European Equities: A Quiet Economic Calendar Leaves COVID-19 and Earnings in Focus

Economic Calendar

Tuesday, 13th July

German Inflation Rate YoY Final JUN

German Inflation Rate MoM Final JUN

French Inflation Rate YoY Final JUN

French Inflation Rate MoM Final JUN

Wednesday, 14th July

Spain Harmonized Inflation Rate YoY Final JUN

Spain Inflation Rate YoY Final JUN

Eurozone Industrial Production MoM MAY

Thursday, 15th July

Italy Inflation Rate MoM Final JUN

Friday, 16th July

Eurozone Balance of Trade MAY

Eurozone Inflation Rate Final JUN

The Majors

It was a particularly bullish end to the week for the European majors on Friday.

The CAC40 rallied by 2.07%, with the DAX30 and the EuroStoxx600 ending the day with gains of 1.73% and 1.34% respectively.

Following a string of disappointing stats from Germany in the week, a quiet day on the economic calendar delivered support.

The lack of stats allowed bargain hunters to jump back in following Thursday’s sell-off.

In spite of the rebound, the continued spread of the Delta variant and a more murky economic outlook remain downside risks to the majors.

With the 2nd quarter having come to an end, however, attention will be shifting to corporate earnings, which should be market risk positive.

The Stats

It was a particularly quiet day, with no material stats from the Eurozone.

From the U.S

It was also a quiet day on the U.S economic calendar. There were no majors stats from the U.S to spook the markets late in the European session.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Friday. Volkswagen surged by 6.18%, with BMW and Daimler ending the day up by 3.42% and by 2.72% respectively. Continental rose by a more modest 1.21%.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank saw gains of 4.03% and 2.13% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 2.44% and by 2.49% respectively, with Soc Gen gaining 3.60%.

It was also a bullish day for the French auto sector. Stellantis NV and Renault ended the day up by 2.81% and 2.34% respectively.

Air France-KLM bucked the trend, falling by 0.83%, while Airbus SE rallied by 3.43%.

On the VIX Index

It was back into the red for the VIX on Friday, marking a 5th day in the red from 7-sessions.

Partially reversing a 17.28% jump from Thursday, the VIX slid by 14.84% to end the day at 16.18.

The Dow rallied by 1.30%, with the NASDAQ and the S&P500 ending the day up 0.98% and by 1.13% respectively.

VIX 120721 Daily Chart

The Day Ahead

It’s a particularly quiet day ahead on the economic calendar. There are no material stats to provide the majors with direction through the early part of the European session.

From the U.S, there are also no material stats to consider later in the day.

The lack of stats will leave the markets to consider the latest updates on the Delta variant of the coronavirus.

Late in the session, expect direction to come from the U.S majors, however, as the markets prep for earnings season, which kicks off this week.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 2 points.

For a look at all of today’s economic events, check out our economic calendar.

Earnings to Watch Next Week: Most Big U.S. Banks, PepsiCo, Delta Air Lines and UnitedHealth in Focus

Earnings Calendar For The Week Of July 12

Monday (July 12)

Ticker Company EPS Forecast
FRHC Freedom $0.72

 

Tuesday (July 13)

IN THE SPOTLIGHT: JPMORGAN, PEPSICO, GOLDMAN SACHS

JPMorgan: The New York City-based multinational investment bank and financial services holding company is expected to report its second-quarter earnings of $3.16 per share, which represents year-over-year growth of over 128% from $1.38 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered earnings surprise all four times, with of over 32%.

JPM has less excess capital as a % of the market cap relative to other names in the group, which drives a lower benefit from buybacks. We are valuing the group on normalized 2023 EPS. We expect a V-shaped recovery will drive higher reserve release and share buybacks over the next 2 years, with “normalized” post-recession earnings beginning in 2023,” noted Betsy Graseck, equity analyst at Morgan Stanley.

“We see more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure. This drives our Underweight rating.”

PEPSICO: The Harrison, New York-based global food and beverage leader is expected to report its second-quarter earnings of $1.53 per share, which represents year-over-year growth of over 15% from $1.32 per share seen in the same quarter a year ago.

The U.S. multinational food, snack, and beverage corporation would post revenue of $17.91 billion. In the last four consecutive quarters, on average, the company which holds approximately a 32% share of the U.S. soft drink industry has delivered an earnings surprise of over 6%.

GOLDMAN SACHS: The New York-based leading global investment bank is expected to report its second-quarter earnings of $9.52 per share, which represents year-over-year growth of over 52% from $6.26 per share seen in the same quarter a year ago.

It is worth noting that in the last two years, the world’s leading investment manager has surpassed market consensus expectations for profit and revenue most of the time. The better-than-expected number would help the stock hit new all-time highs.

“Our 2Q EPS est. increases to $10.05 from $9.53 on positive markets and higher equity investment revs. The equity investment line will likely again be a meaningful rev. swing factor (we model $1.4B vs. $3.1B in 1Q21). Post-DFAST, GS indicated that the dividend will increase to $2.00/qtr. from $1.25/qtr., but did not provide specifics on buybacks. We model 2Q share repurchase of $1.5B (vs. $2.2B cons.) and $2.5B/qtr. (vs.$2.3B/qtr. cons.) for the remainder of this year,” noted Daniel T. Fannon, equity analyst at Jefferies.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JULY 13

Ticker Company EPS Forecast
FAST Fastenal $0.41
CAG Conagra Foods $0.52
JPM JPMorgan Chase $3.16
PEP PepsiCo $1.53
GS Goldman Sachs $9.96
FRC First Republic Bank $1.73
HCSG Healthcare Services $0.30
AMX America Movil Sab De Cv Amx $0.32

 

Wednesday (July 14)

IN THE SPOTLIGHT: WELLS FARGO, BANK OF AMERICA, CITIGROUP, DELTA AIR LINES, BLACKROCK

WELLS FARGO: The fourth-largest U.S. lender is expected to report a profit in the second quarter after last year posting its first loss since the global financial crisis of 20028.

Wells Fargo, Bank of America, Citigroup, JPMorgan will tother report profits of $24 billion in the second quarter, up significantly from $6 billion seen last year.

There is no relief for Delta Air Lines, which is expected to post a loss of $1.36 per share on $6.19 billion in revenue.

BLACKROCK: The world’s largest asset manager is expected to report its second-quarter earnings of $9.28 per share, which represents year-on-year growth of over 18% from $7.85 per share seen in the same quarter a year ago.

The New York-based multinational investment management corporation’s revenue would grow over 25% of $4.56 billion. In the last four consecutive quarters, on average, the investment manager has delivered an earnings surprise of over 11%.

The better-than-expected number would help the stock hit new all-time highs. The company will report its earnings result on Wednesday. BlackRock’s shares rose over 24% so far this year. The stock ended 2.83% higher at $901.31 on Friday.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JULY 14

Ticker Company EPS Forecast
WFC Wells Fargo $0.95
BAC Bank Of America $0.77
PNC PNC $3.09
C Citigroup $1.99
DAL Delta Air Lines -$1.36
BLK BlackRock $9.28
INFY Infosys $0.17

 

Thursday (July 15)

Ticker Company EPS Forecast
WIT Wipro $0.07
WNS Wns Holdings $0.68
BK Bank Of New York Mellon $1.00
MS Morgan Stanley $1.66
CTAS Cintas $2.31
UNH UnitedHealth $4.43
USB US Bancorp $1.12
TFC Truist Financial Corp $0.98
HOMB Home Bancshares $0.46
AA Alcoa $1.28
VLRS Controladorauelaavcncv $0.80
PGR Progressive $1.07
TSM Taiwan Semiconductor Mfg $0.93
PBCT People’s United Financial $0.34
WAL Western Alliance Bancorporation $1.96

 

Friday (July 16)

Ticker Company EPS Forecast
ERIC Ericsson $0.13
ALV Autoliv $1.40
FHN First Horizon National $0.40
ATLCY Atlas Copco ADR $0.45
STT State Street $1.77
KSU Kansas City Southern $2.18
SCHW Charles Schwab $0.76

 

European Equities: A Week in Review – 09/07/21

The Majors

It was a mixed week for the majors in the week ending 9th July, with a Friday rebound delivering much-needed support.

The CAC40 fell by 0.36%, while the DAX30 and the EuroStoxx600 ended the week up by 0.24% and by 0.19% respectively.

Economic data from Germany and other major economies weighed on riskier assets in the week.

While survey-based numbers have been impressive, non-survey-based data has raised some concerns over current economic conditions and the outlook.

Significantly, low vaccination rates in some economies and the ongoing spread of the Delta variant tested appetite for riskier assets.

