Futures for the Dow Jones Industrial Average are up 0.1%, the S&P 500 is inching higher by 0.2%, and the tech-heavy Nasdaq 100 is advancing by 02%. In premarket trading, regional bank KeyCorp surged after announcing a deal with Scotiabank, which will acquire a 14.9% stake for approximately $2.8 billion. Starbucks shares also rose following news that activist investor Starboard Value has taken a stake in the company.

Traders are eyeing the New York Federal Reserve's report on consumer inflation expectations, set for release at 11 am ET. This week is packed with crucial economic reports: the Producer Price Index (PPI) for July on Tuesday, the Consumer Price Index (CPI) on Wednesday, and the retail sales report on Thursday. These reports will provide a clearer picture of inflation and consumer spending trends in the U.S. Major companies reporting earnings this week include Walmart, Home Depot, Cisco, Deere, and Applied Materials. These reports will be closely watched for indications of economic health and consumer behavior.

Last week's stock market variations were flat for the US S&P 500, +0.3% for the Stoxx Europe 600, and -0.08% for the UK FTSE. Japan's Nikkei stood out with a -2.5% gain, but the index had plunged 12% on Monday. The VIX volatility index, often dubbed the fear index, spiked before calming down a bit. It remains in a worrying zone but is less frightening on the way down than on the way up. This renewed volatility is largely due to the loss of interest in the carry trade. Japan's change in monetary policy, even though it was widely anticipated, crashed this popular bet, which consists of borrowing at low rates in Japan to reinvest in presumably higher-yielding assets such as AI, tech stocks, or Mexican debt. The carry trade was both safe and remunerative, prompting investors, particularly hedge funds, to invest on a leveraged basis. When it came time to cut back at high speed, many asset classes were affected. This was essentially a technical correction, not a fundamental one, as argued by the managers at RBC BlueBay in a note published last Friday.

Fundamentals were not entirely absent, as they took the form of doubts about US growth, consumer spending appetite, and questions about China's ability to accelerate. However, these elements have been the market's backdrop for months. The most likely hypothesis now is that the US central bank will launch its rate-cutting cycle to prevent the economy from going off course, while China will continue to struggle, caught between its structural problems (property fragility, overproduction, etc.) and external pressure (anti-dumping, technology embargoes, etc.). In this dual context (Fed and China), a new front seems to be opening up in China, where increased speculation on the bond market is forcing the central bank to take action to halt the fall in yields. This phenomenon had already been visible for a few weeks, but it has increased with the recent volatility and the shift of Chinese investors towards bonds, at the expense of equities and other asset classes.

In the US, the financial community is still forecasting three or even four rate cuts this year, which would require a meeting with two rate cuts, given that there are only three meetings left between now and the end of December for the Fed. Reasonable people believe that there is no reason, at present, to carry out a double easing. Fed Governor Michelle Bowman reiterated over the weekend that there are still upside risks to inflation and that the labor market remains strong. She may therefore not vote in favor of a rate cut in September. The market is listening to this important voice, knowing that she is the most hawkish member of the FOMC: she is therefore playing her part in advocating a conservative approach to monetary policy. 

The situation in the Middle East remains tense. The United States is pressing ahead with peace negotiations, while at the same time stepping up its presence in the Mediterranean for fear of Iran retaliating against Israel. Japanese markets are closed for the public holiday on Monday. In China, Hong Kong and Shanghai are balanced. South Korea and Taiwan benefited from the strong performance of technology stocks, gaining 1% or more. Australia is up 0.4%, while India is down slightly. European leading indices are bullish.

Today's economic highlights:

The dollar is worth EUR 0.9156 and GBP 0.7832. The ounce of gold is down to USD 2,444. Oil regained some ground, with North Sea Brent at USD 80.47 a barrel and US light crude WTI at USD 76.87. The yield on 10-year US debt inches up to 3.95%. Bitcoin is trading at USD 60,000.

In corporate news:

  • Starbucks rose by 2.7% before the opening, the Wall Street Journal having reported that activist investor Starboard Value held a stake in the group.
  • Keycorp soared 22.2% before the opening, as Canada's SCOTIABANK said it had reached an agreement to acquire a stake of around 14.9% in the US regional bank.
  • Gold group Barrick Gold beat expectations on second-quarter earnings, buoyed by higher prices and robust production volumes. The share price gained 2.2% in pre-market trading.

Analyst recommendations:

  • Biogen Inc : Baptista Research rétrograde l'action de "acheter" à "conserver" avec un objectif de prix réduit de 285,60 USD à 223,30 USD.
  • Abbvie Inc : Morgan Stanley maintient sa note de surpondération et augmente le prix cible de 211 USD à 218 USD.
  • Airbnb, Inc : Jefferies maintient sa position "hold" avec un objectif de prix réduit de 150 USD à 125 USD.
  • Bristol-Myers Squibb Company: TD Cowen maintient sa recommandation "hold" et relève l'objectif de cours de 45 USD à 53 USD.
  • Paypal Holdings, Inc : President Capital Management Corp passe de neutre à achat avec un objectif de cours relevé de 65 USD à 77,80 USD.
  • Progressive Corporation: HSBC passe de "hold" à "buy" avec un objectif de prix relevé de 228 USD à 253 USD.
  • Robinhood Markets, Inc : Piper Sandler & Co passe de neutre à surpondérer avec un objectif de prix relevé de 20 à 23 USD.
  • Snap Inc : Baptista Research passe de sous-performance à achat avec un objectif de prix réduit de 14,90 USD à 12,90 USD.
  • Take-Two Interactive Software, Inc : DZ Bank AG Research passe de "hold" à "buy" avec un objectif de prix relevé de 146 USD à 172 USD.
  • Doximity, Inc : Baird maintient sa note de surperformance et augmente le prix cible de 33 USD à 41 USD.
  • Doordash, Inc : Baptista Research rétrograde l'action de "surperformance" à "attente" et relève l'objectif de cours de 133,70 USD à 140,70 USD.
  • Stellantis N.v. : Morgan Stanley maintient sa recommandation de surpondération et réduit le prix cible de 26 à 19 euros.
  • Trex Company, Inc : JP Morgan maintient sa recommandation neutre et réduit le prix cible de 95 à 69 USD.
  • Eli Lilly And Company: DZ Bank AG Research maintient sa recommandation "hold" avec un objectif de cours relevé de 800 à 875 USD.
  • Kellanova: Goldman Sachs initie une recommandation neutre avec un objectif de cours de 75 USD.
  • Chevron Corporation: Bernstein maintient sa recommandation "market perform" et réduit l'objectif de cours de 167 à 154 USD.
  • Moderna, Inc : Baptista Research rétrograde l'action de "surperformance" à "sous-performance" et réduit l'objectif de cours de 145 USD à 73 USD.
  • Unity Software Inc : CICC maintient sa recommandation de surperformance et réduit le prix cible de 34 USD à 20 USD.
  • Cloudflare, Inc : Baptista Research rétrograde l'action de "surperformer" à "conserver" et augmente l'objectif de cours de 88,60 USD à 89,10 USD.
  • Bellway P.l.c.: Peel Hunt reclasse l'action de "hold" à "add" avec un objectif de cours relevé de GBX 2920 à GBX 3020.
  • Diageo Plc: RBC Capital relève le titre de sous-performance à performance sectorielle, avec un objectif de cours relevé de GBX 2100 à GBX 2400.
  • JD Sports Fashio: Deutsche Bank rétrograde l'action de "hold" à "sell" avec un objectif de cours ramené de GBX 115 à GBX 110.