The US figures are disappointing. In Europe, too, the PMI indices are below expectations.
Disappointing numbers in the US last week. The NAHB index of developers fell to 55 in July (-12 points) versus 64.5 exp as June housing starts at 1.56 million versus 1.59 million in May and 1.58 million expected and home sales at 5.12 million versus 5.41 million in May and 5.39 million expected. The Philly Fed index for July is at -12.3 (-9 points and vs. -0.7 expected) and in particular the services PMI index at 47, ie -5.7 points m/m and vs. 52 .7 expected. In Europe, first interest rate hike (50 basis points) since 2011 by the ECB, fall of the Italian government and new elections in September, reopening after maintenance of the gas pipeline NordStream 1 and decline in manufacturing PMI indices to 49.6 (-2.5 points ). the contraction zone and vs 51.0 expected) and performances at 50.6 (-2.4 points and vs 52.2 expected).
In the middle of last week, the US President tried to reaffirm his climate protection commitments by announcing an investment plan to develop infrastructure adapted to climate change. However, the lack of a majority in Congress and an opposition Supreme Court remain a brake on the president’s ambitions. Declaring a state of emergency would still give the executive additional leeway.
The main event of the week was the ECB meeting, which started its monetary tightening cycle with a 50 basis point hike. The focus was on inflation and the need to raise interest rates faster than expected. In order to prevent the risk of fragmentation, the ECB also presented the new “TPI” instrument, the functioning of which remains unclear beyond balance sheet sterilization. Despite this hawkish move, investors are focused on recession fears and government bond yields end the week lower (Bund 10Y-10bp).
After a nervous but positive week, the stock indices started the new week in the red after the Asian markets. All eyes will be on the FOMC meeting (+75 basis points expected) and quarterly corporate results (+500 EU and US releases) could well bring further volatility.
Despite a 0.50% rate hike by the ECB, the € remains under pressure at €/$ 1.0196, we expect the following range: €/$ 0.9950 -1.0350. Forex traders will focus on the Fed meeting this week as the market expects a 0.75% rate hike. CHF strengthens at €/CHF 0.9830 and $/CHF 0.9645, we expect the following ranges: €/CHF 0.9650 – 1.0160, $/CHF 0.9495 – 0.9991. An ounce of gold is $1,726/oz, sup. 1’570 ed. 1’814.
In this deteriorated macro context, government bond yields fell with the exception of Italy (D -10bps, US and UK -15bps), leading to government bonds (D +0.9%, US +1.3%) and corporate bonds (IG +1 .8%, HY +2.7%) allowed. to perform positively. Equities rallied (US +2.6%, EU +2.9%, EM +3%) on releases in the second quarter of 2022 that were less alarming than expected at the time. The euro, weighed down by Italy, barely reacted to the ECB’s rate hike. This week we will be following US consumer confidence in July, household spending and income in June, 2Q22 GDP after a negative 1Q and the FOMC meeting. In Europe, we will monitor business confidence, industrial and consumer confidence, consumer inflation and GDP for the second quarter of 2022.
To be monitored this week: OFS June retail sales and KOF July economic barometer. The following companies will publish results: Bobst, Kühne+Nagel, Julius Baer, Logitech, UBS, Belimo, Lindt&Spüngli, SIG, Holcim, Credit Suisse, Autoneum, Zehnder, Bucher, Comet, Kardex, Clariant, Inficon, Lem, Vontobel, Nestlé, Sulzer, Sunrise UPC, Swiss Re and the SNB.
ASTRAZENECA (Core holding): Following the recently published good clinical results, the US regulatory submission for Enhertu (breast cancer – one of the Group’s long-term growth drivers) was accepted by the FDA with Priority Review status (accelerated review). The decision will be made in Q4.
AXA (Satellite): In anticipation of the Q2 results (03/08), the market increases the pressure for a share buyback (€1-2bn). The group is indeed well capitalised, with 3-5 billion euros in cash and AXA XL now appears to be “floating” and no longer needs to strengthen its equity.
Sentiment remains cautious this week on upcoming releases from Core Holdings (Alphabet, Microsoft, Apple, Amazon). Estimates for most companies should be revised lower further given the slowdown in certain activities and macroeconomic conditions.
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