Mixed signals by the FED were also a test, while the ECB left the door open for extended policy support by making adjustments to its objectives. The ECB interest rate target was revised and lifted to a firm 2%, which suggests extended status quo on the policy front.

The weak stats from Germany and some disappointing data from China in recent weeks muted the impact of the minutes, however.

In spite of the market jitters and impact on the majors, bargain hunters jumped in on Friday to reverse the losses from the week.

The Stats

It was another busy week.

Early in the week, service sector PMIs for June were in focus, with the stats skewed to the positive.

For the Eurozone, the services PMI increased from 55.2 to 58.3 in June, which was up from a prelim 58.0.

For June, the Composite PMI came in at 59.5. This was up from a May 57.1 and a prelim 59.2.

According to the finalized survey,

  • The private sector economy expanded at the fastest pace for 15-years in June.
  • Support came from a marked increase in output across both service and manufacturing.

By Country,

  • Ireland ranked 1st, with a 2-month low Composite PMI of 63.4, followed by Spain. In June Spain’s Composite PMI surged to a 256-month high 62.4.
  • Germany ranked 3rd, with a 123-month high 60.1, following by Italy and then France. Both saw their respective composites reach 41-month highs at the end of the 2nd

The rest of the stats in the week were skewed to the negative, however.

Economic sentiment for Germany and the Eurozone waned. The Eurozone’s ZEW Economic Sentiment Index falling from 81.3 to 61.2.

Stats from Germany also disappointed in the week.

Significantly, factory orders and industrial production both fell unexpectedly in May, with Germany’s trade surplus narrowing.

The numbers raised question marks over the resilience of the economy recovery.

On the monetary policy front, the ECB meeting minutes were also in focus. A shift in the ECB’s inflation target to 2% was the only headline.

From the U.S

After Monday’s holiday, service sector PMIs for June were in focus on Tuesday.

The all-important ISM Non-Manufacturing PMI fell from 64.0 to 60.1. While in decline, plus 60 levels continued to support the bullish outlook on the U.S economy.

On Wednesday, JOLT’s job openings for May had a muted impact on the Dollar as did the weekly jobless claim figures.

In the week ending 2nd July, initial jobless claims rose from 371k to 373k.

On the monetary policy front, the FOMC meeting minutes delivered mixed signals. The minutes pointed to a more patient stance on policy easing concerns of an imminent move. As expected, there was tapering talk, however.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental and Daimler slid by 4.99% and by 4.56% respectively to lead the way down, with BMW falling by 2.92%. Volkswagen, bucked the trend, however, ended the week up by 0.40%.

It was a bearish week for the banking sector. Deutsche Bank and Commerzbank saw losses of 3.57% and 3.38% respectively.

From the CAC, it was a bearish week for the banks. BNP Paribas slid by 2.94% to lead the way down, with Soc Gen ending the week down by 1.20%. Credit Agricole fell by a more modest 0.51%.

The French auto sector also struggled with Stellantis NV and Renault falling by 1.27% and by 5.66% respectively.

Air France-KLM joined the broader market in the red, with a 1.72% loss. Airbus bucked the trend, however, rising by 0.48%.

On the VIX Index

Two consecutive weeks in the red came to an end for the VIX. In the week ending 9th July, the VIX rose by 7.37%. Reversing a 3.52% decline from the previous week, the VIX ended the week at 16.18.

2-days in the green from 5 sessions, which included a 17.28% jump on Thursday delivered the upside in the week.

For the week, the Dow rose by 0.24%, with the NASDAQ and the S&P500 ending the week up by 0.43% and by 0.40% respectively.

VIX 100721 Weekly Chart

The Week Ahead

It’s a relatively busy week ahead on the economic calendar.

Industrial production figures for the Eurozone on Wednesday and trade data on Friday will be in focus.

Following some disappointing numbers last week, we can expect increased sensitivity to the Eurozone figures.

Through the week, finalized inflation figures for member states and the Eurozone will also draw interest.

The Eurozone’s inflation figures on Friday will be key on the inflation front.

From the U.S, inflation figures will also be in focus early in the week. With market concerns over FED monetary policy lingering, expect the numbers to influence.

On Thursday, jobless claims and Philly FED manufacturing numbers will draw attention.

Wrapping things up will be retail sales and consumer sentiment figures on Friday. Expect the retail sales figures to be key.

Also in focus, will be economic data from China late in the week. 2nd quarter GDP numbers are due out along with fixed asset investment, industrial production, and trade data.

BlackRock Q2 EPS to Rise Over 18% to $9.28; Shares to Scale New Highs

The world’s largest asset manager BlackRock is expected to report its second-quarter earnings of $9.28 per share, which represents year-on-year growth of over 18% from $7.85 per share seen in the same quarter a year ago.

The New York-based multinational investment management corporation’s revenue would grow over 25% of $4.56 billion. In the last four consecutive quarters, on average, the investment manager has delivered an earnings surprise of over 11%.

The better-than-expected number would help the stock hit new all-time highs. The company will report its earnings result on Wednesday, July 14. BlackRock’s shares rose over 24% so far this year. The stock traded 2.38% higher at $397.42 on Friday.

“Shares of BlackRock have outperformed the industry over the past 12 months. The company has an impressive earnings surprise history. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters. With a strong liquidity position, strategic acquisitions and initiatives to restructure the equity business are likely to keep aiding revenues, and expand the company’s global reach and market share,” noted analysts at ZACKS Research.

“Steadily improving assets under management (AUM) balance are expected to continue to support revenue growth. Also, the capital deployments activities look sustainable and will enhance shareholder value. However, persistently increasing operating expenses (owing to higher administration costs) are expected to hurt the bottom line. Further, the company’s high dependence on overseas revenues makes us apprehensive.”

BlackRock Stock Price Forecast

Thirteen analysts who offered stock ratings for BlackRock in the last three months forecast the average price in 12 months of $949.62 with a high forecast of $1,017.00 and a low forecast of $850.00.

The average price target represents 5.76% from the last price of $897.93. All of those 13 analysts rated “Buy”, none rated “Hold” or “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $1,017 with a high of $1,456 under a bull scenario and $513 under the worst-case scenario. The firm gave an “Overweight” rating on the investment manager’s stock.

Several other analysts have also updated their stock outlook. UBS raised the target price to $984 from $890. JP Morgan lifted the target price to $959 from $905. Deutsche Bank upped the price target to $1,005 from $922. Evercore ISI raised the price target to $955 from $896.

Analyst Comments

“We believe BlackRock (BLK) is best positioned on the asset mgmt barbell given leading iShares ETF platform, multi-asset & alts combined with technology/Aladdin offerings that should drive ~13% EPS CAGR (2020-22e) via ~6% avg LT organic growth,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“We see further growth ahead for Alts, iShares, international penetration, and the institutional market in the US. Recently acquired Aperio also bolsters solutions offering and organic growth. We expect the premium to widen as BLK takes share in evolving industry and executes on improving organic revenue growth trajectory.”

Check out FX Empire’s earnings calendar

European Equities: A Quiet Economic Calendar Leaves COVID-19 and Central Banks in Focus

The Majors

It was a particularly bearish day for the European majors on Thursday.

The CAC40 slid by 2.01%, with the DAX30 and the EuroStoxx600 ending the day with losses of 1.73% and 1.72% respectively.

Yet more disappointing economic data from Germany and a rise in jobless claims from the U.S added to the market angst.

A dovish set of ECB minutes and a shift in the ECB’s inflation target to 2% failed to support the majors.

The continued spread of the Delta variant will have added to concerns over the sustainability of the current economic recovery.

While recent manufacturing PMI numbers from the Eurozone and member states have impressed, non-survey-based data have been less impressive.

The Stats

It was another relatively quiet start to the European session. German trade data was in focus.

Trade Data

In May, Germany’s trade surplus narrowed from €15.2bn to €12.3bn. Economists had forecast a widening to €17.4bn.

According to Destatis,

  • Exports increased by 0.3% on the previous month and by 36.4% on the same month a year earlier.
  • Imports increased by 3.4% on the previous month and by 32.6% on the same month a year earlier.

Trade with EU countries,

  • Germany exported goods to the value of €60.7bn to EU member states, while importing goods to the value of €52.9bn.
  • Compared with May 2020, exports were up 43.3% and imports up 38.1%.
  • Goods exported to euro area countries increased by 40.2%, with imports up 36.9%.
  • In May 2021, goods exported to EU countries outside of the euro area rose by 50.8%, with imports up 40.8%, year-on-year.

Trade with non-EU countries,

  • Exports to non-EU countries increased by 28.7%, with imports rising by 26.5%.
  • Compared with May 2020, exports to the UK jumped by 46.3%, while imports from the UK rose by 26.2%.
  • Exports to China rose by 17.1%, while exports to the U.S surged by 40.7%.

