All countries, even the US, which is a net exporter, are suffering the consequences of the global supply crunch: natural gas prices have not been this high since 2008. On the oil market, Brent crude oil is trading near the $110 a barrel mark again.

This week will see a flurry of corporate earnings reports, including Johnson & Johnson, Netflix and IBM, followed by Tesla, Procter & Gamble, ASML, Rio Tinto, Nestlé and BHP on Friday. So far, Q1 results have been pretty solid, showing that large companies are responding to their rising costs. We can only hope that the consumer is as flexible.

Meanwhile, the series of speeches by US central bankers continues, keeping investors on their toes as they await the important decisions to be made by the Fed in early May. The very "hawkish" James Bullard confirmed on CNBC the institution's offensive stance on rate hikes, which should result in a double rate increase in two weeks, which means half a point. In monetary policy, key rates usually increase by quarter points in serious economies, except when central banks want to send a different message, to show determination to curb rampant inflation. The Fed plans on May 4 to move its key rate from the current "0.25 to 0.50%" range to the "0.75 to 1%" range without going through the "0.50 to 0.75%" box. CME's FedWatch tool puts the probability of this scenario at 91%. Bullard, who sometimes likes to tease investors, even mentioned a three-quarter point figure in yesterday's CNBC interview, noting that this is not the base case, but that it cannot be ruled out. U.S. government bonds are reacting with 10-year debt paying 2.84%, which brings real rates very close to equilibrium.

Johnson & Johnson dropped 2.6% after it suspended the sales forecast for its Covid vaccine due to a surplus in demand globally.

Some 38 companies in the S&P 500 index have posted first-quarter earnings so far, with 78.9% of them exceeding earnings estimates, according to Refintiv data.

 

Economic highlights of the day:

US housing starts and building permits for March is the main indicator. Yesterday, China announced a slightly higher than expected GDP growth in the first quarter. At the same time, the country's central bank reduced its reserve requirement, urging banks to invest the surplus in the economy.

The dollar is down 0.1% against the euro to EUR 0.9265. The ounce of gold remains firm at USD 1964. Oil rallied with North Sea Brent at USD 110.0 a barrel and U.S. light crude WTI at USD 103.7. The yield on 10-year U.S. debt rises to 2.84%. Bitcoin is trading around USD 41,000 a unit.

 

On markets:

* Twitter - Several private equity firms have expressed interest in a possible bid for the social network, sources close to the matter said Monday. The stock, which gained more than 7 percent on Monday, is down 1 percent in premarket trading Tuesday.

* Microsoft and Apple are each down about 0.2% in pre-market trading as the yield on 30-year U.S. Treasuries hit 3% for the first time since early 2019.

* Johnson & Johnson announced Tuesday it is suspending its Covid-19 vaccine sales forecast, citing uncertain demand and oversupply around the world, sending the stock down 3.5% in pre-market trading.

* Hasbro reported better-than-expected quarterly sales on Tuesday, helped by strong demand for its board games.

* Lockheed Martin lost 3% in premarket trading after reporting a 5.7% drop in quarterly profit due to supply chain issues.

* Halliburton is down 2.7% amid lower oil prices, even though the company posted better-than-expected first-quarter results.

* Netflix and IBM will publish their quarterly accounts after the close of the New York Stock Exchange.

* Several US Airlines announced Monday that they would lift the requirement to wear masks on planes after a federal judge ruled that such a requirement on public transportation was illegal.

* United Parcel Service - The U.S. Department of Justice announced Monday that it has reached a settlement with the courier and delivery group to end a discrimination claim against a former employee in Jacksonville, Fla.

* Zendesk - The software company, which in February rejected a $16 billion buyout offer from a consortium of private equity funds, has hired advisory group Qatalyst Partners to study a possible sale, a source close to the matter said Monday. The share is up 5.9% in pre-market trading.

* Doordash - The meal delivery specialist is down 0.6% in premarket trading after its European subsidiary Wolt announced a disruption of operations in countries bordering Russia and Ukraine.

 

Analyst recommendations:

  • Asos: Jefferies remains Buy with a price target reduced from GBp 4050 to GBp 2440.
  • AstraZeneca: Jefferies remains "Hold" with a price target raised from GBp 8800 to GBp 9500.
  • CMS Energy: Barclays downgrades to equal-weight from overweight. PT up 6.4% to $76.
  • Costco Wholesale: Raymond James adjusts costco wholesale's price target to $645 from $565, keeps outperform rating.
  • ITV: Berenberg downgrades from hold to sell targeting GBp 64.
  • Mastercard: BofA Securities adjusts mastercard price target to $402 from $416, maintains buy rating.
  • Newmont Corp.: Credit Suisse downgrades to neutral from outperform. PT down 6.3% to $80.
  • Parker-Hannifin: Stifel adjusts price target to $338 from $384, keeps buy rating
  • Pinnacle West Capital: Barclays downgrades to underweight from equal-weight. PT up 1.1% to $78.
  • PriceSmart: Scotiabank upgrades to sector outperform from sector perform. PT up 26% to $100.
  • Shopify: Piper Sandler adjusts price target to $800 from $900, reiterates overweight rating.
  • Teck Resources: Canaccord Genuity downgrades to hold from buy, adjusts price target to CA$54 from CA$52.
  • Tesla: Credit Suisse adjusts tesla's price target to $1,125 from $1,025, keeps outperform rating.
  • UnitedHealth: Raymond James adjusts price target to $620 from $540, reiterates strong buy rating.
  • United States Cellular: Morgan Stanley downgrades to equal-weight from overweight. PT up 16% to $37.
  • Wizz air: HSBC upgrades from Reduce to Hold with a target of GBp 2500.