Wall Street, which has been a little off since the beginning of the year, has regained leadership since June, to the point of reaching a triple record for all New York indexes on Friday evening at the close. The second half of July is traditionally intense as companies publish their half-yearly results in a very concentrated period. US banks traditionally take the brunt of this, along with a few other groups. Here is what it looks like this week, focusing on capitalizations of over $50 billion: JPMorgan Chase, PepsiCo and Goldman Sachs on Tuesday, Bank of America, Wells Fargo and Citigroup on Wednesday, UnitedHealth and Morgan Stanley on Thursday, Honeywell, Rio Tinto and Compagnie Financière Richemont on Friday.

The G20 Finance Ministers and Central Banks, meeting in Venice, made progress in approving the proposed 15% minimum tax worldwide, endorsed by 132 countries. Now the signatories have to get the commitment into their national laws, which will probably be a long and complicated process in some countries, led by the US. The US Treasury Secretary, Janet Yellen, is well aware of this. At the same time, she called on Europe to abandon its plans specifically targeting large American digital companies, believing that the global tax addresses this issue.

On the central bank side, the ECB is in the spotlight today. In an interview with Bloomberg, Christine Lagarde teased that the ECB is likely to change the next steps of its monetary policy at its meeting on July 22. The president of the institution did not say much more, except that the emergency repurchase program decided to counter the pandemic could "move to a new format" in March 2022, which is the earliest date that had been scheduled for a change. But since the ECB has made a habit of letting its liquidity infusion tools run in recent years, the announcement could matter. When you consider that every statement is weighed and reweighed, you can sense that this interview is not a trivial one, and is intended to pave the way for not taking the markets by surprise in ten days. Last week, the ECB had already, without much surprise this time, shifted its inflation target.

Meanwhile, two important statistics will be closely watched in the coming days: US inflation for June, to be published on Tuesday, and Chinese GDP for the second quarter, expected on Thursday. The acceleration in US consumer prices has probably passed its peak, especially since part of the surge was due to used cars. However, this market was less overheated in June, which should help mitigate the rise in the average basket. Other prices may have taken over, particularly in leisure. This is what economists will be watching closely to distribute the points in favor of those who think inflation is transitory and those who counter that it is sustainable. As for China's GDP, experts fear a nasty surprise after the Chinese central bank's unexpected decision to reduce the minimum reserve ratio for financial institutions. The PBOC suggests that the economy needs more financing. The consensus is for an 8% annual increase in Chinese GDP. Finally, the infrastructure plan in the US could also be discussed. The Democrats would like to pass it before the end of the legislature in July, otherwise its vote could be postponed until the fall. But the Republicans are watching to slow down the process.

 

Economic highlights of the day:

There will be no major indicators today. Overnight, Japan announced a sharp increase in machine tool orders in June, above projections. Japanese producer prices also exceeded expectations.

The dollar is trading at EUR 0.8437. Gold is trading at USD 1803 per ounce. In the oil market, Brent crude oil is trading at USD 74.60 per barrel and WTI at USD 73.60 per barrel, both down slightly. US debt is yielding 1.35% over 10 years and 0.21% over two years. Bitcoin is trading around USD 33,500.

 

On markets :

* Virgin Galactic gained more than 9% in pre-market trading after the successful completion of the first manned space flight by one of the group's aircraft on Sunday.

* Walmart - Indian online retailer Flipkart, in which Walmart is a shareholder, announced Monday a new $3.6 billion (€3.04 billion) capital raise that values it at $37.6 billion.

* The Boeing Company - Air France-KLM has launched a tender to renew and develop the medium-haul fleets of its Dutch branch KLM and its low-cost subsidiary Transavia. The daily Het Financieele Dagblad, quoting group CEO Ben Smith, had earlier reported that the group had contacted Airbus and Boeing with a view to ordering 160 aircraft.

* Amazon - Disruptions affected the group's websites in several countries for several hours on Sunday and Monday.

* Didi Global - The Chinese VTC group confirmed Monday that the Beijing authorities had ordered the withdrawal of 25 of its applications from the application stores, saying that this decision could affect its revenue in China. The stock lost 4.4% in pre-market trading.

* Tencent Music Entertainment - The online music group's stock is down 2% in premarket trading after Reuters reports that Chinese antitrust authorities may order it to give up exclusive rights to certain labels.

* Nio - The share of the Chinese manufacturer of electric cars, which has just had six sessions of decline, gained 1.6% in pre-trade after the announcement of the appointment of a new independent director.

 

Analyst recommendations:

  • AstraZeneca: Jefferies advises its customers to buy the stock. The target price is being increased from GBp 8850 to GBp 9950.
  • AO World: Jefferies upgrades from hold to buy, targeting GBp 400.
  • Diageo: Barclays maintains its Buy rating. The target price is now set at GBp 3940 versus GBp 3850.
  • Easyjet: JP Morgan retains his Neutral opinion on the stock. The target price continues to be set at GBp 845.
  • Hays: RBC upgrades from sector perform to outperform, targeting GBP 195.
  • International Consolidated Airlines Group: JP Morgan research considers the stock attractive and recommends it with a Buy rating.
  • NatWest: Berenberg remains Buy with target price raised to GBP 240 from GBP 230.
  • PageGroup: RBC upgrades from Market Perform to Outperform with a target of GBP 700.
  • Reinsurance Group: J.P. Morgan upgrades to overweight from neutral. PT set to $138, a 22% increase from last price.
  • Ryanair: JP Morgan maintained its recommendation on the stock with a Neutral rating. The target price is increased from EUR 15.80 to EUR 16.40.
  • Victrex: Berenberg remains a Hold with a price target raised from GBp 2,500 to 2,600.