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Monday Report
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Economy
Not many statistics were published in the United States, but they were reassuring. In particular, the ISM leading economic index for services came as a pleasant surprise, rising from 48.8 to 51.4 (vs. 51 expected). New weekly jobless claims came in slightly below expectations (233,000 vs. 240,000 and 250,000 the previous week). In the eurozone, investor confidence disappointed, falling from -7.3 to -13.9 (vs. -8 expected) in August, as did retail sales, which contracted by 0.3% m/m in July (vs. -0.1% expected). In China, the consumer price index rebounded (from +0.2% y/y to +0.5% y/y in July), a sign that the risk of deflation is receding: this is an encouraging signal for the economy.
Planetary Limits
California had its hottest July on record, with an average tem-perature of 27.6°C (81.7 F), according to the National Center for Environmental Information. Death Valley set the same record, according to the National Park Service (NPS). Finally, Las Vegas had its hottest day ever, with a temperature of 48.9°C (120 F).
Markets
After a few turbulent sessions, the equity markets are attempting to bounce back in a volatile environment. In the US, equities ended the week unchanged, while in Europe and the emerging markets they rose by 0.2%-0.3%. Sovereign 10-year yields rose slightly, by 14bp in the US and a few basis points in EUR. The dollar is unchanged, gold continues its trend (+0.6%) and oil prices rebound (+3.3%) with the political tensions in the Middle East. Coming up this week: consumer price index, retail sales, industrial production, business confidence (NAHB) and household confidence (Univ. of Michigan) in the United States; industrial production in the eurozone; industrial production, retail sales, investment and house prices in China.
Swiss Market
Coming up this week: air traffic statistics for July (Flughafen Zürich), PPI index for July (FSO), Q2 GDP (FSO) and Q2 industrial and construction output (FSO). The following companies will publish H1/Q2 results: Aryzta, Bell, Tecan, Komax, Polypeptide, Swissquote, Basilea, On Holding, Orascom DH, Schweiter, Meyer Burger, UBS, Emmi, Montana Aerospace, Straumann, Geberit, Phoenix Mecano and VZ Holding.
Equities
DUKE ENERGY (Satellites): 7,500 employees restored power supply to 95% or 510,000 of the group’s customers affected by hurricane Debby in the Carolinas.
FORTINET (Core Holdings) forecasts a recovery in the firewall market by 2025 and will integrate two acquisitions, Lace-Work and Next DLP, which will boost growth. This puts Fortinet in a favourable position: the firewall market accounts for 60% of sales and the software market for 40%.
PARTNERS GROUP (Swiss conviction): Ares could buy industrial manufacturer Form Technologies, backed by Partners.
SIKA (Core Holdings) has acquired Vinaldom, a specialist in high-quality additives for concrete, in the Dominican Republic, where the group did not yet have a production unit.
TSMC (Satellites) is close to agreeing a deal to buy an Innolux factory that will be converted into an advanced chip packaging plant (CoWoS) to meet strong demand. TSMC is expected to announce a deal on 13 August.
VEOLIA (Satellites): BlackRock crossed the 5% shareholding threshold on the upside, through share purchases, to 5.15%.
Bonds
Following the rate cut at the start of last week after a weaker-than-expected NFP and manufacturing ISM, the market retraced the whole movement, with the US 10-year ending the week up 14bp, after the services ISM surprised consensus and moved out of the contraction zone, and on weaker-than-expected weekly jobless claims. This change in sentiment saw US HY spreads contract by 19bp over the week, while IG spreads remained unchanged.
Sentiment of traders
Stock exchange
After a hectic week, we will be keeping a close eye on the many economic statistics to come: in the US, PPI, CPI, retail sales and industrial production, and in the eurozone, the ZEW, GDP and unemployment figures. As for companies, there are a few results to keep an eye on: Home Depot, Walmart, UBS, Porsche and Cisco. Volatility is unlikely to fall.
Currencies
Despite an apparent return to calm following last week’s shock, the €/$ is struggling to break out of the 1.0885-1.0965 range. Forex traders will be keeping a close eye on the CPI this week. In the absence of any figures last Friday, the dollar is consolidating at $/CHF 0.8667, sup. 0.85, res. 0.875. The € is rebounding against our CHF to €/CHF 0.947, a break of the 0.956 res. is necessary to extend this trend, the 0.9210 sup. remains valid. The pound is up at £/$ 1.2764, sup. 1.2673, res. 1.284. Gold oz is up at $2439/oz, sup. $2379, res. $2500.
Today’s graph
Performances
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