From the U.S

It was also another quieter day on the U.S economic calendar. On the economic data front, the weekly jobless claim figures were in focus. In the week ending 2nd July, jobless claims rose from 371k to 373k. Economists had forecast claims to fall to 320k,

The Market Movers

For the DAX: It was a bearish day for the auto sector on Thursday. Volkswagen slid by 3.02%, with Continental and Daimler ending the day down by 2.79% and by 2.42% respectively. BMW also struggled, falling by 2.18%.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank saw losses of 3.39% and 1.76% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen slid by 2.86% and by 3.12% respectively, with Credit Agricole falling by 1.61%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day down by 3.35% and 1.59% respectively.

Air France-KLM bucked the trend, rising by 0.29%, while Airbus SE fell by a relatively modest 0.73%.

On the VIX Index

It was back into the green for the VIX on Thursday, marking just the 2nd day in the green from 6-sessions.

Reversing a 1.46% decline from Wednesday, the VIX jumped by 17.28% to end the day at 19.00.

The NASDAQ fell by 0.72%, with the Dow and the S&P500 ending the day down 0.75% and by 0.86% respectively.

VIX 090721 Daily Chart

The Day Ahead

It’s a particularly quiet day ahead on the economic calendar. There are no material stats to provide the European majors with direction on the day.

From the U.S, there are also no material stats to consider later in the day.

The lack of stats will leave the markets to consider the latest set of minutes from the ECB and FED and updates on the Delta variant of the coronavirus.

On the monetary policy front, ECB President Lagarde is scheduled to speak later in the day. Following the latest sell-off, any chatter on the economic outlook would likely influence.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 4 points.

For a look at all of today’s economic events, check out our economic calendar.

Goldman Sachs Could Scale to Fresh Record High on Upbeat Q2 Earnings; Target Price $414

The New York-based leading global investment bank Goldman Sachs is expected to report its second-quarter earnings of $9.52 per share, which represents year-over-year growth of over 52% from $6.26 per share seen in the same quarter a year ago.

It is worth noting that in the last two years, the world’s leading investment manager has surpassed market consensus expectations for profit and revenue most of the time.

The better-than-expected number would help the stock hit new all-time highs. The company will report its earnings result on Tuesday, July 13.

According to Zacks, The Goldman Sachs Group will report full-year earnings of $44.81 per share for the current financial year, with EPS estimates ranging from $40.95 to $49.50. For the next financial year, analysts expect that the business will report earnings of $35.81 per share, with EPS estimates ranging from $33.21 to $39.00.

Analyst Comments

“Our 2Q EPS est. increases to $10.05 from $9.53 on positive markets and higher equity investment revs. The equity investment line will likely again be a meaningful rev. swing factor (we model $1.4B vs. $3.1B in 1Q21). Post-DFAST, GS indicated that the dividend will increase to $2.00/qtr. from $1.25/qtr., but did not provide specifics on buybacks. We model 2Q share repurchase of $1.5B (vs. $2.2B cons.) and $2.5B/qtr. (vs.$2.3B/qtr. cons.) for the remainder of this year,” noted Daniel T. Fannon, equity analyst at Jefferies.

Goldman Sachs Stock Price Forecast

Sixteen analysts who offered stock ratings for Goldman Sachs in the last three months forecast the average price in 12 months of $414.50 with a high forecast of $500.00 and a low forecast of $330.00.

The average price target represents 14.44% from the last price of $362.20. From those 16 analysts, 13 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $165 with a high of $194 under a bull scenario and $104 under the worst-case scenario. The firm gave an “Overweight” rating on the beverage company’s stock.

“As market volatility subsides in the back half of the year and into 2022, we expect total revenues decline 13% y/y in 2022. We are valuing the group on normalized 2023 EPS. We see even more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure. This drives our Underweight rating,” noted Betsy Graseck, equity analyst at Morgan Stanley.

“Over time, we expect GS can drive some multiple expansion as management executes on its multi-year strategic shift towards higher recurring revenues.”

Several other analysts have also updated their stock outlook. BMO lowered the target price to $415 from $436. Evercore ISI raised the target price to $410 from $370. Oppenheimer lifted the target price to $493 from $484. UBS upped the target price to $370 from $340.

Check out FX Empire’s earnings calendar

European Equities: German Trade Data, the ECB Minutes, and U.S Jobless Claims in Focus

Economic Calendar

Thursday, 8th July

German Trade Balance (May)

ECB Monetary Policy Meeting Minutes

The Majors

It was a bullish day for the European majors on Wednesday.

The DAX30 rallied by 1.17%, with the CAC40 and the EuroStoxx600 seeing gains of 0.31% and by 0.78% respectively.

Disappointing economic data from Germany and apprehension ahead of the FOMC meeting minutes failed to spook bargain hunters following Tuesday’s pullback.

Optimism and market expectation of continued central bank support remains key for the European markets near-term.

The Stats

It was relatively quiet start to the European session. German industrial production figures were in focus.

German Industrial Production

In May, industrial production fell by 0.3%, following a 0.3% decline in April. Economists had forecast a 0.7% rise.

According to Destatis,

  • Production in industry excluding energy and construction was down by 0.5%.
  • Within industry, the production of consumer goods rose by 4.1%, while the production of intermediate goods increased by 0.6%.
  • The production of capital goods fell by 3.4%.
  • Outside of industry, energy production fell by 2.1%, while production in construction rose by 1.3%.
  • Compared with May 2020, production was up 17.3%, while down by 5.0% when compared with February 2020.

From the U.S

It was also a quieter day on the U.S economic calendar. On the economic data front, JOLT’s job openings had little influence. In May, job openings increased from 9.193m to 9.209m, coming in ahead of a forcasted 9.100m rise.

After the European close, the FOMC meeting minutes were key, however, and may provide some support going into the European open. In response to the FOMC meeting minutes, the U.S majors wrapped up the day in positive territory.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Wednesday. BMW and Volkswagen rose by 0.05% and by 0.68% respectively. Continental and Daimler ended the day down by 0.25% and by 0.83% respectively.

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank saw losses of 1.56% and 2.37% respectively.

From the CAC, it was a bearish day for the banks. Credit Agricole and Soc Gen slipped by 0.14% and by 0.84% respectively, with BNP Paribas falling by 1.43%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.43% and 1.33% respectively.

Air France-KLM and Airbus SE fell by 1.54% and by 0.96% respectively.

On the VIX Index

It was back into the red for the VIX on Wednesday, marking a 4th day in the red from 5-sessions.

Partially reversing a 9.09% gain from Tuesday, the VIX fell by 1.46% to end the day at 16.20.

The NASDAQ eked out a 0.1% gain, with the Dow and the S&P500 ending the day up 0.30% and by 0.34% respectively.

VIX 080721 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the economic calendar.

German trade data will be in focus ahead of the European open. Later in the day, the ECB’s monetary policy meeting minutes will also draw interest.

From the U.S, the weekly jobless claims will provide direction, though the release coincides with the ECB minutes.

Away from the economic calendar, COVID-19 news updates will need continued monitoring.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 16 points.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: German Industrial Production in Focus

Economic Calendar

Wednesday, 7th July

German Industrial Production (MoM) (May)

Thursday, 8th July

German Trade Balance (May)

The Majors

It was a bearish day for the European majors on Tuesday, with the U.S markets reopening after Monday’s holiday.

The CAC40 and the DAX30 fell by 0.91% and by 0.96% respectively, with the EuroStoxx600 ending the day down by 0.52%.

Disappointing economic data from Germany and the Eurozone weighed on the majors as did lingering concerns over the Delta variant.

The Stats

It was another busy start to the European session. German and Eurozone economic sentiment and German factory orders and Eurozone retail sales figures were in focus.

German Factory Orders

In May, factory orders slid by 3.7%, reversing a 0.2% fall from April with interest. Economists had forecast a 1.0% increase.

According to Destatis,

  • Domestic orders increased by 0.9%, while foreign orders tumbled by 6.7%, month-on-month.
  • New orders from the euro area decreased by 2.3% and tumbled by 9.3% from other countries.
  • In May 2021, the manufacturers of intermediate goods saw new orders fall by 3.6%.
  • Orders for capital goods tumbled by 4.6%, while orders for consumer goods rose by 3.9%.
  • Excluding major orders, real new orders in manufacturing were 3.7% lower than in the previous month.

Economic Sentiment

ZEW economic sentiment figures for Germany and the Eurozone disappointed.

Germany’s Economic Sentiment Indicator fell from 79.8 to 63.3 versus a forecasted decline to 75.2.

