- Macro: Global equities had a positive day yesterday with both the US and Europe in the green. The S&P500 was up +0.32%, whilst the Nasdaq was up +0.14%. In Europe stocks traded higher +0.54%. In the US, eight of eleven sectors were positive and in total 83% of stocks finished higher on the day. Materials (+1.69%) and Health Care (+1.58%) were the two strongest sectors. Communication Services (-0.49%) and Consumer Staples (-0.44%) were the weakest. Paramount Skydance Corp saw its shares rise an impressive +36.7% after the company announced a seven-year partnership with TKO Group Holdings, the owner of the UFC, which will make Paramount the exclusive US broadcaster of all UFC events. In Europe, nine of eleven sectors were positive and a total of 55% of companies finished higher on the day. Health Care (+1.58%) and Information Technology (+1.33%) were the strongest sectors. Energy (-0.86%) and Industrials (-0.43%) were the weakest. British Insurance company Beazley had a noticeably weak day, with shares falling -12.3% after it reduced its full year revenue guidance after a slow start to the year.US MBA mortgage applications came in up +10.9% for the week ended 8th August. Meanwhile in Germany final July CPI came in line with expectations at a 2% annualised rate. This morning in the UK, Q2 GDP growth of 0.3% came in better than the 0.1% estimated.Starting in Europe, final French CPI for the month of July will be released with the annualised rate expected to maintain at 1.0%. Seasonally Adjusted Q2 Eurozone GDP will be published, with the annualised rate expected to remain at 1.4%. In the US today, initial jobless claims for the week ended 9th August will be published. Survey estimates suggest claims will remain relatively unchanged and come in at 225k. Continuing claims for the period ended 2nd August will simultaneously be released. PPI final demand for the month of July will also be updated with an expected increase of 0.2% MoM and YoY to an annualised rate of 2.5%.Central bank speakers today include the Fed’s Musalem and Barkin.
- Stocks: Aviva: (Neutral TP 665p) This morning, Aviva issued a solid set of H1 2025 results. Headline numbers were better than expected, with operating profit (OP) at £11,070mn (11% above consensus), Solvency II Own Funds Generated (OFG) rose +19% YoY to £909m, Discounted Combined Operating Ratio (COR) was 89.8% better versus 91.4% in consensus. Solvency II Cover was 206% in line with 205.9% consensus. Cash remittances of £1022mn were 7% higher than 2024. Management said it is confident in meeting existing guidance for 2026 and that the DirectLine integration is “moving at pace”. We continue to appreciate Aviva’s strong recurring business model, with solid brand, large scale in core markets and diversity to manage risks. Following this release, we raise our target price on Aviva to 665p from 632p. We now value Aviva using a combination of 10x PE, 1.75x P/B and 5.5% target dividend yield on FY26 estimates. We maintain a Neutral rating based on limited upside (+0.9%).
- Debt: There was a big rally in bond markets yesterday with the market more convinced that US monetary policy loosening is looming large. US Treasuries led the way, but sizeable rally in Bunds too, erasing all of Tuesday’s losses.