| By Romain Fournier |
| Wall Street indexes continued their correction on Monday. As is often the case, the trigger for the downward movement was abrupt, unexpected, and outside of the clearly identified threats that investors have singled out. Russia’s invasion of Ukraine is turning up the heat on most commodity prices, which will likely lead to considerable turmoil. And a Russian oil ban should push prices even higher. |
| US stock market indexes, which had held up well until then, suffered another blow yesterday, falling quite heavily at the end of the session. The broad S&P500 index lost about 3%, while the Nasdaq, rich in technology stocks, sank by 3.75%. The surge in commodity prices, led by black gold, has allowed the oil sector to go it alone, or almost, in the bull market. Volatility is still extremely high, and the VIX index jumped sharply higher yesterday, reaching over 36 points. A level is very close to the October 2020 peak (which coincided with the second wave of coronavirus). The VIX, based on 30-day options on the S&P500, is the most widely used indicator of nervousness among investors. Markets have been slow to realize that the aftermath of the war in Ukraine has taken away the mini-window of opportunity that central bankers had to regain control of inflation without doing too much damage to the economy. Until two weeks ago, the Fed had rather favorable conditions to launch its monetary tightening cycle. But everything has changed. The staggering rise in commodity prices makes central banks’ tasks much more difficult. Western countries are taking several steps to try and improve the situation: The G7 will meet on Friday with its agriculture ministers to find ways to stabilize food markets. The International Energy Agency has published a ten-point plan to reduce Europe’s dependence on Russian gas. The problem, of course, is that the remedies, if they prove to be effective, will take time to have any effect. In the meantime, inflation is likely to creep in everywhere. Wall Street indexes were down this morning, and the high level of volatility means that investors are likely to react sharply, one way or the other, to any announcement. Oil price keeps rising. As I write these lines, U.S. President Joe Biden is expected to announce a ban on Russian oil in remarks any minutes… Economic highlights of the day: German industrial production, the US trade balance and wholesale inventories are on the agenda today. The dollar is down 0.4% to EUR 0.9162, while the ounce of gold is up to USD 2014. Oil is rising to above USD 130 per barrel for Brent and above USD 128 for WTI. US debt yields are back up to 1.80% on 10-years and the Bund remains in negative territory at -0.02%. Bitcoin is hovering around USD 38,800. On markets: * Polymet Mining – Shares of the Wall Street-listed copper and nickel producer soared 50% in premarket trading as nickel prices soared above $100,000 a ton for the first time on Tuesday on fears of tougher Western sanctions against Russia, the metal’s main producer. * Hycroft Mining – The gold and silver producer’s stock rose 183% in premarket trading in response to a further rise in gold to $2,012 an ounce. * Tesla – The U.S. automaker sold 56,515 electric vehicles produced in China in February, including 33,315 for export, according to data released Tuesday by the China Passenger Car Association (CPCA), the Chinese industry federation. Tesla shares are up 1.2 percent in premarket trading. * South Korea has approved a law, set to take effect March 15, that prohibits major platform operators such as Apple and Alphabet subsidiary Google from forcing app developers to use their payment systems, the country’s telecom regulator announced Tuesday. Separately, Apple is expected to unveil a new version of its entry-level iPhone compatible with 5G networks this Tuesday during its traditional spring conference, analysts said. * Mandiant – The cybersecurity specialist’s share price is down 2.8% in pre-market trading on Tuesday, the day after a 16% jump following initial reports of a takeover of the group by Google. The subsidiary of Alphabet confirmed Tuesday that it had bought Mandiant for $ 5.4 billion. * Kohl’s – The department store chain, which recently rejected two separate takeover offers, said Monday it had contacted more than 20 potential acquirers and signed confidentiality agreements with some of them that give them access to more financial data. Kohl’s shares are up 3.2 percent in premarket trading. * The Estée Lauder Co announced Monday that it intends to suspend all business operations in Russia, including the closure of all its stores in the country. * Lockheed Martin – The U.S. defense group announced on Tuesday its intention to invest more than $1 billion in a military production facility in Saudi Arabia. * KKR – U.S. fund KKR is in preliminary discussions for a potential bid for French renewable-energy producer Albioma, which is valued at about 1.1 billion euros, Bloomberg reported Tuesday, citing sources close to the matter. In addition, according to the Italian daily Il Messaggero, KKR is still interested in buying Telecom Italia but at a price of about 0.40 euro per share, compared to a proposal in November at 0.505 euro per share, which valued its target at 10.8 billion euros. * Moderna – The U.S. laboratory announced Monday its intention to develop vaccines targeting 15 of the world’s most worrisome pathogens by 2025, in preparation for potential future pandemics. Analyst recommendations: Adobe: Phillip Securities initiated coverage with a recommendation of buy. PT set to $658. Archaea Energy: Stifel at Buy with $37 Price Target Bank of America: Baird upgrades to neutral from underperform. PT up 9.5% to $42. Biogen: Stifel downgrades to hold from buy. PT up 8.4% to $223. BlackRock: Exane BNP Paribas downgrades to neutral from outperform. PT up 7.1% to $725. Bumble: Cowen adjusts price target to $36 from $75, keeps outperform rating Caterpillar: Jefferies upgrades to buy from hold. PT up 32% to $260. DocuSign: UBS adjusts price target to $110 from $170, maintains neutral rating Essentra: Berenberg starts tracking as buy, targeting GBp 360. Fastenal: Wells Fargo upgrades to equal-weight from underweight. PT up 7.2% to $58. First Horizon: Keefe, Bruyette & Woods downgrades to market perform from outperform. PT up 6.6% to $25. Flutter: Jefferies remains Buy with a price target reduced from GBp 16,500 to GBp 15,500. Gilead Sciences: RBC Capital lowers price target for gilead sciences to $77 from $85, maintains outperform rating. ITV: Bernstein upgrades from neutral to outperform, targeting GBp 124. Millicom: Scotiabank upgrades to sector outperform from sector perform. PT jumps 64% to $32.90. Moody’s: Baird initiated coverage with a recommendation of outperform. PT set to $363. S&P Global: UBS adjusts price target to $486 from $520, maintains buy rating SquareSpace: Mizuho Securities cuts to neutral from buy, price target to $22 from $35 The Arena Group Holdings: B Riley Securities initiated coverage with a recommendation of buy. PT set to $15. Travis Perkins: Jefferies downgrades from buy to hold targeting GBp 1416. Universal Health Services: UBS adjusts price target to $134 from $124, maintains sell rating. Contact us | Discover our services MarketScreener.com is published by Surperformance SAS You are receiving this message because you have opted to receive our communications and offers. You can unsubscribe by clicking on this link. |
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