For the Eurozone, the Economic Sentiment Indicator fell from 81.3 to 61.2, which was worse than a forecasted decline to 78.9.

Eurozone Retail Sales

In May, retail sales increased by 4.6%, reversing a 3.9% fall from April. Economists had forecast a 4.4% rise.

According to Eurostat,

  • Sales of non-food products increased by 8.8% and by 8.1% for automotive fuels.
  • By contrast, food, drinks, & tobacco sales slipped by 0.3%.
  • France and the Netherlands recorded retail sales of 9.9% and 9.3% respectively to lead the way.
  • Compared with May 2020, retail sales jumped 9.0% in the euro area.
  • The jump was driven by a 28.4% surge in automotive fuel sales and a 14.8% increase in non-food product sales.
  • Food, drinks, & tobacco sales rose by just 0.1%.

From the U.S

Service sector PMIs for June also provided direction later in the day, with the market’s favored ISM Non-Manufacturing PMI in focus.

In June, the ISM Non-Manufacturing PMI fell from 64.0 to 60.1. Economists had forecast a decline to 63.0.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Tuesday. BMW and Daimler slid by 3.41% and by 3.49% respectively, with Continental ending the day down by 3.26%. Volkswagen fell by a more modest 2.79%.

It was a bearish day for the banks. Deutsche Bank and Commerzbank saw losses of 3.53% and 3.11% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Soc Gen led the way down, falling by 3.19% and by 3.08% respectively. Credit Agricole saw a more modest 2.80% loss on the day.

It was also a bearish day for the French auto sector. Stellantis NV fell by 1.19%, with Renault tumbling by 5.43%.

Air France-KLM and Airbus SE joined the broader market in the red, falling by 1.80% and by 1.95% respectively.

On the VIX Index

A run of 3 consecutive days in the red came to an end for the VIX on Tuesday.

Reversing a 2.21% fall from Friday, the VIX rose by 9.09% to end the day at 16.44.

The NASDAQ gained 0.17%, while the Dow and the S&P500 ended the day down 0.60% and by 0.20% respectively.

VIX 070721 Daily Chart

The Day Ahead

It’s a quieter day ahead on the economic calendar.

German industrial production figures for May will be in focus going into the European open. With little else for the markets to consider early in the day, expect plenty of influence. Following the unexpected slide in factory orders, a marked decline in production would bring further economic uncertainty.

From the U.S, JOLT’s job openings are due out. The numbers will likely have a muted impact on the European majors, however. There will likely be some apprehension ahead of the FOMC meeting minutes due out after the European close.

Away from the economic calendar, the markets will continue to monitor COVID-19 news updates.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 55 points.

For a look at all of today’s economic events, check out our economic calendar.

PepsiCo Could Scale to Fresh Record High on Upbeat Q2 Earnings; Target Price $156

The Harrison, New York-based global food and beverage leader PepsiCo is expected to report its second-quarter earnings of $1.53 per share, which represents year-over-year growth of over 15% from $1.32 per share seen in the same quarter a year ago.

The U.S. multinational food, snack, and beverage corporation would post revenue of $17.91 billion. In the last four consecutive quarters, on average, the company which holds approximately a 32% share of the U.S. soft drink industry has delivered an earnings surprise of over 6%.

“On average, analysts expect that PepsiCo will report full-year earnings of $6.05 per share for the current fiscal year, with EPS estimates ranging from $5.91 to $6.13. For the next year, analysts expect that the firm will post earnings of $6.54 per share, with EPS estimates ranging from $6.34 to $6.77,” noted analysts at ZACKS Research.

PepsiCo’s better-than-expected results, which will be announced on Tuesday, July 13, would help the stock hit new all-time highs.

Analyst Comments

“We expect 2Q21 PepsiCo (PEP) EPS of $1.54, 2 cents above the $1.52 Eikon consensus. We forecast +7.9% y-o-y organic sales growth in 2Q21, above the Visible Alpha consensus of +7.3%, as PEP cycles an easy comparison of -0.3% in 2Q20, which was negatively impacted by COVID-19-related closures in the on-premise business. We could see upside to our already above-consensus organic sales growth estimate as we only assume 2-Yr average organic sales growth of +3.8% in 2Q21, which seems conservative vs. +5.2% in 1Q21 and +4.5% in 2020,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“We expect PepsiCo (PEP) operating margins to be up modestly (MSe +10 bps YoY) due to an expected yoy GM decline (MSe -100 bps YoY), driven by lower-margin acquisitions, partially offset by a -110 bps YoY expected decline in SG&A as % of sales on the moderation of COVID-19 related costs (which were $378M in the year ago quarter, worth 210 bps on margins), although we expected higher A&P investment in the business.”

PepsiCo Stock Price Forecast

Nine analysts who offered stock ratings for PepsiCo in the last three months forecast the average price in 12 months of $156.00 with a high forecast of $165.00 and a low forecast of $149.00.

The average price target represents 5.25% from the last price of $148.22. From those nine analysts, four rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $165 with a high of $194 under a bull scenario and $104 under the worst-case scenario. The firm gave an “Overweight” rating on the beverage company’s stock.

Several other analysts have also updated their stock outlook. JP Morgan lowered the target price to $154 from $155. Deutsche Bank raised the price target to $149 from $147. Credit Suisse lifted the price target to $155 from $144. Cowen and company upped the price target to $165 from $162. Citigroup increased the price objective to $162 from $161.

Check out FX Empire’s earnings calendar

Levi Strauss Could Hit New All-Time High on Strong Q2 Earnings; Target Price $31.5

Levi Strauss & Co, an American clothing company known for its Levi’s brand of denim jeans, is expected to report its fiscal second-quarter earnings of $0.09 per share, which represents year-over-year growth of around 120% from a loss -$0.45 per share seen in the same quarter a year ago.

The San Francisco-based jeans maker would post revenue growth of about 140% to $1.21 billion. In the last four consecutive quarters, on average, the company has delivered earnings surprise in all four times.

Levi Strauss’ better-than-expected results, which will be announced on Thursday, July 8, would help the stock hit new all-time highs. Levi Strauss shares surged more than 35% so far this year. The stock ended nearly flat at $27.46 on Friday.

Despite the recent stock price rally, Levi Strauss continues to trade at a discount to peers, thus we see an opportunity for the stock to re-rate further, particularly if the above-planned revenue recovery continues into 2H21, noted Kimberly Greenberger, an equity analyst at Morgan Stanley.

Levi Strauss Stock Price Forecast

Six analysts who offered stock ratings for Levi Strauss in the last three months forecast the average price in 12 months of $31.50 with a high forecast of $36.00 and a low forecast of $28.00.

The average price target represents 14.71% from the last price of $27.46. All of those six analysts rated “Buy”, while none rated “Hold” or “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $28 with a high of $36 under a bull scenario and $16 under the worst-case scenario. The firm gave an “Overweight” rating on the jeans maker’s stock.

Several other analysts have also updated their stock outlook. Evercore ISI raised the target price to $36 from $30. Levi Strauss had its price target upped by JPMorgan to $34 from $29. JPMorgan Chase & Co. currently has an overweight rating on the blue-jean maker’s stock. UBS Group increased their price target to $34 from $29 and gave the company a buy rating.

Analyst Comments

LEVI’s Mar-May quarter (2Q) likely benefits from the favorable macro backdrop that boosted Softlines’ 1Q (Feb-Apr) results. LEVI’s impressive +36% YTD rally suggests a beat is expected. Stock likely trades on forward guidance, which we anticipate comes in above Street estimates,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

LEVI’s +24-25% y/y 1H21 revenue guidance appears conservative, particularly in light of management’s encouraging 2QTD commentary on the last earnings call and the outsized beats reported by peers with Feb-Apr quarters. The ‘Denim Resurgence’ trend may also contribute to a potential 2Q21 revenue beat. We think gross margin meets (and likely beats) consensus expectations, driven by clean inventories, a mix-shift towards digital sales, and greater international revenue growth as Europe sales gradually recover. We forecast 8c EPS, in-line with consensus and at the high-end of management’s 7-8c adj. EPS guidance.”

Check out FX Empire’s earnings calendar

European Equities: Service Sector PMIs and COVID-19 News in Focus

Economic Calendar

Monday, 5th July

Spanish Services PMI (Jun)

Italian Services PMI (Jun)

French Services PMI (Jun) Final

German Services PMI (Jun) Final

Eurozone Markit Composite PMI (Jun) Final

Eurozone Services PMI (Jun) Final

Tuesday, 6th July

German Factory Orders (MoM) (May)

German IHS Markit Construction PMI (Jun)

German ZEW Economic Sentiment / Current Conditions(Jul)

Eurozone Retail Sales (MoM) (May)

Eurozone ZEW Economic Sentiment (Jul)

Wednesday, 7th July

German Industrial Production (MoM) (May)

Thursday, 8th July

German Trade Balance (May)

The Majors

It was a mixed end to the week for the European majors on Friday.

