The Zacks Analyst Blog Highlights Intesa Sanpaolo, Ford Motor and Cummins
For Immediate Release
Chicago, IL – June 25, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Intesa Sanpaolo ISNPY, Ford Motor F and Cummins CMI.
Here are highlights from Monday’s Analyst Blog:
Global Week Ahead: Key Inflation Data Insights for Interest Rate Moves
Greetings, Zacks Equity Strategist Shaun Pruitt here filling in for John Blank.
In the Global Week Ahead, markets will be awaiting Personal Consumption Expenditures (PCE) data in the U.S., Tokyo’s CPI index, and preliminary June data from Eurozone economies.
Notably, these readings will help assess how quickly global interest rate moves will likely come for the major economies.
Meanwhile, central bank meetings in emerging markets and the run-up to elections in Britain and France will be of interest concerning global economic and political policies as well.
Next are Reuters’ five world market themes, reordered for equity traders:
(1) Monitoring the Global Easing Cycle
A push by many emerging market central banks to front run a global easing cycle has lost momentum as the prospect of near-term Fed rate cuts fades and King Dollar weighs on many a currency.
Mexico's central bank is expected to keep rates on hold on Thursday. It's grappling with inflation ticking up and election-induced peso volatility after a surprise strong showing of the ruling party coalition in a June 2 ballot that spooked investors.
Policymakers in the Philippines — meeting the same day — are set to leave rates at 17-year highs, having flagged their restrictive policy settings as appropriate.
And Turkey — a reluctant late joiner to the hiking cycle — is seen sticking with its benchmark rate at 50%, as policymakers still feel the sting of inflation which stood at an eye-watering 75% in May.
(2) On Friday, markets await PCE price index data in the U.S.
That long-awaited slowdown in U.S. inflation has been hard to come by, but investors are hopeful — perhaps more so than the Fed officials, who are anticipating just one rate cut this year.
Friday's key inflation gauge, the Personal Consumption Expenditures (PCE) price index, should show whether the easing inflation trend is in place.
But there's reason for caution.
Recent PCE readings have not always conformed to expectations. The most recent, reported on May 31, showed U.S. inflation unexpectedly tracking sideways in April.
Another such reading on June 28 could undercut the case for those who believe rate cuts are coming anytime soon. Unlike the Fed, markets are holding out for almost two rate cuts this year.
(3) Also on tap Friday: Eurozone June inflation data
Eurozone June inflation data trickles in from Friday with flash prints for France, Italy and Spain.
The data will set the tone for a Eurozone-wide print on July 2, key for traders trying to gauge how many times the European Central Bank (ECB) will cut rates this year.
The ECB cut rates on June 6, but still strong domestic inflation and wages have raised question marks on how many more will follow.
Traders expect one more cut and a roughly 64% chance of a second by year-end, down from nearly 80% before the June meeting.
Any upside surprise would sour the mood for investors grappling with fresh political uncertainty after French President Emmanuel Macron called a first round French election on June 30.
(4) Mixed signals from Japan
The Bank of Japan (BOJ) has kept the door open to a July rate hike. Markets are not convinced and assign less than 1-in-3 odds to a quarter-point increase.
A big reason for that is the BOJ has already said it will also outline quantitative tightening next month. The argument goes that doing too much at once risks roiling bond markets.
Of course, the BOJ — like everyone else — is data-dependent. And the data thus far isn't exactly exerting pressure to tighten. Weak consumer spending is a particular worry, and demand-driven inflation has cooled for nine straight months.
Some key macro readings in coming days will help shed light on the outlook, with retail sales data due Thursday and Tokyo CPI a day later. The BOJ also releases the minutes of its June meeting on Monday.
(5) Elections in Britain and France are crucial to Forex (FX) Trading
It's funny how quickly times change. While Britain has been a hot spot for political instability for some time, the Eurozone has been relatively calm.
Yet, it's the snap French parliamentary election that has markets fretting that a majority for the far-right could mean more spending, hurting France's already frail fiscal position.
Traders have pushed the euro to one-month lows; further weakness could be in store in the next few days.
Sterling, meanwhile, is benefiting from expectations that a big win for the opposition Labour majority in Britain's July 4 election will bring stability.
It's the best performing major currency versus the dollar so far this year and has hit almost two-year highs versus the euro.
Ironically, concern that a Liz Truss-style episode, when Britain's plans for unfunded tax cuts in 2022 roiled markets, could be repeated in France helps explain jitters towards the euro. After all, that episode sunk the pound to record lows.
Top Zacks Rank #1 (STRONG BUY) Stocks
My choices for this week are two U.S. stocks with industry leadership within the auto sector and a large European Bank.
(1) Intesa Sanpaolo: This is a $22 share price stock, operating in the Banks-Foreign Industry, with a market cap of $68.26B. I see a Zacks Value score of C, a Zacks Growth score of D and a Zacks Momentum score of F.
Intesa Sanpaolo is a new banking group resulting from the merger between Banca Intesa and Sanpaolo IMI. It has leadership in the Italian market and a strong international presence focused on Central-Eastern Europe and the Mediterranean basin.
The new group brings together two major Italian banks with shared values and improves their growth opportunities as well as enabling enhanced service for retail customers, significant support for the development of business customers, and an important contribution to growth in all the countries where it operates.
Intesa Sanpaolo intends to become a benchmark for the creation of value in the European banking sector.
(2) Ford Motor: This is a $11 share price stock, operating in the Automotive-Domestic Industry, with a market cap of $47.67B. I see a Zacks Value score of A, a Zacks Growth score of D and a Zacks Momentum score of D.
Ford is one of the leading automakers in the world. It manufactures, markets and services cars, trucks, sport utility vehicles, electrified vehicles and Lincoln luxury vehicles.
Effective 2023, Ford came up with a new operating model and reporting structure. As a result of this change, the business has the following segments: Ford Blue, Ford Model E and Ford Pro (combined, replacing the previous Automotive segment), Ford Next (previously the Mobility segment) and Ford Credit.
Together, Ford Blue, Ford Model E and Ford Pro produced $165.9 billion in automotive revenues in 2023 while The Ford Next segment primarily encompasses costs and investments related to emerging business initiatives. The Ford Credit segment deals with vehicle-related financing and leasing activities.
(3) Cummins:This is a $276 share price stock, operating in the Automotive-Internal Combustion Engines industry, with a market cap of $37.88B. I see a Zacks Value score of C, a Zacks Growth score of C and a Zacks Momentum score of C.
Cummins is a leading global designer, manufacturer, and distributor of diesel and natural gas engines and powertrain-related component products.
Powertrain components include fuel systems, turbochargers, transmissions, batteries and electrified power systems among others.
The company offers products to original equipment manufacturers (OEMs), distributors, and dealers through a network of roughly 600 company-owned and independent distributor facilities in over 9,000 dealer locations in more than 190 countries and territories.
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