More contagious, a little more resistant to vaccines, the Delta variant of the coronavirus is turning the summer scenario upside down. The arrival of good weather and vaccination were supposed to rid us of Covid-19, at least until the end of August. But the virus doesn't follow the projections of a return to normal by the second half of 2021. Borders that were supposed to reopen widely are still partly closed, the rush of tourists is thwarted, and the Tokyo Olympics are looking grim.
All this to say that investors woke up yesterday in a bad mood, thinking that the nice growth expected for the coming quarters might be a bit less vigorous than expected. To be honest, this idea had been hanging around the market for a few weeks - after all, the peaks in macroeconomic indicators are behind us - but the persistence if the pandemic has given weight to this idea. This is not to say that global growth is at risk, just that there are still headwinds and we shouldn't forget about them. It is also a very good reminder, not the first one by the way, that complacency does not work with Covid-19.
Yesterday, reflation trade, i.e. the appetite of investors for ultra-cyclical stocks and financials, took a hit. For the rest, it was a bit of a mess, which is quite characteristic of these sharp and brutal correction sessions. Quite logically, healthcare came out on top, with healthcare providers rather than major laboratories.
Meanwhile, it’s a tough time for Chinese companies. The United States is not letting its guard down with the probable addition tonight of a dozen companies to its blacklist, for having taken advantage of the forced labor of Uyghurs. Meanwhile, China maintains a crazy pressure on its digital champions by severely punishing those who step out of line and by placing under reinforced surveillance the candidates for expatriation to the United States. At the same time, the government wants to clean up the finances of large conglomerates to avoid systemic failures. The Bloomberg agency revealed today that Beijing has intimated to the boss of the giant Evergrande to quickly find a solution to the problems of indebtedness of his group. Chinese stock markets have recorded the worst performance of all major stock markets since January 1.
Economic highlights of the day
To close the week, the monthly British GDP, the French production for May, and the US wholesale inventories for May are on the agenda.
The dollar is down slightly to EUR 0.8433. The ounce of gold is regaining followers and reaches USD 1802. Oil remains under slight pressure after its early week peaks, with Brent slightly above USD 74.6 and WTI flirting with USD 73.6 U.S. debt is paying 1.33% over 10 years. Bitcoin is trading at around USD 33,000.
* Oil groups are up in pre-market trading as oil prices recovered after the EIA reported a sharp decline in U.S. crude inventories last week.
* US banks are up as bond yields rise. U.S. President Joe Biden will also sign an executive order on Friday targeting mergers in the banking and financial data sector in an effort to promote greater competition, according to a source close to the matter.
* Philip Morris International - The Marlboro cigarette maker announced Friday that it is buying British pharmaceutical group Vectura for 1.05 billion pounds in a deal designed to strengthen its portfolio of tobacco and nicotine-free products.
* Pfizer - The pharmaceutical giant will offer U.S. regulators a third dose of its COVID-19 vaccine within the next month, chief scientific officer Mikael Dolsten said Thursday night, due to a decline in the vaccine's protection six months after the first two doses and the spread of the more contagious Delta variant of the coronavirus.
* Levi Strauss & Co on Thursday night forecast a solid full-year profit after a quarterly result well above estimates on the back of a faster-than-expected rebound in demand in its markets. The jeans maker's stock is up 3.3% in premarket trading.
* Didi - The Chinese VTC giant is back on track for the first time in five days with a rise of about 4.5% in pre-market trading. Like other Chinese companies listed on Wall Street, Didi had suffered from the announcement by Beijing of a strengthening of the surveillance of these companies.
- American Tower Corporation (REIT) : Deutsche Bank adjusts pt to $295 from $250, maintains hold rating
- Alexander & Baldwin : Sidoti & Co reinstates buy rating, $24 price target
- Baidu : KGI Securities initiates coverage with neutral rating, $210 price target
- Bilibili : KGI Securities initiates coverage with outperform rating, $125 price target
- Bunzl: Berenberg upgrades from hold to buy with a target of GBp 2,750.
- Canopy Growth : Piper Sandler cuts pt to us$24, keeps neutral rating
- Ferguson: Berenberg remains a hold with a target price raised from GBp 9200 to GBp 9500.
- General Motors : Wedbush initiates coverage with outperform rating, $85 price target
- John Wood: Jefferies remains Underperform with a price target reduced from GBP 230 to GBP 150.
- Laredo Petroleum : Siebert Williams Shank downgrades to hold rating to buy, keeps price target at $66
- Microsoft : KGI Securities adjusts pt to $345 from $300, maintains outperform rating
- Petrofac: Jefferies remains at Hold with a price target reduced from GBp 170 to GBp 140.
- Raytheon Technologies : Cowen raises price target to $95 from $88, maintains outperform rating
- Reckitt Benckiser: RBC keeps Neutral rating. The target price is reduced from GBp 6800 to GBp 6500.
- Ricardo: Jefferies resumes its Buy rating with a target of GBP 530.
- Rio Tinto: Goldman Sachs maintains his Neutral opinion on the stock. The target price is unchanged at GBp 5920.
- Rolls-Royce: Kepler Cheuvreux upgraded from neutral to buy with a target of GBP 130.
- State Street : Wolfe Research upgrades to peer perform rating from underperform, sets $91 price target
- Synthomer: Jefferies remains Buy with a price target reduced from GBp 655 to GBp 650.
- Watches of Switzerland: Jefferies remains Buy with a price target raised from GBp 800 to GBp 990.