The CAC40 slipped by 0.01%, while the DAX30 and the EuroStoxx600 rose 0.30% and by 0.26% respectively.

There were no major stats from the Eurozone to provide direction in the early part of the session. The lack of stats left the majors in the hands of U.S nonfarm payroll figures and news updates on the COVID-19 Delta variant.

From the U.S

The all-important nonfarm payrolls were in focus late in the European session.

In June, the government reported a 662k increase in nonfarm payrolls following a 516k rise in May.

In spite of the rise, the unemployment rate edged up from 5.8% to 5.9%.

Economists had forecast nonfarm payrolls to rise by 570k and for the unemployment rate to fall to 5.7%. The participation rate held steady at 61.6% versus a forecasted increase to 61.7%…

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. BMW and Continental fell by 0.10% and by 0.57% respectively. Daimler and Volkswagen ended the day up by 0.38% and by 0.09% respectively.

It was a bearish day for the banks, however. Deutsche Bank and Commerzbank ended the day with losses of 1.21% and by 1.48% respectively.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole fell by 1.89% and by 1.13% respectively. Soc Gen led the way down, however, sliding by 2.45%.

It was also a bearish day for the French auto sector. Stellantis NV and Renault ended the day with losses of 0.02% and 0.28% respectively.

Air France-KLM rose by 0.27%, with Airbus SE rallying by 2.11%.

On the VIX Index

It was a 3rd consecutive day in the red for the VIX on Friday.

Following a 2.21% loss on Thursday, the VIX fell by 2.65% to end the day at 15.07.

The Dow rose by 0.44%, with the NASDAQ and the S&P500 ending the day with gains of 0.81% and by 0.75% respectively.

VIX 050721 Daily Chart

The Day Ahead

It’s a busy day ahead on the economic calendar.

Service sector PMIs for Italy and Spain are due out along with finalized PMIs for France, Germany, and the Eurozone.

With little else for the markets to consider, expect plenty of influence from the numbers. The ECB is looking towards consumption to fuel a speedier economic recovery in the 2nd half of the year…

Away from the economic calendar, COVID-19 news updates will also need monitoring on the day.

There are no stats from the U.S to consider, with the U.S markets closed at the start of the week.

For a look at all of today’s economic events, check out our economic calendar.

SMART Global Holdings and AZZ in Focus Amid Quiet Earnings Week

Earnings Calendar For The Week Of July 5

Monday (July 5)

There are no major earnings scheduled. The stock market is closed on Monday in observation of Independence Day.

Tuesday (July 6)

Ticker Company EPS Forecast
AVAV AeroVironment $0.81

Wednesday (July 7)

IN THE SPOTLIGHT: SMART GLOBAL HOLDINGS

The provider of specialty memory, storage and hybrid solutions is expected to report its fiscal third-quarter earnings of $1.10 per share, which represents year-over-year growth of about 57% from $0.70 per share seen in the same quarter a year ago.

The Newark, California-based company which is also a part of the semiconductor & other electronic component manufacturing industry would post revenue growth of about 50% to $415.81 million. In the last four consecutive quarters, on average, the company has delivered an earnings surprise all four times.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JULY 7

Ticker Company EPS Forecast
WDFC Wd 40 $1.15
MSM MSC Industrial Direct $1.38

Thursday (July 8)

Ticker Company EPS Forecast
HELE Helen Of Troy $2.56
DCT DCT Industrial Trust -$0.01
PSMT PriceSmart $0.65

Friday (July 9)

IN THE SPOTLIGHT: AZZ

The provider of various industrial solutions, specialty electrical equipment and engineered services is expected to report its fiscal first-quarter earnings of $0.64 per share, which represents year-over-year growth of over 200% from $0.21 per share seen in the same quarter a year ago.

The industrial products company would post revenue growth of about 0.5% to $214.4 million. In the last four consecutive quarters, on average, the company has delivered an earnings surprise two times.

European Equities: A Week in Review – 02/07/21

The Majors

It was a mixed week for the majors in the week ending 2nd July.

The DAX30 rose by 0.27%, while the CAC40 and the EuroStoxx600 ended the week down by 1.06% and by 0.18% respectively.

Economic data from the Eurozone and the U.S delivered the majors with support in the week.

From the Eurozone, inflationary pressures softened in June, according to prelim figures, while the Manufacturing PMI hit a record high.

Economic data from the U.S was also positive, with labor market data supporting the FED’s more optimistic outlook.

While the stats were skewed to the positive for the majors, however, rising COVID-19 cases across the world pressured the majors in the week.

The Stats

Economic sentiment figures for the Eurozone in focus on Tuesday.

A pickup in economic sentiment in June provided some support early in the week.

Midweek, German unemployment and Eurozone inflation figures were in focus.

While unemployment numbers were market positive, inflationary pressures across the Eurozone softened in June.

According to prelim figures, the Eurozone’s annual rate of inflation softened from 2.0% to 1.9%.

On Thursday, manufacturing sector PMIs for June were positive, however.

Spain’s manufacturing PMI increased from 59.4 to 60.4, with Italy’s seeing a modest fall from 62.3 to 62.2.

Germany’s manufacturing PMI rose from 64.4 to 65.1, which was up from a prelim 64.9.

France’s manufacturing sector saw growth slow moderately, with the PMI falling from 59.4 to 59.0. This was up from a prelim 58.6.

As a result, the Eurozone’s manufacturing PMI rose from 63.1 to a record high 63.4, which was up from a prelim 63.1.

Eurozone unemployment figures for May were also upbeat, with the unemployment rate falling from 8.1% to 7.9%.

Retail sales figures from Germany were also market positive on Thursday. Retail sales rose by 4.2% partially reversing a 6.8% slide in April.

From the U.S

After a quiet start to the week, consumer confidence figures impressed on Tuesday. The CB Consumer Confidence Index jumped to a 16-month high in June.

Mid-week, ADP nonfarm employment change figures pointed to another sharp increase in hiring. In June, the ADP reported a 692k increase in nonfarm payrolls, following an 886k surge in May.

On Thursday, the focus shifted to the weekly jobless claims and manufacturing sector PMI numbers.

In the week ending 25th June, initial jobless claims fell from 415k to 365k.

Manufacturing sector activity saw slightly weaker growth in June, however, with the ISM Manufacturing PMI falling from 61.2 to 60.6.

While the stats delivered Dollar support, nonfarm payroll data at the end of the week was the key stat of the week.

In June, the government reported a 662k increase in nonfarm payrolls following a 516k rise in May.

In spite of the rise, the unemployment rate edged up from 5.8% to 5.9%.

Economists had forecast nonfarm payrolls to rise by 570k and for the unemployment rate to fall to 5.7%. The participation rate held steady at 61.6% versus a forecasted increase to 61.7%…

The Market Movers

From the DAX, it was a bearish week for the auto sector. Volkswagen fell by 1.90%, with BMW and Daimler declining by 2.18% and by 2.02% respectively. Continental led the way down, however, with a 2.58% loss.

It was also a bearish week for the banking sector. Deutsche Bank fell by 1.71%, with Commerzbank sliding by 5.59%.

From the CAC, it was a bearish week for the banks. BNP Paribas slid by 3.65%, with Credit Agricole and Soc Gen ending the week down by 0.84% and by 1.30% respectively.

It was a mixed week for the French auto sector, however. Stellantis NV fell by 2.13%, while Renault rose by 0.71%.

Air France-KLM ended the week down by 4.21%, while Airbus rose by 1.72%.

On the VIX Index

It was a 2nd consecutive week in the red for the VIX, marking a 5th weekly loss in 6-weeks. In the week ending 2nd July, the VIX fell by 3.52%. Following a 24.54% slide from the previous week, the VIX ended the week at 15.07.

3-days in the red from 5 sessions delivered the downside in the week.

For the week, the Dow rose by 1.02%, with the NASDAQ and the S&P500 ending the week up by 1.94% and by 1.67% respectively.

VIX 030721 Weekly Chart

The Week Ahead

It’s a relatively busy week ahead on the economic calendar.

At the start of the week, service sector PMIs for Italy and Spain will be in focus along with finalized PMIs for France, Germany, and the Eurozone.

With the markets expecting a pickup in service sector activity, expect the numbers from Italy and Spain to draw plenty of attention. According to prelim figures last month, the Eurozone’s services PMI hit a 41-month high in June.

On Tuesday, German factory orders and Eurozone retail sales figures will be in focus along with ZEW Economic Sentiment numbers.

