US GDP for the second quarter. The economist consensus is for annualized growth of 1.8%. This puts us a long way from the recession that was so feared just a few months ago.

The other highlight of the session was the staggering number of corporate results, which forced me to make lengthy lists below this column. In the US, investors are waiting for Amazon, but that will be after the close. Last night, Meta delivered better-than-expected figures. The stock was up 6% in after-hours trading, helping to revitalize technology stocks. In Europe, TotalEnergies, Nestlé, Roche, L'Oréal, Shell, Air Liquide, BNP Paribas, Kering, Volkswagen and many others publish their quarterly accounts. 

In Asia-Pacific, reactions are positive this morning. The Nikkei 225 gained 0.77% in Japan and the ASX 200 just under 0.8% in Australia. In China, the CSI300 recorded a small rise and the Hang Seng gained 1.10%. South Korea also remains buoyant, with the Kospi up 0.40%. The SENSEX lost a little ground. European leading indicators are up.

Today's economic highlights

A busy schedule for US statistics, with the first estimate of Q2 GDP, durable goods orders, and jobless claims at 8:30 am, followed by housing figures at 10:00 am. The ECB will announce its rate decision at 8:15am, before a press conference at 8:45am. For the full macro agenda, click here.

The dollar touches 0.8979 EUR and 0.7716 GBP, and the ounce of gold approaches 1980 USD. Oil regains altitude, with North Sea Brent at USD 83 a barrel and US light crude WTI at USD 79.43. The yield on 10-year US debt falls to 3.85%. Bitcoin is still trading below the USD 30000 mark.

In corporate news:

  • On Wednesday, Meta Platforms announced a sales forecast for the third quarter that exceeded expectations. Meta shares gained 7.5% in pre-market trading.
  • Netflix restructures its advertising partnership with Microsoft for its cheapest subscription packages, the Wall Street Journal reported on Thursday. Netflix was up 1.0% before the opening.
  • Lam Research forecasts third-quarter revenues of $3.4 billion, plus or minus $300 million, ahead of expectations, according to Refinitiv data. The stock rose by around 2% after the close, dragging the entire semiconductor sector with it. Intel, Broadcom, Marvell technology, Qualcomm, Advanced Micro Devices, Nvidia, Micron Technology and Applied Materials were all up between 1.2% and 3.6% before the opening.
  • Ebay announced on Thursday that it expected third-quarter earnings to fall short of consensus, as group expenses rose, sending the stock down 4.8% before the opening.
  • US regulators are expected to propose a rule later on Thursday that could significantly increase capital requirements for LARGE BANKS, forcing them to cut costs and retain profits to protect against potential losses.
  • 3M lost 0.3% before the opening, as several US states sought to revise the judgment relating to eternal pollutants, for which the company must pay $10.3 billion.
  • Western Union raised its annual earnings per share forecast from $1.65 to $1.75, compared with a previous forecast of $1.55 to $1.65 on Wednesday, after a positive second quarter, sending its shares up by around 4% after the close.
  • Xpeng - Volkswagen will partner with the Chinese electric vehicle company to build new models, it said on Wednesday, and will invest around $700 million. Xpeng's US-listed shares rose by 26.7% before the opening.
  • Raymond James Financial reported earnings of $1.85 per share on Wednesday, below consensus at $2.16 per share, according to Refinitiv.
  • Seagate Technology expects sales for the quarter to come in below expectations at $1.55 billion, plus or minus $150 million, compared with $1.74 billion anticipated by analysts, according to data from Refinitiv.
  • Teradyne was up 1.8% on Wednesday after the close, with its third-quarter sales forecast of $650 to $710 million above the consensus of $671.5 million, according to Refinitiv.
  • Royal Caribbean was up 1.1% in pre-market trading, ahead of the publication of its second-quarter results.
  • Mattel posted a strong performance in July following the "Barbie" movie, and posted a surprise profit in the second quarter. However, the share price fell by 1.8% after the close, as the company noted that consumers were postponing their purchases.
  • PTC expects fourth-quarter sales of between $540 and $570 million, below analysts' estimates of $572.9 million.
  • On Wednesday, O'Reilly Automotive appointed a successor to its current CEO and raised its annual earnings and sales forecasts. The share price nevertheless fell by 2.7% in pre-market trading.
  • Chipotle Mexican Grill posted sales below Wall Street expectations on Wednesday, sending the company's shares down nearly 9% in after-hours trading.
  • Edwards Lifesciences raised its annual earnings forecast on Wednesday, but reported slower sales growth for its artificial heart valve division.
  • Results from Intel, McDonald's, Mastercard, Ford Motor and T-Mobile US are expected on Thursday.
  • Virtu Financial - JP Morgan lowers its recommendation from "outperform" to "neutral".

Analyst recommendations:

  • Boeing: BofA Global Research raised the recommendation to buy from neutral. PT set to $300.
  • Conmed: Piper Sandler maintains overweight rating. Price target upgrades to $145 from $128.
  • Fiserv: Susquehanna Financial raised the target  to $170 from $140. Maintains positive rating.
  • Lam Research: Susquehanna Financial maintains neutral rating. PT up to $615 from $540.
  • Old Dominion Freight Line: Cowen maintains market perform rating. PT up to $408 from $317.
  • Popular: Hovde Group raised the target to $92 from $83. Maintains outperform rating.
  • PTC: KeyBanc Capital Markets upgrades the target to $177 from $160.
  • Raytheon Technologies: BofA Global Research cut the recommendation to neutral from buy. PT up 10% to $95. 
  • TE Connectivity: Truist Securities raises the price target to $147 from $127. Maintains hold rating.
  • Union Pacific: Cowen raises the price target to $240 from $210. Maintains outperform rating.
  • Weatherford International: Piper Sandler raised the recommendation to $116 from $101. Maintains overweight rating.