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Monday Report
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Economy
The statistics published in the United States were disappointing. The manufacturing PMI fell in April from 51.9 to 49.9 (<50, in contraction territory), whereas a stabilization was expected. Its services counterpart also disappointed, falling from 52.1 to 50.9 (vs. 52 expected). Q1 GDP slowed to 1.6% (annualized q/q), much more than expected (2.5%), and the deflator accelerated more than expected to 3.7% q/q. In the eurozone, the disappointment of the manufacturing PMI (down from 46.1 to 45.6 versus 46.5 expected) was more than offset by the pleasant surprise of the services PMI, which rose more than expected in April (from 51.5 to 52.9). In the same month, household confidence improved very slightly (from -14.9 to -14.7), but less than expected (-14.5). Finally, in China, in line with expectations, 1- and 5-year loan rates were unchanged (3.45% and 3.95%).
Planetary Limits
The International Energy Agency’s annual report concludes that, while CO2 emissions in 2023 peaked at 37.4 billion tons, their 2019-2023 growth of 900 miot would have been three times higher had it not been for the ramp-up of solar, wind, nuclear, heat pumps and electric vehicles. Better still: emissions from advanced economies will have fallen by 4.5% in 2023, returning to their level of the early 1970s, while their GDP will have grown by 1.7%.
Markets
The disappointment over US inflation pushed up 10-year interest rates somewhat (USD & EUR: ~+6bp). Equities, on the other hand, benefited from some good quarterly corporate results and resumed their upward trend after the previous week’s decline (US: +2.8%; Europe: +1.7%; emerging markets: +3.7%). After reaching an all-time high, gold is down 2.5% despite the dollar’s slight depreciation (dollar index: -0.2%). Coming up this week: house prices (FHFA and S&P CoreLogic), household confidence, ISM manufacturing and services, Fed meeting and employment report in the United States; EC confidence indices (economy, industry and services), first estimate of Q1 GDP and consumer price index in the eurozone; manufacturing and services PMI in China.
Swiss Market
This week, we have the March retail sales figures, the KOF economic barometer, the PMI index and the BFS inflation figures for April. On the corporate side, Logitech, Clariant, SIG, Straumann, Swisscom and others will be releasing their quarterly sales or results.
Equities
AMAZON (Core Holdings) will publish its Q1 results on Tuesday, and we expect AWS growth to pick up (+15% y/y and +2% q/q), which is necessary to support the stock’s momentum. Alphabet and Microsoft (Core Holdings) reported a reacceleration in growth in their cloud divisions, supported by the integration of artificial intelligence services (Copilot, Gemini and computing capacity offerings).
ANGLO AMERICAN (Satellite): according to Bloomberg, 1/ following the rejection of its initial offer by the board of directors, BHP is working on a new proposal; and 2/ activist shareholder Elliott has increased its stake and now holds 2.5% of the capital, making it one of the largest shareholders. The stock will continue to perform strongly over the coming weeks.
ASTRAZENECA (Core Holdings): Initial data from the DESTINY-Breast6 study evaluating Enhertu in hormone-dependent breast cancer with low HER2 expression (HR-positive/HER2-low). Administered as a second-line treatment with chemotherapy, Enhertu demonstrated a statistically significant improvement in progression-free survival (PFS). Overall survival (OS) is not mature, but shows a positive trend. This indication represents potential sales in excess of $1 billion. Enhertu is one of the Group’s growth drivers.
Bonds
In the US, economic activity showed signs of slowing with lower-than-expected PMIs, while inflation surprised on the upside. Against this backdrop, rates continued to anticipate a “no landing” scenario (2Y +1bp/10Y +4bp) and the market is now expecting a 1st Fed rate cut in December. In Europe, the rebound in services PMIs has pushed core rates higher (Bund 10Y +8bp), ahead of April’s inflation figures this week. On the credit side, US spreads have narrowed sharply (IG -6bp/HY -21bp) and remain at historically low levels.
Sentiment of traders
Stock markets
The European markets got off to a green start in a week packed with economic events. On the macro side, we have the CPI and GDP figures for the eurozone, while the FOMC meeting in the US (no change expected) and the employment figures are on the agenda. The calendar of quarterly publications will be busy (Apple, Amazon, Coca, Novo Nordisk, Shell…). Volatility is the order of the day.
Currencies
The €/$ is rebounding slightly to 1.0720, but a break of the 1.0753 level is needed to confirm this trend, while the upper 1.0517 level remains valid. Forex traders will focus this week on European CPIs and then on the Fed. The $/CHF is consolidating at 0.9115, sup. 0.9013 res. 0.9244. The CHF is stabilizing at €/CHF 0.9770, sup. 0.9676 res. 0.9848. The pound rebounds to £/$ 1.2525, sup. 1.2337 res. 1.2709. The ounce of gold is holding steady at $2334/oz, sup. 2265 res. 2417.
Today’s graph
Performances
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