Uncertainty lingers on stock markets, as the pace of earnings season intensifies. A flurry of speeches from central bankers is expected by the end of the week, ahead of a major monetary policy decision by the Fed in a fortnight.

US equities posted a third consecutive session of tiny swings around equilibrium yesterday, a sign of some caution as a new season of quarterly releases gets underway. I guess you could call it a lateralization or something like that. But with a permanent bullish bias, which allows some indices to fly from one small record to another, like the French CAC40 or the British FTSE, which yesterday posted its eighth consecutive session in the green. For the record, London has only seen one decline in fifteen sessions. Western markets benefited from the acceleration of Chinese GDP in the first quarter of 2023 and the widespread feeling that the time for major upheavals is probably over: interest rates will rise a little, the economy will slow down a little and so will inflation, while results will deteriorate a little. Investors are getting used to this tepid environment, a little.

At the same time, they are not listening too much to the calls for caution from some financial strategists, nor to the cacophony of central bankers on the evolution of key rates. In the US, Atlanta Bank President Raphael Bostic yesterday indicated that he was in favor of raising rates further and then keeping them high for a while. His peer at the St Louis Fed, James Bullard, is more aggressive, expecting two or three more hikes. But that doesn't seem to be troubling investors, which are still betting on a reversal of the machine during the year. The Fed's whistle will be blown from Saturday, to respect the legal silence period before the May 3 policy decision. Between now and then, many of them will be making speeches, especially on Thursday.

Elsewhere in the news, Fox News has been ordered to pay $787.5 million to Dominion Voting System, which sued the ultraconservative TV channel for defamation after it presented as fact that the company, whose machines were collecting votes in 28 states, rigged the election in favor of the Democrats during the 2020 US presidential election. 

The trial began on Tuesday in a Delaware court, but ended very quickly with an agreement between the parties.

Meanwhile, European leaders agreed yesterday to mobilize €43bn, from public and private sources, to develop the semiconductor industry and thus improve the region's self-sufficiency in this area. In addition, the Commission is working on a reform of the banking crisis management system, even though the eurozone did not suffer any losses in the 2023 crisis, which saw the collapse of Credit Suisse in Europe and SVB Financial and Signature Bank in the US.

 

Economic highlights of the day:

On the agenda today, we have the second reading of Eurozone inflation in March, the weekly oil inventories in the US and the latest Fed Beige Book. All the agenda is here. 

The dollar is up 0.3% against the euro to EUR 0.9140 and is flat against the pound at GBP 0.8049. The ounce of gold fell to USD 1979. Oil loses a few cents with North Sea Brent at USD 83.32 a barrel and US WTI light crude at USD 79.60. The yield on US 10-year debt is at 3.58%. Bitcoin is just under USD 30,000.

 

In corporate news:

  • Morgan Stanley reported a drop in first-quarter profit on Wednesday as its core investment banking business remained under pressure amid a continued decline in M&A activity. The stock was down 2% in premarket trading.
  • Netflix on Tuesday reported January-March results in line with Wall Street expectations but with fewer new subscribers than expected, and issued a disappointing forecast for the current quarter. The stock was down 1.6% in premarket trading.
  • Tesla was down 2.2% in premarket trading after it further lowered prices for some of its Model Y and Model 3 electric vehicles in the US, raising concerns about the company's profit margins.
  • Western Alliance Bancorp climbed 15.5 percent in premarket trading after the regional bank reported better-than-expected quarterly profit and stabilized deposits following last month's banking crisis.
  • United Airlines reported a second-quarter profit and maintained its annual profit target on "strong" demand, particularly for international travel. The stock was up 0.6% in pre-market trading.
  • Abbott Laboratories reported better-than-expected quarterly profit on Wednesday, boosted by sales of its diabetes treatment devices and improved demand for its other medical equipment. The stock was up 2% in premarket trading.
  • Baker Hughes - The oil and gas group reported a better-than-expected first-quarter profit on Wednesday as demand for its services rose from oil and gas producers looking to take advantage of a recovery in China and high prices.

 

Analyst recommendations:

  • Alliant Energy: Wells Fargo Securities upgrades to overweight from equal-weight. PT set to $61, implies a 12% increase from last price.
  • Bristol-Myers: Baptista Research initiated coverage with a recommendation of hold. PT set to $77.50.
  • Brunswick: KeyBanc Capital Markets initiated coverage with a recommendation of overweight. PT set to $100.
  • EasyJet: Liberum remains Buy with a price target raised from GBP 500 to GBP 650.
  • Global Payments: Baird upgrades to outperform from neutral. PT up 43% to $156.
  • Intuitive Surgical: Truist Securities raised the target on Intuitive Surgical Inc. to $325 from $300. Maintains buy rating.
  • National Grid: Jefferies remains 'Hold' with a price target raised from £820 to £1000.
  • Netflix: Fubon Securities upgrades to buy from neutral. PT up 17% to $389.
  • Network International: Credit Suisse downgrades from Outperform to Neutral targeting GBp 387.
  • Paychex: Baptista Research initiated coverage with a recommendation of outperform. PT set to $131.50.
  • Polaris: KeyBanc Capital Markets initiated coverage with a recommendation of overweight. PT set to $125.
  • Tenet: J.P. Morgan initiated coverage with a recommendation of overweight. PT set to $72.
  • Universal Health: J.P. Morgan initiated coverage of Universal Health Services Inc. Class B with a recommendation of neutral. PT set to $133.