The services ISM fell much less than expected in June. In the Eurozone, on the other hand, investor confidence and retail sales are disappointing.
Economy
The statistics published in the United States have somewhat reassured. Indeed, if the ISM for services fell from 55.9 to 55.3 in June, this fall is modest and above all much less sharp than expected. In addition, job creations in June (+372,000) turned out to be much higher than expected, reducing fears of recession in the short term. In the euro zone, investor confidence (Sentix) fell in July, from -15.8 to -26.4, more than expected, and retail sales rose less than expected in May (+0.2% m /m). In China, the services PMI (Caixin) rebounded strongly in June, from 41.4 to 54.5. Lastly, consumer price growth accelerated in June (from +2.1% to 2.5% y/y), but remained under control.
Climate
The Global Wind Energy Council (GWEC) expects a new phase of significant growth in off-shore wind power and has revised its capacity installation projections by 17% up to 2030. The GWEC now expects 260 GW of new off-shore capacity between 2022 and 2030, bringing installed capacity to c. 370 GW on this horizon.
Obligations
In the US, the good figures for activity (PMI) and employment have reduced fears of recession. Yields resumed their upward trajectory, with the 10-year rising 20bp. The June inflation statistics published on Wednesday should dictate the trend for the coming weeks. In Europe, the movement was less significant (10-year Bund +7bp) due to fears over Russian gas supplies. This trend is similar in credit with a rebound in HY indices and sharply tightening spreads in the US (-50bp) but to a lesser extent in Europe (-12bp).
Trader Sentiment
Sotck exchange
The rebound of the past week is stopped dead, the markets open lower. Tomorrow we will have the first important quarterly results with Pepsi, Delta, the American banks and IBM. On the macro side, all eyes will be on the publication of the CPI, but also retail sales and industrial production in the US, for Europe, we will have the ZEW and the trade balance.
Currencies
The rise of the $ accelerated sharply at the end of last week, the €/$ reached its lowest level for 20 years: €/$ 1.0070. This morning the €/$ is trading at 1.0130. We remain negative in the short term sup. 1.00 then sup2. 0.9613, res. 1.0580. The CHF confirms its strengthening against the € at €/CHF 0.9929 sup. 0.9775, res. 1.0220. The $/CHF remains bullish at $0.9797, a break of the resistance 0.9820 would open the way towards the parity; important sup. at 0.9495. The ounce of gold is down sharply at $1,740/oz, sup. $1,690/oz, res. $1,878/oz.
Markets
The economic figures revived the appetite for risk. Thus, equities rose (US: +2.1%; Europe: +2.5%; emerging: +0.7%) and credit spreads narrowed, especially in the US. 10-year sovereign interest rates are rising (USD: ~+20bp; EUR and CHF: ~+5/7bp). Gold (-3.4%) suffered from the rise in rates and above all from the appreciation of the dollar (dollar index: +1.8%). Oil fell by 4.1% and copper by 3.1%. To be monitored this week: SME confidence (NFIB index), consumer price indices, retail sales, industrial production and household confidence (Univ. of Michigan) in the United States; ZEW confidence index, industrial production and trade balance in the Euro zone; industrial production, retail sales, investment and Q2 GDP in China.
Swiss market
To be monitored this week: June traffic statistics (Flughafen Zürich), production-import prices for June (OFS) and 1st estimate of hotel nights for June (OFS). The following companies will publish results: Cantonal Banks of ZG, NE and JU, Oneswissbank, Partners Group (assets under management S1), Ems-Chemie, DKSH and Richemont (turnover Q1).
Shares
MERCK & CO. (Core Holding): Rumors are intensifying around the potential acquisition of Seagen by Merck & Co. The two companies are said to be in advanced talks. As a reminder, Seagen (American biotech) is notably developing new generation conjugated antibodies. With the exception of size (vs. willingness to focus on bolt-on acquisitions), therapeutic and technological areas would make sense.
PEPSICO (Core Holding) will publish its Q2 results on Tuesday with an expected turnover of 19.38 billion dollars (organic growth +7.4%) driven by a good price effect (US/world) and solid volumes internationally, while the gross margin should prove resilient (-30bp) to the appreciation of the dollar and the increase in PM/logistics/wage costs. Even if it could raise it, the market sees PepsiCo cautiously reiterating its annual guidance (organic growth +8% / EPS +6% at 6.63 dollars) in the face of uncertainties.
STMICROELECTRONICS (Satellite) and GLOBALFOUNDRIES are going to build a new factory on the Crolles site in France. This project, estimated at 5.7 billion euros, confirms STMicro’s future growth ambitions, particularly in the automotive and industrial markets. The French government will provide financial support that aligns with the objectives of the European Chips Act plan.
