Weekly market update: Towards a Fed rate cut

Gainers:

Tesla +27.17%: Several vectors of growth for Tesla. The automaker reported above-consensus quarterly sales (443,956 vehicles delivered vs. 436-438,000 expected), albeit down 4.8% on the same period last year. This is a strong comeback for Elon Musk's group, as the market was expecting a clear setback this quarter, with demand for electric vehicles still turbulent worldwide. The Group also obtained permission from the German authorities to expand its production site near Berlin, an expansion strongly contested by local residents. Finally, the Group's cars have been endorsed by the Chinese government, which has added them to its list of authorized service vehicles. Shares in Chinese competitors such as Nio and Li Auto are also up sharply.

On Semiconductor +7.05%: The chipmaker rebounded nicely after announcing the acquisition of SWIR Vision System, a provider of technologies that extend the detectable light spectrum to see through objects and capture images. According to ON Semiconductor, the acquisition will significantly enhance the company's portfolio of smart sensing products, paving the way for further growth in key markets such as industrial, automotive and defense.

Paramount Global +13.67%: The saga surrounding the purchase of Paramount's assets, which began in April, continues. This week, the American entertainment giant announced that it had entered into exclusive talks to sell its BET (Black Entertainment Television LLC) network to a consortium of buyers that includes BET CEO Scott Mills and Chinh Chu, head of private equity firm CC Capital, for $1.6 to $1.7 billion. Earlier in the week, National Amusements, owned by Shari Redstone, said it had reached a preliminary agreement to sell its majority stake in Paramount to Skydance Media. However, some analysts remain skeptical that the deal will go through, citing the numerous twists and turns that have taken place in the past.

Losers:

Chewy -8.30%: The company specializing in pet products retracted its gains over the week, following the dizzying 32% rise recorded the previous week. News that influencer Keith Gill, aka "Roaring Kitty", holds a stake in Chewy cooled the speculative movement on the stock that he had provoked the previous week with a simple dog meme.

Walgreens Boots Alliance -6.90%: The pharmacist continues to fall after the publication of its quarterly results. Earnings per share were down 36% year-on-year. The group is facing a downturn in consumer spending in the United States, which is affecting its entire sector. As a result, the chain announced the closure of a quarter of its outlets and revised downwards its EPS guidance range for 2024 by 15%. As a result, RBC Capital Markets has reduced its price target to $13, down from $22.

Masimo Corporation -8.88%: The US specialist in medical monitoring technologies and audio systems is hampered by the activist campaign led by Politan Capital Management LP and the ensuing conflicts within its board of directors. This week, the group dismissed its CEO, despite the COO's threats to resign if necessary.

Abbvie -2.49%: This week, the pharmaceuticals group cut its adjusted earnings forecast for 2024 to between $10.61 and $10.81 per share, compared with the previous estimate of $11.13 to $11.33 per share. It blames higher research and development costs, as well as costs linked to the Group's acquisitions (Celsius Therapeutics, announced at the end of June, and Immunogen, finalized in February). US healthcare stocks have been trending downwards in recent days.

Energy : Oil rose for the fourth week running, trading at around USD 87.50 for the European benchmark. The price of crude oil remains buoyant, benefiting from a spectacular plunge in weekly US inventories. Rising exports, increased refinery throughput and solid demand ahead of the national holiday: this is the combination that explains the 12.2 million barrel drop in inventories, compared with the consensus forecast of a minimal contraction of 0.4 million. In other news, Saudi Arabia lowered its official selling prices to Asian customers, a bad signal for Asian demand dynamics. WTI is trading up at around USD 83 a barrel.

Metals : Copper ends its long seven-week downtrend. A tonne of copper is now trading higher in London at USD 9880 (spot price). Metals are benefiting overall from a weaker US dollar, as financiers keep in mind the forthcoming easing of the Federal Reserve's monetary policy. Eyes are also turning to China, which could announce additional measures for its industrial sector this month, according to some players. In precious metals, the ounce of gold advanced to USD 2366, benefiting from a lull in both the dollar and US bond yields.

Agricultural products: In Chicago, the price of corn remains on a downward trend, with a bushel of corn still trading at around 400 cents. Wheat prices are a little more neutral, although a bushel of wheat is treading water at 550 cents.

Atmosphere. The first presidential debate of 2024 between Joe Biden and Donald Trump rekindled concerns within the Democratic Party about the President's cognitive faculties. Falling household savings are holding back consumption against a backdrop of restrictive financial conditions. This slowdown in demand could reduce inflationary pressures and affect economic activity as well as the job market. The Federal Reserve (Fed) remains cautious about its future decisions, considering limited rate cuts between now and the end of the year.

Rates. Expected at +190k, non-agricultural job creation came out at 206k, proof of the resilience of the US economy. The unemployment rate edged up to 4.1% (vs. 4.0% one month earlier), while wage inflation tended to ease: in June, average hourly earnings rose by "only" 3.9% year-on-year, compared with +4.1% in May. This was all it took to push bond yields down and equities up. The 10-year thus held below the 4.51% threshold and remains under downward pressure, with a target maintained at around 4.06/00%. On the other hand, the French OAT is still on an uptrend and awaiting the parliamentary elections. It would have to fall below 3.07% to break the current momentum and allow itself to ease towards 2.68%. The OAT/Bund spread has stalled at 86 and is now approaching initial support at +/- 63/61, which would also need to be breached to continue tightening towards 44.

Crypto: Bitcoin has been falling sharply since Monday. The digital currency has tumbled by more than 11% this week, and is now trading around $55,500. The main reason, as with last week's drop, is the start of reimbursements to customers harmed by the hacking of cryptocurrency platform Mt. Gox in 2014. Over 140,000 bitcoins have been recovered from a total hack of 940,000 BTC. The redistribution of bitcoins to customers suggests massive sales should creditors decide to take profits, given that one bitcoin was worth $451 at the time of the bankruptcy compared with $55,500 today. The second reason for the crypto-asset's fall this week, which follows on from the first, is the fear of investors not directly affected by the repayment that the value of their portfolio will plummet. Indeed, they are anticipating massive sell-offs, and so are selling their BTC positions in the hope of being able to trade them at a better price in the near future. It's a heavy atmosphere that's being felt throughout the market. Ether (ETH) is down 14% at $2,940, Solana (SOL) is down 10% at $131, and Binance Coin (BNB) is down more than 16% at around $485.