Through the 2nd half of the week, the German economy will remain in the spotlight, with industrial production and trade data due out.

From the U.S, the market’s preferred ISM Non-Manufacturing PMI on Tuesday and weekly jobless claims on Thursday will also provide direction.

China’s Caixin services PMI and inflation data due out on Monday and Friday will also need considering.

Away from the economic calendar, central bank chatter and COVID-19 news will continue to influence.

Goodyear to Post Earnings of $0.14 in Q221; Target Price $21

Goodyear tire & rubber company is expected to report its fiscal first-quarter earnings of $0.14 per share, which represents year-over-year growth of over 107% from a loss of -$1.87 per share seen in the same quarter a year ago.

The company, whose brands include Kelly and Dunlop, would report its Q2 2021 period on July 29, 2021. The company would post revenue of $4.134 billion up from $2.1 billion a year ago.

“For Q221, we model group revenue of $4,134m, with volume +70% yoy (-7% vs Q219 levels, vs Q121 at -8%, in line with company commentary for a smaller decline vs 2019 levels in Q2), price/mix +9.8% driven by price increases as well as favourable geographic and channel mix, and FX at +3.5%,” noted Victoria Greer, equity analyst at Morgan Stanley.

“In the SOI walk, we assume volume at +$331m, overhead at +$225m (reversing most of the -$299m unabsorbed fixed cost from Q220), raw materials at -$35m, price/mix at +$105m (stronger than Q121 at +$64m, but with further price increases to come in H2), cost savings vs inflation at -$19m (as the reversal of some one-off cost moves in Q220 more than offsets the Gadsden/Europe savings), and other at +$40m, comping the decline in other tire-related businesses, although tempered by some costs such as marketing returning.”

Goodyear shares surged more than 55% so far this year. The stock slumped about 2% to $17.13 on Friday.

Goodyear Stock Price Forecast

Four analysts who offered stock ratings for Goodyear in the last three months forecast the average price in 12 months of $17.00 with a high forecast of $21.00 and a low forecast of $12.00.

The average price target represents -0.93% from the last price of $17.16. Of those four analysts, none rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $16 with a high of $23 under a bull scenario and $6 under the worst-case scenario. The firm gave an “Equal-weight” rating on the tire & rubber manufacturer company’s stock.

Several other analysts have also updated their stock outlook. Deutsche Bank raised the target price to $21 from $19. Citigroup lifted the price target to $19 from $17. CFRA increased the target price by $4 to $18.

Analyst Comments

“Significant margin declines during the latest raw materials up-cycle as Goodyear has struggled to pass on pricing – although we think this is well understood. We believe capacity reduction and the US plant closure, as well as the industry volume recovery, should drive a partial earnings recovery,” Morgan Stanley’s Greer added.

“Recovering some relative pricing is the main additional lever we see for further margin improvement. Each 50bps of margin is worth $0.23 (14%) to EPS, on our estimates – $1.60/share at the current multiple. The Cooper acquisition, expected to close in H221, could be significantly earnings enhancing based on the disclosed synergies; further plant closures could drive more upside in time.”

Check out FX Empire’s earnings calendar

European Equities: U.S Nonfarm Payrolls in Focus

Economic Calendar

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

It was a relatively bullish day for the European majors on Thursday.

The CAC49 led the way, rising by 0.71%, with the DAX30 and the EuroStoxx600 seeing gains of 0.47% and 0.62% respectively.

Market focus returned to economic data from the Eurozone and the U.S, supporting a partial recovery of Wednesday’s losses.

The upside was limited, however, in spite of a fresh record high Eurozone PMI and a weaker EUR.

Concerns over the rising number of new COVID-19 cases continued to limit the upside across the European majors.

The Stats

It was a busy economic calendar this morning. Following Tankan survey numbers from Japan and manufacturing PMI numbers from China, manufacturing PMI and unemployment figures from the Eurozone were in focus.

The Member States

Spain’s manufacturing PMI rose from 59.4 to 60.4, while Italy’s manufacturing PMI slipped from 62.3 to 62.2 in June.

Economists had forecast PMIs of 58.6 and 61.5 respectively.

For Germany, the manufacturing PMI increased from 64.4 to 65.1, which was down from a prelim 64.9.

The French manufacturing PMI fell from 59.4 to 59.0, which was up from June’s prelim 58.6.

The Eurozone

In June, the Eurozone’s manufacturing PMI increased from 63.1 to a record high 63.4, which was also up from a flash 63.1.

According to the June Survey,

  • Production increased sharply, with jobs growth hitting a survey peak in June.
  • Investment goods producers recorded the strongest growth, followed by intermediate goods producers.
  • While consumer goods producers continued to lag, growth was the most marked since Jun-2020.

By country, the Netherlands led the way in spite of a 2-month low PMI of 68.8. By contrast, Greece sat at the bottom of the table despite a 254-month high PMI of 58.6.

Germany ranked 3rd, with a 2-month high PMI of 65.1, with Italy’s 2-month low PMI of 62.2 leaving Italy in 5th spot.

Eurozone Unemployment

In May, the Eurozone’s unemployment rate fell from 8.1% to 7.9%, which was in line with forecasts.

From the U.S

Jobless claims and manufacturing sector PMIs were in focus.

In the week ending 25th June, initial jobless claims fell from 415k to 364k, which was better than a forecasted 370k.

The ISM Manufacturing PMI slipped from 61.2 to 60.6, however. Economists had forecast a more modest decline to 61.0.

The Market Movers

For the DAX: It was a relatively bullish day for the auto sector on Thursday. BMW rose by 0.74%, with Continental and Daimler ending the day up by 0.58% and by 0.52% respectively. Volkswagen saw a more modest 0.45% gain on the day.

It was also a bullish day for the banks. Deutsche Bank and Commerzbank ended the day up by 0.45% and by 0.33% respectively.

From the CAC, it was a bullish day for the banks. BNP Paribas and Credit Agricole rose by 1.15% and by 1.47% respectively. Soc Gen led the way, however, rallying by 3.38%.

It was also a bullish day for the French auto sector, however. Stellantis NV rose by 0.89%, with Renault rallying by 4.47%.

Air France-KLM and Airbus SE saw gains of 1.38% and 1.35% respectively.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Thursday.

Following a 1.19% loss on Wednesday, the VIX fell by 2.21% to end the day at 15.48.

The NASDAQ rose by 0.13%, with the Dow and the S&P500 ending the day up by 0.38% and by 0.52% respectively.

VIX 020721 Daily Chart

The Day Ahead

It’s a quieter day ahead on the economic calendar. There are no material stats from the Eurozone to provide the majors with direction.

From the U.S, the stats will be more significant, however. June’s nonfarm payroll figures and unemployment rate will provide direction late in the session.

A number of FOMC members have begun talking of a shift in policy as early as next year. A marked increase in payrolls may force further pressure on the FED as inflationary pressures linger.

Away from the economic calendar, COVID-19 news will once more need monitoring. Any further lockdown measures will test support for the majors.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 29 points, with the DAX up by 48 points.

For a look at all of today’s economic events, check out our economic calendar.

Morgan Stanley Lifts Constellation Brands’ Target Price to $266, Reiterates Overweight Rating

Morgan Stanley raised their base stock price forecast on Constellation Brands to $266 from $260, reiterating an “Overweight” rating on the corona beer marker and said with beer depletion growth rebounding sustainably to the HSD range, and high visibility that STZ’s FY guidance is conservative.

On Wednesday, the New York-based Fortune 500 international beverage alcohol company said it lost $908.1 million, or $4.74 a share in its fiscal first quarter, compared with a 94-cent loss in the year-ago period. On an adjusted basis, the company reported earnings per share of $2.33 and revenue of $2.03 billion. Analysts predicted EPS of $2.35 on revenue of $2.02 billion. The beer maker said it sees FY22 comparable EPS of $10.00-$10.30.

“We are reiterating our OW rating on STZ. Post Q1 upside, we have even greater visibility that underlying beer depletion growth is rebounding sustainably to the HSD range (near 10% growth days adjusted in fiscal Q1), and better visibility that Constellation Brands’ (STZ) FY guidance is conservative, given a Q1 beat, better than expected beer margin performance in Q1 (contrary to concern regarding what we viewed as conservative initial FY21 beer margin guidance last quarter), and a pending beer inventory rebuild in the balance of the year,” noted Dara Mohsenian, equity analyst at Morgan Stanley.

“Attractive valuation of 19x times CY22 EPS and 15x times EV/EBITDA does not reflect STZ’s strong 7-8% LT corporate topline growth outlook in our minds, with the beer business returning to consistent HSD% depletion growth in FY22 and beyond, increased beer mix post the low-end wine divestiture, an improved wine & spirits growth outlook post the divestiture, and a return to share repurchases.”

