On the first point, yesterday's PMI services indicator highlighted that the sector's momentum is slowing in China. With the manufacturing sector even less buoyant, the story of the return of the Chinese engine of growth has been derailed yet again. The local authorities don't seem ready to embark on the massive support plan that investors are dreaming of, especially as deglobalization squabbles continue. Yesterday, as expected, Beijing restricted exports of two strategic metals for modern uses ranging from technology to energy and mobility. Xi Jinping may be advocating for an end to the economic decoupling between his country and the West, but he also knows that he has to flex his muscles in the balance of power that is taking shape. It is against this backdrop that Janet Yellen, the US Treasury Secretary, meets the Chinese President today. The aim is, at the very least, to restore dialogue between the two powers. The balance of power increasingly becomes "if you want my natural resources, give me your technology".

On the monetary policy front, last night's publication of the minutes of the Fed's latest meeting gave financial analysts the opportunity to fine-tune their forecasts. The document shows that “almost all” members of the central bank's Monetary Policy Committee were in favor of a rate pause in June, which means they a little more divided than expected on the course of action to take. And that pause was to buy time to assess further rate hikes. It may be a minor detail, but the bond market nevertheless became tense, with the US 10-year yield rising from 3.84 to 3.95% at the time of the announcement. This is its highest level since last March. The bet on a July rate hike was therefore reinforced, but had already been largely taken on board by the market. On the other hand, the content of the Fed's minutes reinforced the feeling that the "pivot", i.e. the moment when monetary policy will reach the tipping point to drive rates down again, has moved further away.

Especially because the job market remains tight, and today’s employment figures just confirmed the trend.  According to a report from employment firm Challenger, Gray & Christmas, U.S. employers said they were cutting 40,709 jobs in June, down 49% from the number of cuts announced in May. US weekly jobless claims were in line with expectations last week at 248,000, while the ADP report shows the country added 497,000 jobs last month.

Economic highlights of the day:

Along with German factory orders and eurozone retail sales, we have a major series of indicators in the United States, including employment data (Challenger, ADP and JOLTS surveys and weekly jobless claims) and services activity (PMI, ISM). The full agenda is here. 

The dollar is slightly down to EUR 0.9203 and GBP 0.7853. The ounce of gold is also down, to USD 1903. Oil consolidates yesterday's gains, with Brent North Sea crude at USD 76.11 a barrel and WTI US light crude at USD 71.30. The yield on 10-year US debt rises to 3.95%. Bitcoin is trading at around USD 30,500.

In corporate news:

  • Meta Platforms gained 1.7% in pre-market trading the day after the launch of Threads, an application designed to compete with Twitter, which the company claims has already attracted 10 million subscribers.
  • Exxon Mobil, which will publish its results on July 28, is expected to post a sharp fall in second-quarter operating profit due to lower natural gas prices and reduced margins in oil refining, according to a regulatory notice. The share price was down 0.9% in pre-market trading.
  • JetBlue Airways lost 1.2% in pre-market trading, as the low-cost carrier announced its intention to terminate its alliance with American Airlines, which would give up 1.12%, to save its planned merger with Spirit Airlines, up 2.04%.
  • Coty was up 2.1% after raising its annual operating profit forecast to $965 million-$970 million from $955 million-$965 million previously.

Analyst recommendations:

  • Barclays: Morgan Stanley maintains in-line recommendation with a price target reduced from 210 to 190 GBp.
  • Eagle Materials: J.P. Morgan downgrades to underweight from neutral. PT up 3.2% to $190.
  • Eli Lilly: CICC initiated coverage with a recommendation of market perform. PT up 1.8% to $474.31.
  • HubSpot: Piper Sandler downgrades to neutral from overweight. PT down 0.2% to $520.
  • Martin Marietta: J.P. Morgan downgrades to neutral from overweight. PT up 4.6% to $470.
  • Meta Platforms: KeyBanc Capital Markets raises price target to $335 from $280. Maintains overweight rating.
  • Mondi: J.P. Morgan upgrades from neutral to overweight, targeting GBp 1355.
  • NatWest: Morgan Stanley remains Overweight with a price target reduced from 350 to 320 GBp.
  • Neurocrine Bio: BMO Capital Markets upgrades to market perform from underperform. PT up 1.5% to $96.
  • Ocado: Morgan Stanley remains Underweight with a price target reduced from 430 to 390 GBp.
  • Reckitt: HSBC remains Buy with a price target reduced from 7900 to 7600 GBp.
  • Smurfit Kappa: Morgan Stanley maintains in-line recommendation with a price target reduced from 3500 to 3200 GBp.
  • Textron: Citi reinstated coverage with a recommendation of buy. PT set to $90 - a 34% increase from last price.
  • TransDigm: Citi initiated coverage with a recommendation of buy. PT set to $1,042.