Equities Set to Rebound on Brighter China Prospects

The S&P 500 and the Nasdaq Composite fell to their lowest levels in two weeks Monday as investors continued to grapple with the outlook for the economy and interest rates. Tech and mega-cap shares led the losses, as the Nasdaq fell by 1.1% and the S&P 500 by 0.4%, while the Dow Jones ended marginally lower. In Europe, equity markets also closed mostly lower yesterday, following their worst performance in three months last week. 

Summary for 27.06.2023 

• Asian shares shook off earlier losses on Tuesday, helped by assurances that Beijing would support flagging growth in the world’s second-largest economy, which helped investors shift their focus away from risks around interest rates and Russia.  
• European and US shares look set for tiny gains at the open as risk sentiment improved, while investors look ahead to a fresh batch of economic data this week to guide the economic and interest rate outlook.  
• Oil prices edged higher this morning, spurred by worries about political instability in Russia and possible supply disruptions, as well as US demand hopes ahead of the summer driving season. 
• China’s economic growth in the second quarter will be higher than the first and is expected to reach the annual economic growth target of around 5%, China’s Premier Li Qiang told delegates at the World Economic Forum in Tianjin on Tuesday. Li said: “We will launch more practical and effective measures in expanding the potential of domestic demand, activating market vitality, promoting coordinated development and promoting high-level opening to the outside worlds.”  
• Russian President Vladimir Putin condemned leaders of the Wagner mercenary group as traitors to Russia in a late-night speech to the nation, his first public comments since the mutiny that posed the most serious threat to his nearly quarter-century rule. He spoke hours after Wagner leader Yevgeny Prigozhin said he wasn’t trying to oust Putin’s government but would keep his mercenary company going despite official efforts to shut it down.  
• Alphabet shares were downgraded to “neutral” from “buy” by UBS, citing beliefs there is limited upside to consensus estimates. UBS still raised its price target to $248 from $185. Alphabet shares fell 3.3%. 
• Carnival Corp shares sank despite the cruise operator reporting a smaller-than-expected loss of 35 cents per share for the recent quarter and giving an upbeat forecast. However, Carnival’s management also noted rising costs. Carnival shares fell 7.6%. 
• Micron Technology’s share price target was raised by $10 to $65 by Stifel analyst Brian Chin, though he kept a “hold” rating on the equity ahead of the chipmaker’s quarterly results Wednesday. Investors will likely be watching the company’s numbers for clues about the outlook for chip demand. Micron shares ended 0.3% higher Monday. 
• Moderna shares were upgraded to “buy” from “neutral” by UBS, which said investors do not fully appreciate the company’s potential to create new vaccines. Moderna shares rose 1.6% yesterday. 
• Pfizer announced yesterday it would end the development of its experimental obesity and diabetes drug, lotiglipron. Its shares fell 3.7%. 
• Sherwin-Williams shares were upgraded to “outperform” from “market perform” by BMO Capital yesterday, saying they see a “reasonable upside” to the company’s outlook with raw material inflation fading and housing markets showing signs of improving. Shares rose 1.9% during Monday’s session. 
• Tesla shares were downgraded to “neutral” from “buy” by Goldman Sachs analyst Mark Delaney, who cited a “difficult” pricing environment for new vehicles. Tesla shares were down 6%.