Before the bell: bright outlook for Wall Street

The US and EU strike a trade deal, China unveils a stimulus plan, and Heineken reports declining volumes and revenue.

Yesterday, the United States and the European Union reached a trade agreement. The tariff on goods from the EU will be 15%, except for steel and aluminum, which remain subject to a 50% tariff. Today, members of the US House of Representatives begin their annual summer recess. They’re not expected back until September. Historically, this is good news for Wall Street—several studies have shown that markets tend to perform better when Congress is not in session. Markets may have already priced in that optimism: last week, both the Nasdaq (+1%) and the S&P 500 (+1.5%) hit new record highs. On Friday, they added 0.2% and 0.4%, respectively. Deckers Outdoor surged 11.4% on stellar quarterly results, while Intel (-8.5%) fell sharply after nearly doubling its quarterly loss to 2.9 billion dollar. News of significant job cuts failed to calm investors. European markets treaded water on Friday. Volkswagen issued its third profit warning of the year, yet shares rose 4.6%. Meanwhile, Puma plunged 16% after disappointing results. In Brussels, Elia rose 2.3%, while Umicore (-3.1%) and WDP (-3.2%) underperformed.

In Asia, Japanese shares are down about 1% on average this morning. Hong Kong is up 0.5%. China’s Ministry of Agriculture announced a plan to boost consumption of agricultural goods—China Foods Limited jumped 2.1% in response. Later today, Vastned reports earnings after the bell. In the US, we’ll get numbers from Waste Management and Whirlpool.

Lemey’s picks

Quirien Lemey, a fund manager at Decalia, is a familiar name to our readers. The tech stock expert shared a few of his top picks in De Tijd this weekend. He believes the market underestimates the potential of chipmaker Marvell. He’s also bullish on SiTime, the leader in timing chips, and software company Salesforce, known for its customer relationship management tools. In medtech, Lemey likes Edwards Lifesciences, a company producing heart valves that can be placed via catheter, avoiding open-heart surgery. He rounds off his picks with CyberArk, a cybersecurity firm. Lemey believes the company’s recent acquisitions could deliver positive surprises.

A bitter brew for Heineken

Beer makers have been struggling for a while in a declining market. Now, Heineken is also grappling with a falling dollar, putting it at a disadvantage compared to AB InBev, which reports in dollar, while Heineken reports in euro. As a result, the Dutch brewer couldn’t offset declining volumes with price increases this time. In the first half of the year, revenue fell 5% to 16.9 billion euro, and beer volume was down 1.2%. The declines were sharpest in Brazil, the US, and Europe. One bright spot? The Heineken brand itself, which saw a 4.5% volume increase. That growth came mainly from Asia (+21.6%), as volumes in Europe actually dropped 4.3%. Africa and the Middle East also contributed with an 8% increase. AB InBev reports earnings on Thursday—we’ll then find out whether the Belgian competitor fared better than the Dutch.

Did you know…

that Sundar Pichai, CEO of Alphabet, is worth 1.1 billion dollar? His annual salary is a modest two million dollar in cash, but he also receives compensation in stock. Pichai isn’t the best investor, though: he regularly sold his shares. Had he held on to all his Alphabet stock, his fortune would now be worth 2.3 billion dollar.

This article was translated from Dutch and was originally published on Spaarvarkens.be.