The acceleration of inflation in the US stunned markets last week. Investors initially got convinced that the Fed would be forced to raise rates by 100 basis points to control prices. But Fed governor Christopher Waller calmed things with more measured and optimistic statements about the situation. He said he backed a 75-bps rate increase for the next FOMC meeting, on July 27.
This helped sentiment, and the three leading Wall Street indexes posted some gains: the Dow Jones returned 0.16%, the S&P500 a little over 0.90% and the Nasdaq 1.7%. Sectoral performances were much less clear-cut than in previous weeks: defensive stocks performed rather well as health care, utilities and consumer non-cyclicals led the rally. Semiconductors also rose thanks to the good results of Taiwanese giant TSMC. On the other hand, energy, financials, and basic materials sectors were the biggest drag.
Wall Street opened in the green again today, as investors have faith that the Fed will not raise rates too aggressively. This is also due to Chinese officials at the PBOC promising more support for the economy during a speech this week-end.
Investors are awaiting a fresh batch of earnings reports from major companies. So far, results have been disappointing. On the agenda today, Bank of America, IBM, Johnson & Johnson and Goldman Sachs announce their performance for the first half of the year and give indications on their projections. Some thirty companies with capitalizations of more than $50 billion will unveil their half-year results in the next few sessions, and a few dozen for those exceeding the $100 billion mark. Nevertheless, we will have to wait a little longer to scrutinize the performance of the stars of the stock market, which can make or break indexes, such as Apple, Amazon, Microsoft or Alphabet.
Focus will also be on several central bank meetings this week. On Thursday, the European Central Bank is expected to raise interest rates by 0.25%, or perhaps even 0.5%, while The Bank of Japan is expected to keep rates unchanged.
In other news, Joe Biden's trip to Saudi Arabia to try and get the country to increase oil production has been a failure. The kingdom said that only OPEC+ (and therefore Russia) can collectively decide to increase its production, and that no single country can do it.
This couldn't come at a worse time, since Thursday is the day that maintenance is supposed to end for the Nord Stream 1 pipeline that connects Russia to Germany. The gas is supposed to start flowing again, but if it doesn't, we should brace for several choppy sessions.
Economic highlights of the day:
The NAHB real estate index is the main indicator of the day All the macro agenda here.
The dollar is trading at 0.9867. The gold ounce is worth USD 1715. Oil is rallying with North Sea Brent at USD 103.71 per barrel and US WTI light crude at USD 99.76. U.S. debt has a 10-year yield at 2.92%. Bitcoin is trading at USD 22200.
* Bank of America reported Monday a decline in second-quarter profit, due to a drop in investment banking revenue. The stock was down nearly 1% in premarket trading.
* Goldman Sachs gained 1.7 percent in premarket trading after reporting a smaller-than-expected decline in second-quarter profit.
* U.S. Oil companies were up in premarket trading as crude oil prices rose. Chevron and Exxon Mobil gained 1.86% and 1.58% respectively.
* Mining sector companies were rising in pre-market trading as industrial metals prices rose after Beijing announced support for the Chinese economy.
* Delta Air Lines announced Monday that it has ordered 100 of its 737 MAX 10 aircraft from Boeing for about $13.5 billion at list price and has placed an option for 30 more. Delta Air Lines and Boeing were up 1.8% and 3.5%, respectively, in pre-market trading.
* Twitter - Elon Musk filed a motion Friday opposing Twitter's request for an expedited trial, saying the court should reject the social network's "unjustifiable request."
* Starbucks is not engaged in a formal process to sell its U.K. business, a spokesman for the group said Saturday after the Times reported earlier that the coffee chain was exploring a potential sale.
* Alphabet was up 1.8 percent in premarket trading on the eve of its first day of trading following a 20-for-1 stock split.
* Abbott Laboratories said Friday it expects to market its EleCare baby powder produced at its Sturgis plant, which was recently reopened after being at the center of the U.S. infant milk shortage, in the coming weeks.
* Biogen - Analysts at Wells Fargo said Biogen could beat second-quarter earnings expectations in its earnings call Wednesday, thanks to strong demand for its multiple sclerosis drugs.
* Coinbase, which specializes in cryptoassets, announced on Monday that it had received the green light from Italian authorities to continue offering its services in Italy. The stock was up 6.2% in pre-market trading, buoyed further by bitcoin's rise to its highest level in a month at $22,503.
- Admiral Group: Jefferies downgrades from Hold to Underperform with a GBp 1525 price target.
- Brinker: Goldman Sachs downgrades to neutral from buy. PT up 22% to $28.
- Chesapeake Energy: Goldman Sachs reinstated coverage with a recommendation of buy. PT jumps 27% to $106.
- Comstock Resources: Goldman Sachs downgrades to sell from neutral. PT down 4.1% to $12.
- Direct Line: Jefferies downgrades from buy to hold with a price target of GBp 215.
- Fevertree Drinks: Deutsche Bank downgrades from buy to neutral with a GBp 900 price target.
- Idex: Stifel downgrades to hold from buy. PT up 0.9% to $188.
- International paper: Wells Fargo Securities downgrades to equal-weight from overweight. PT up 12% to $47.
- Janus Henderson: J.P. Morgan cut its recommendation to underweight from neutral. PT down 24% to $18.
- JPMorgan: Berenberg upgrades to hold from sell. PT up 6.2% to $120.
- Radian: Keefe, Bruyette & Woods downgrades to market perform from outperform. PT up 29% to $27.
- Rio Tinto: Morgans Financial moves from Hold to Accumulate with a price target of USD 113.
- Yum: Goldman Sachs upgrades to buy from sell. PT up 14% to $135.