Constellation Brands shares rose about 7% so far this year. The stock traded 0.12% higher at $234.175 on Thursday.

Fifteen analysts who offered stock ratings for Constellation Brands in the last three months forecast the average price in 12 months at $271.00 with a high forecast of $305.00 and a low forecast of $226.00. The average price target represents 15.91% from the last price of $233.81. Of those 15 equity analysts, 13 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $310 under the bull scenario and $147 under the worst-case scenario.

“Near-Term Beer Depletions Re-Acceleration: We expect a re-acceleration to +HSD% beer depletions growth in FY22 and beyond post negative COVID impacts in FY21. Our expected improvement is driven by the resolution of beer out-of-stocks, improving shelf-space and market share trends for STZ high-velocity products, as well as innovation contribution,” Morgan Stanley’s Mohsenian added.

“Solid Long-Term Beer Fundamentals: Our robust +HSD% LT beer topline CAGR is driven by favorable sub-category positioning (high-end beer), advantageous demographics (skew to Hispanics), solid pricing, and innovation. Our ~7.7% 3-year STZ corporate organic sales forecast is above the ~4% growth at similarly valued beverage peers.”

Other equity analysts also recently updated their stock outlook. UBS raised the target price to $264 from $256. Citigroup lifted the price target to $257 from $244. Deutsche Bank increased the target price to $242 from $223. Guggenheim upped the price target to $226 from $220. Credit Suisse lifted the target price to $275 from $260.

Check out FX Empire’s earnings calendar

Walgreens Boots Alliance Tops Earnings and Revenue Estimates, Lifts 2021 Guidance

Walgreens Boots Alliance, a global leader in retail and wholesale pharmacy, reported better-than-expected earnings in the fiscal third quarter and lifted its full-year 2021 guidance.

The Deerfield, Illinois-based retail pharmacy provider said adjusted earnings came in at $1.51 per share, beating analysts’ estimates of $1.17 per share. The company’s revenue rose over 12% to $34.03 billion, higher than Wall Street’s consensus expectations of $33.76 billion.

The largest U.S. drugstore chain raised fiscal 2021 guidance from mid-to-high single-digit growth to around 10% growth in constant currency-adjusted EPS from continuing operations. The revised guidance reflects strong results in the third quarter and greater clarity on the impact of COVID-19 vaccinations.

Despite that Walgreens Boots Alliance shares slumped about 9% to $48.03 on Thursday. The stock surged more than 20% so far this year.

Walgreens Boots Alliance Stock Price Forecast

Nine analysts who offered stock ratings for Walgreens Boots Alliance in the last three months forecast the average price in 12 months of $58.67 with a high forecast of $72.00 and a low forecast of $50.00.

The average price target represents 19.52% from the last price of $49.09. Of those nine analysts, one rated “Buy”, eight rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $60 with a high of $75 under a bull scenario and $36 under the worst-case scenario. The firm gave an “Equal-weight” rating on the retail pharmacy provider’s stock.

Several other analysts have also updated their stock outlook. Jefferies lowered the target price to $59 from $62. Mizuho raised the target price to $55 from $47. Guggenheim lifted the price target to $62 from $58. Citigroup increased the price target to $60 from $50.

Analyst Comments

Walgreens Boots Alliance operates a top 2 retail pharmacy chain in the US as well as Boots Pharmacy and Alliance drug distribution in Europe. With COVID-19 disruption likely to weigh on results for the first part of FY21, at the least, along with ongoing structural reimbursement pressure, EBIT and EPS growth will likely be constrained for the foreseeable future,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

Walgreens has the balance sheet to deploy capital into M&A, as well as the strategic optionality to potentially reposition its portfolio of assets in a changing healthcare marketplace. Unveiling a new strategy under a new CEO that provides a roadmap to future growth is a potential catalyst for shares.”

Check out FX Empire’s earnings calendar

European Equities: Manufacturing PMIs and U.S Jobless Claims in Focus

Economic Calendar

Thursday, 1st July

Spanish Manufacturing PMI (Jun)

Italian Manufacturing PMI (Jun)

French Manufacturing PMI (Jun) Final

German Manufacturing PMI (Jun) Final

Eurozone Manufacturing PMI (Jun) Final

Eurozone Unemployment Rate (May)

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

It was a bearish day for the European majors on Wednesday, reversing Tuesday’s modest gains.

The DAX30 led the way down, falling by 1.02%, with the CAC40 and the EuroStoxx600 seeing losses of 0.91% and 0.77% respectively.

Economic data from China, the Eurozone, and the U.S were all in focus through the day.

From China, NBS private sector PMI figures for June disappointed. The NBS Manufacturing PMI slipped from 51.0 to 50.9, with the Non-Manufacturing PMI falling from 55.2 to 53.5.

The weaker figures had weighed on the DAX futures ahead of the European open

Through the early part of the week, the markets remained torn. Market optimism towards a speedier economic recovery continued to provide support.

Concerns over the rising number of new Delta variant COVID-19 cases weighed, however.

The Stats

In June, the annual rate of inflation ticked up from 1.4% to 1.5% based on prelim figures. This was in line with forecasts.

According to Insee.fr,

  • Prices for energy were up 10.9%, with prices for tobacco rising by 5.3% year-on-year.
  • Food prices were down by 0.3%, with prices for fresh food (-3.4%) weighing.
  • Month-on-month, consumer prices increased by 0.2% after having risen by 0.3% in May.

German Unemployment

In June, unemployment fell by 38k, following on from a 19k decline in May. Economists had forecast a more modest 20k fall. In spite of the larger than expected drop, the unemployment rate held steady at 5.9%.

The Eurozone

According to prelim figures for the Eurozone, the annual rate of inflation softened from 2.0% to 1.9% in June. Month-on-month, consumer prices rose by 0.3% following a 0.3% increase in May.

From the U.S

ADP nonfarm employment change numbers were in focus.

In June, the ADP reported a 692k increase in nonfarm payrolls, following an 886k surge in May. Economists had forecast a 450k rise.

Chicago PMI and pending home sales figures were also in focus but had a muted impact on the European majors.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Wednesday. Continental and Volkswagen slid by 2.49% and by 2.18% to lead the way down. BMW and Daimler ended the day down by 1.61% and by 0.97% respectively.

It was also a bearish day for the banks. Deutsche Bank fell by 0.22%, with Commerzbank declining by 1.45%.

From the CAC, it was a bearish day for the banks. BNP Paribas and Credit Agricole fell by 1.31% and by 1.24% respectively. Soc Gen saw a more modest 0.92% loss on the day.

It was also a bearish day for the French auto sector. Stellantis NV and Renault fell by 1.59% and by 2.85% respectively.

Air France-KLM fell by 1.33%, while Airbus SE bucked the trend, rising by 1.84%.

On the VIX Index

It was back into the red for the VIX on Wednesday.

Partially reversing a 1.65% gain from Tuesday the VIX fell by 1.19% to end the day at 15.83.

The NASDAQ slipped by 0.17%, while the Dow and the S&P500 ended the day up by 0.61% and by 0.13% respectively.

VIX 010721 Daily Chart

The Day Ahead

It’s another busy day ahead on the economic calendar. Italian and Spanish manufacturing PMIs are due out along with finalized PMIs for France, Germany, and the Eurozone.

Barring any marked revisions to prelim figures, expect Italy and the Eurozone’s PMIs to draw the greatest interest.

Later in the day, Eurozone unemployment figures will also draw interest ahead of key stats from the U.S.

From the U.S, the weekly jobless claim figures and market’s favored ISM Manufacturing PMI numbers will also influence.

Ahead of the European open, the Caixin Manufacturing PMI for June will set the tone, however.

Away from the economic calendar, COVID-19 news updates and any central bank chatter will also provide direction.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 67 points, with the DAX up by 53 points.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: A Month in Review – June 2021

The Majors

It was another bullish month for the European majors in May, logging a 5th consecutive monthly gain.

The EuroStoxx600 rose by 1.36% to lead the way, with the CAC40 and the DAX30 gaining 0.94% and 0.71% respectively.

After a bearish start to the year, with January having delivered heavy losses, the CAC40 was up 17.2% year-to-date. The DAX30 and EuroStoxx600 weren’t far behind, with year-to-date gains of 13.2% and 13.5% respectively.

The general market theme remained unchanged at the end of the 2nd quarter. Economic data and continued assurances from the ECB of unwavering support delivered the upside in June.

In June’s ECB press conference and in separate speeches, ECB President Lagarde talked of a speedier economic recovery in the 2nd half of the year. This was coupled with assurances that there would be no near-term shift in monetary policy.

