But let's start with a quick review of the market trend. Just like US consumers, sentiment is improving among investors, to the point where they are once again taking bold bets on cyclical and growth stocks. This is what emerges from our heatmaps, which survey sectoral variations in stock market indices. In Europe, the trend is clear: defensive stocks have stalled, while cyclicals have recovered. This led to a large gap between Paris (+0.98%) and Zurich (+0.37%), as the CAC40 is better endowed with cyclical stocks, in contrast to the Swiss SMI. In the United States, the situation was less clear-cut. The energy sector came out on top thanks to the recovery in oil prices, themselves propelled by last week's vertiginous meltdown in US oil inventories. In a nutshell, the combination of vigorous domestic demand and buoyant exports led to this result. This did not prevent the Dow Jones from ending with a slight loss (-0.22%), while the Nasdaq100 managed in extremis to close in positive territory (+0.12%). Tech remains in good shape. As proof, Apple punctually broke the $3,000 billion market capitalization barrier during the session.

The Nasdaq is thus poised to close a rather extraordinary half-year. At last count, Wall Street's tech index was up 36% since January 1. By comparison, the S&P500 has advanced by 14% over the same period. Elsewhere, Japan will close the half-year with an increase of around 20%.

Let’s go back to today's session. Germany gave a first estimate of June inflation. It showed an acceleration to 6.8% year-on-year from 6.3% in May, which was in line with expectations.

This gave a foretaste of tomorrow's stakes, since PCE inflation is on the agenda. It's a statistic the Fed is keeping a close eye on, even if I doubt it will sway financial expectations, given the high probability of a 25bps rate hike by the end of July. This probability rose to over 80% on the CME Fedtwatch tool, after Jerome Powell’s remarks yesterday. He reiterated what the market already knew, namely that the Fed is still planning two rate hikes this year.

At a Banco de Espana conference on financial stability in Madrid today, Powell said again the same thing, but did not say exactly when those rates hikes will come. He noted there’s a "long way to go" before inflation can be returned to the Fed's 2% goal.

Meanwhile, weekly jobless claims were released this morning. The number of Americans filing new claims for unemployment benefits unexpectedly declined last week, which highlights the resilience of the labor market. Claims fell to 26,000 to a seasonally adjusted 239,000 for the week ended June 25, while 265,000 were expected in a Reuters consensus.

Another data published today was gross domestic product, which expanded at a 2.0% annualized rate last quarter, the Commerce Department said, up from the 1.3% pace reported last month in a first estimate.

 

Today's economic highlights:

Preliminary German inflation figures for June, US weekly jobless claims and the latest GDP estimate for Q1 2023 are the main indicators today. The full agenda is here. 

The dollar is up 0.4% against the euro to EUR 0.9204 and 0.3% against the pound to GBP 0.7939. The ounce of gold continues its decline to around USD 1897. Brent crude from the North Sea rises to USD 74.52 a barrel, while WTI light crude is at USD 70.01. The yield on 10-year US debt stands at 3.74%. Bitcoin is trading at around USD 30,200.

 

In corporate news:

  • Apple was up 0.2% in premarket trading after breaking through the symbolic $3,000 billion market capitalization barrier on Wednesday.
  • Micron Technology gained 3.8% in premarket trading after reporting quarterly sales ahead of analysts' expectations and a better-than-expected sales forecast for the current quarter.
  • Amazon - Prime Day, the group's promotional day scheduled for July 11-12, should boost sales by 12% compared with the same period a year ago, JPMorgan estimated on Thursday.
  • Salesforce announced on Thursday its intention to invest four billion dollars in its UK operations over the next five years, as the US software company anticipates strong demand in the digital transition and artificial intelligence.
  • Oracle has spent "billions" of dollars on NVIDIA chips this year to develop its cloud computing service aimed at companies interested in artificial intelligence (AI), founder and chairman Larry Ellison said on Wednesday.
  • Berkshire Hathaway announced on Wednesday that it had increased its stake in OCCIDENTAL PETROLEUM to over 25% following a new investment of around $122.1 million. Occidental Petroleum shares were up 1% in pre-market trading.
  • Visa announced on Wednesday the acquisition of Brazilian financial technology platform Pismo for $1 billion in cash, in order to strengthen its position in Latin America.
  • Blackberry - The Wall Street-listed shares of the Canadian group gained 17.4% in premarket trading after the publication of better-than-expected quarterly sales, driven in particular by an increase in cybersecurity spending.
  • Pfizer - Credit Suisse lowers its recommendation from "outperform" to "neutral". Pfizer shares were down 1% in pre-market trading.
  • Walt Disney lost 0.5% on news that KeyBanc had lowered its rating on the stock from "overweight" to "in-line weighting".

 

Analyst recommendations:

  • Advanced Drainage Systems: Morgan Stanley moves from buy to neutral and lowers its target from 114 to 107 USD.
  • Ashtead Group: BNP Paribas Exane downgrades from outperform to neutral with a target of GBp 5550.
  • Beazer Homes: Wedbush upgrades to outperform from neutral. PT up 30% to $32.
  • GB Group: Jefferies upgrades from hold to buy with a target of GBp 285.
  • Genuine Parts: Northcoast Research initiated coverage with a recommendation of buy. PT up 18% to $195.
  • Hibbett: B Riley Securities initiated coverage with a recommendation of neutral. PT set to $37.
  • Intercept Pharma: Canaccord Genuity upgrades to buy from hold. PT jumps 74% to $19.
  • Louisiana-Pacific: Truist Securities upgrades to buy from hold. PT up 16% to $82.
  • Micron: Piper Sandler raised the recommendation to neutral from underweight. PT up 4.4% to $70.
  • Viad: Craig-Hallum Capital Group  initiated coverage with a recommendation of buy. PT set to $40.