First, a quick update on yesterday’s session. Indices recovered broadly with European equities (STOXX Europe 600 Net Return) rising by 0.34%, while Wall Street got back on track with bigger gains, with the S&P500 up 1.3%, the Dow Jones up 1.1% and the Nasdaq 100 up 2.0% after three mixed sessions.

After the disappointing core inflation reading on Wednesday, which showed a slight rebound from February, investors cheered the March producer prices in the US. They contracted by 0.5% compared to February, whereas economists were expecting them to stabilize. US jobless claims rose more than expected last week, a sign that the labor market is entering its long-awaited slowdown phase. This is not good news for the real economy, but it is good news for the Federal Reserve, as the transmission belt of its monetary policy seems to be working. However, this did not change the probability of a 25bps rate hike by the Fed at the May 3 meeting. According to CME's FedWatch tool, the probability was still around 65% (compared to 35% for a status quo).

But that was until we had the opportunity to take the pulse of US consumer spending with the March US retail sales data. Sales at retailers fell 1% in March and declined for the fourth time in the past five months. Economists were expecting a contraction of 0.4% in monthly data. This is another bad sign for the real economy. This fueled recession fears and futures on the main three Wall Street indexes declined as a result, before recovering. On the CME FedWatch tool, the probability of a 25 bps rate hike in May is now about 80%.

On the corporate front, this last session of the week marks the start of earnings season with the traditional US banks. JPMorgan, Wells Fargo and Citigroup announced their performance for the first quarter of the year. All three beat analysts' estimates, and this helped indexes return to green. The earnings and communications of these industry heavyweights will likely come under scrutiny following the recent setbacks in the US banking system, which have shaken the markets to their core. Also on the agenda, the results of UnitedHealth, one of the largest US health insurers, and BlackRock, one of the world's largest asset managers.

 

Today’s economic highlights:

Several US statistics are on the agenda with retail sales, industrial production and the University of Michigan's confidence index.  All the macro agenda is here.

The dollar is unchanged at EUR 0.9048 and GBP 0.7990. The ounce of gold is slightly down to USD 2034. Oil loses ground with North Sea Brent at USD 86 a barrel and US WTI light crude at USD 82. US debt has a 10-year yield of 3.44%. Bitcoin is trading at 30800 dollars.

 

In corporate news:

  • JPMorgan Chase & Co was up 4.9% in premarket trading after reporting a rise in first-quarter profit as rising interest rates boosted its consumer business.
  • Wells Fargo's first-quarter profit rose to $4.99 billion as rising interest rates supported its interest income. The fourth-largest U.S. bank gained 1.8 percent in pre-market trading.
  • United Health reported a quarterly profit above market expectations and raised its annual forecast on the back of lower medical costs. The health insurance group was up 0.7% in premarket trading.
  • Blackrock - The world's largest asset manager reported a lower but better-than-expected quarterly profit thanks to a strong inflow of new business, which helped mitigate the impact on fee income of the turmoil in the banking sector.
  • Boeing, faced with a new quality problem at Spirit Aerosystems, has halted deliveries of some 737 MAX aircraft, the aircraft manufacturer announced on Thursday, losing 4.5% in pre-market trading. Spirit was down 11.7%.
  • Tesla on Friday lowered the price of its electric vehicles in many European markets, including France and Germany, Israel and Singapore, the company said, losing 1.2% in premarket trading.
  • Walmart will sell men's fashion brand Bonobos to Express and WHP Global for $75 million a price well below what it paid nearly six years ago. In pre-market trading, Express was up 20%.
  • Lucid - The electric carmaker reported lower first-quarter production and delivery figures on Thursday than in the previous three months, sending its share price down 5.8 percent before the U.S. market opened.
  • In pre-market trading, Nikola was down 3%. The electric truck designer announced the retirement of three members of its board of directors in June: Gerrit Marx, Lynn Forester de Rothschild and Mark Russell.

 

Analyst recommendations:

  • SLM Corp: Compass Point Research & Trading raised its recommendation to buy from neutral. PT up 31% to $18.
  • Mosaic : Barclays upgrades to equal-weight from underweight. PT up 16% to $54.
  • Inspire Medical: Mizuho Securities initiated coverage with a recommendation of buy. PT up 21% to $300.
  • National Instruments: Jefferies downgrades to hold from buy. PT up 3.3% to $60.
  • London Stock Exchange: Deutsche Bank is keeping its Neutral rating. The target price has been raised to GBp 8000 from GBp 7700.
  • ResMed: Mizuho Securities initiated coverage with a recommendation of buy. PT up 13% to $255.
  • Hecla Mining Co: Roth MKM cut its recommendation to neutral from buy. PT down 9.8% to $6.25.
  • Whitbread: Peel Hunt upgrades to buy from add. PT up 33% to 4,000 pence.