From the U.S, a more hawkish than expected FED failed to derail the European market rally. This was in spite of a number of FOMC members talking of a possible rate hike as early as next year.

While monetary policy and economic data provided support, the spread of the Delta variant of the coronavirus limited the upside late in the month.

The Stats

It was a busy month on the Eurozone economic calendar. Inflation, private sector PMIs, and consumer confidence were key areas of focus.

The Private Sector

Private sector PMIs continued to impress in June, with service sector activity seeing a further pickup in activity.

Eurozone member states eased lockdown measures and reopened borders to tourism, supporting the sector.

For the Eurozone, the services PMI rose from 55.2 to 58.0, with the manufacturing PMI holding steady at 63.1, according to June prelim figures.

As a result, the Eurozone’s composite PMI rose from 57.1 to a 180-month high 59.2.

For Germany, a pickup in manufacturing sector activity was also market positive. Manufacturing sector growth had slowed marginally in the preceding months.

Consumer Confidence

With the ECB looking towards a consumer driven pickup in economic activity, consumer confidence and economic sentiment were also on the rise.

For the Eurozone, consumer sentiment increased from -5.1 to -3.3 in June, which was in line with prelim figures.

Sentiment towards the economy was also on the rise. The Eurozone’s economic sentiment indicator increased from 114.5 to 117.9. Economists had forecast an increase to 116.5.

Inflation

In the month, jitters over inflation had tested support for the majors before central bank assurances delivered comfort. The general view has been that the spike in inflation is transitory, with inflation likely to soften going into next year.

According to prelim figures for the Eurozone, the annual rate of inflation softened from 2.0% to 1.9% in June. Month-on-month, consumer prices rose by 0.3% following a 0.3% increase in May.

From the U.S

Economic data was also skewed to the positive in the month.

Inflationary pressures continued to raise the prospects of a sooner rather than later shift in FED monetary policy.

According to the FED’s preferred core PCE Price Index, the annual rate of inflation accelerated from 3.1% to 3.4% in May.

While the acceleration was aligned with market expectations, labor market data continued to ease pressure on the FED.

NFP numbers for May disappointed, with nonfarm payrolls rising by just 559k, which was well short of the ADP’s 886k rise.

Weekly jobless claim figures also pointed to continued slack in the economy. After having fallen to a June low 376k, initial jobless claims crept back up to 400k levels in the 2nd half of the month.

While labor market numbers failed to impress, private sector PMIs were skewed to the positive.

In May, the all-important ISM Non-Manufacturing PMI rose from 62.7 to 64.0, with the ISM Manufacturing PMI increasing from 60.7 to 61.2.

Consumer confidence was also on the rise, hitting a 16-month high in June. A marked improvement in labor market conditions would therefore support a sharper pickup in service sector activity and consumption. Such an eventuality would give the hawks a stronger footing in terms of monetary policy.

All-in-all, the numbers supported the FED’s optimistic outlook on the economy.

The Market Movers

For the DAX: It was a mixed month for the auto sector in June. Continental and BMW rallied by 3.64% and by 3.31% respectively. Daimler and Volkswagen bucked the trend, however, ending the month down by 0.66% and by 7.49% respectively.

It was a bearish month for the banks. Deutsche Bank and Commerzbank slid by 9.09% and by 9.39% respectively.

From the CAC, it was a bearish month for the banking sector. BNP Paribas and Soc Gen slid by 5.34% and by 5.11% respectively. Credit Agricole saw a more modest 3.20% loss in the month, however.

It was another bullish month for the auto sector. Renault and Stellantis NV ended the month up by 0.74% and by 1.82% respectively.

Air France-KLM tumbled by 12.02% as a result of the Delta variant, while Airbus SE rose by 1.67%.

On the VIX Index

It was a 5th consecutive month in the red for the VIX in June, delivering a 7th monthly decline in 10-months.

Following on from a 9.94% decline in May, the VIX fell by 5.55% to end the month at 15.83.

In June, the NASDAQ rallied by 5.49%, with the S&P500 ending the month up by 2.22%. The Dow bucked the trend, however, falling by 0.08%.

VIX 010721 Monthly Chart

The Month Ahead

Following a string of impressive numbers from the Eurozone, we can expect continued focus on key stats.

While private sector PMIs and inflation will remain key drivers, consumer consumption and confidence will have greater significance. The markets will be looking for stats to be aligned with the ECB’s more optimistic outlook towards the economic recovery.

A continued pickup in private sector activity would support a more hawkish stance by the ECB. Much will depend on whether inflationary pressures continue to build and on COVID-19 updates in the month, however.

From the U.S, the big question will be whether tapering talk gathers momentum.

The markets will likely continue to focus on labor market and inflation figures. Consumer confidence and spending will need to remain on an upward trend, however.

As such, we can expect greater market sensitivity to FOMC member chatter in the month ahead.

From China, private sector PMIs will also draw interest following some weaker numbers of late…

European Equities: Consumer Spending, Unemployment, and Inflation in Focus

Economic Calendar

Wednesday, 30th June

French Consumer Spending (MoM) (May)

French CPI y/y (Jun) Prelim

German Unemployment Change (Jun)

German Unemployment Rate (Jun)

Italian CPI (MoM) (Jun) Prelim

Eurozone CPI (YoY) (Jun) Prelim

Eurozone Core CPI (YoY) (Jun) Prelim

Eurozone CPI (MoM) (Jun) Prelim

Thursday, 1st July

Spanish Manufacturing PMI (Jun)

Italian Manufacturing PMI (Jun)

French Manufacturing PMI (Jun) Final

German Manufacturing PMI (Jun) Final

Eurozone Manufacturing PMI (Jun) Final

Eurozone Unemployment Rate (May)

Friday, 2nd July

German Retail Sales (MoM) (May)

The Majors

It was a relatively bullish day for the European majors on Tuesday.

The DAX30 led the way, rising by 0.88%, with the CAC40 and the EuroStoxx600 seeing gains of 0.14% and 0.31% respectively.

A pickup in consumer confidence and economic sentiment in the Eurozone delivered support, with softer inflation figures from Germany also market positive.

From the U.S, a marked pickup in consumer confidence added further support to the majors late in the day.

Concerns over the spread of the Delta variant of the coronavirus continued to limit the upside, however.

The Stats

Inflation and economic sentiment figures were in focus on the day.

According to prelim figures, German consumer prices increased by 0.4% in June, which was in line with forecasts. In May, consumer prices had risen by 0.5%.

As a result, Germany’s annual rate of inflation softened from 2.5% to 2.3%.

For the Eurozone, consumer sentiment increased from -5.1 to -3.3 in June, which was in line with prelim figures.

Sentiment towards the economy was also on the rise. The Eurozone’s economic sentiment indicator increased from 114.5 to 117.9. Economists had forecast an increase to 116.5

From the U.S

Consumer confidence was also in focus. In June, the CB Consumer Confidence Index rose from 120.0 to 127.3. Economists had forecast an increase to 119.0.

The Market Movers

For the DAX: It was a bullish day for the auto sector on Tuesday. Continental ended the day up by 1.02%, with Volkswagen and Daimler rising by 0.68% and by 0.30% respectively. BMW eked out a 0.01% gain on the day.

It was a mixed day for the banks, however. Deutsche Bank rose by 0.62%, while Commerzbank ended the day down by 0.44%.

From the CAC, it was a bullish day for the banks. BNP Paribas rose by 0.70%, with Credit Agricole and Soc Gen seeing gains of 1.53% and 1.27% respectively.

It was a mixed day for the French auto sector, however. Stellantis NV slipped by 0.01%, while Renault ended the day up by 1.12%.

Air France-KLM and Airbus SE saw losses of 0.43% and 0.58% respectively.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Tuesday.

Following a 0.90% gain on Monday, the VIX rose by 1.65% to end the day at 16.02.

The NASDAQ rose by 0.19%, with the Dow and the S&P500 both ending the day up by 0.03% respectively.

VIX 300621 Daily Chart

The Day Ahead

It’s a busier day ahead on the economic calendar. French consumer spending and German unemployment figures are due out along with inflation figures for the Eurozone.

While consumer spending is key, expect German unemployment and Eurozone inflation figures to have a greater impact on the majors.

Another marked pickup in inflationary pressures could bring into question the willingness of the ECB to stand pat on policy.

Unemployment figures from Germany will also be key. A rise in unemployment would weigh on spending and test market optimism towards the economic outlook.

From the U.S, ADP nonfarm employment change figures will also provide direction late in the European session.

Ahead of the European open, private sector PMIs from China will set the tone.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 33 points.

For a look at all of today’s economic events, check out our economic calendar.