After the disappointing core inflation reading last 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. But on Friday, the March US retail data showed 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, which fueled recession fears.

However, financial stocks outperformed, boosted by strong earnings from US banks JPMorgan and Citigroup. Despite this, Wall Street indices gave up some ground last Friday, with the S&P500 reaching a positive weekly score of around 0.80%. The Nasdaq100 is lagging, losing 0.13% last week.

Overall, equity markets are holding up well and investors are still optimistic. They are ready for earnings season, with a busy schedule this week: we have Charles Schwab on Monday, Johnson & Johnson, Bank of America, Netflix and Goldman Sachs on Tuesday, ASML Holding, Abbott Laboratories, Morgan Stanley and International Business Machines on Wednesday, and Philip Morris, Rio Tinto and EssilorLuxottica on Thursday.

As for the macro agenda, we have the March Empire Manufacturing index and the NAHB house price index for March today. UK unemployment figures and German economic sentiment tomorrow will be published tomorrow, ahead of UK inflation data on Wednesday, unemployment figures on Thursday, before reaching a climax on Friday with the March manufacturing and services PMIs for the US and the eurozone. Not to forget the many speeches by US central bankers, which will keep investors on their toes as they await the important decisions to be taken by the Fed in early May.

US equities futures were struggling for direction this morning ahead of the first quarterly results. The Dow Jones Industrial Average futures gained 0.1%, while the S&P 500 futures and Nasdaq futures were flat.

 

Economic highlights of the day:

In the US, the March Empire Manufacturing index and the NAHB house price index for March are today’s main indicators. All the agenda is here.

The dollar is up 0.2% against the euro to EUR 0.9128 and down 0.1% against the pound to GBP 0.8057. The ounce of gold is taking a breather at USD 2000. Oil is stabilizing with North Sea Brent at USD 85.44 a barrel and US WTI light crude at USD 81.79. US debt has a 10-year yield of 3.51%. Bitcoin is trading just below USD 30,000.

 

In corporate news:

  • Merck & Co announced on Sunday that it was buying Prometheus Biosciences for about $10.8 billion, giving it a promising experimental treatment for ulcerative colitis and Crohn's disease and strengthening its presence in immunology. Prometheus shares jump 70.2% in pre-market trading.
  • Alphabet's shares fall 3.3% in premarket trading in response to reports that Samsung plans to replace Google's internet search engine with Microsoft's on its devices.
  • Apple - The company's sales in India rose nearly 50 percent year-on-year in March to $6 billion, Bloomberg reported Monday, citing a source close to the matter.
  • Regional bank Charles Schwab is up 3% in premarket trading after reporting better-than-expected first-quarter profit.
  • Apollo Global Management is expected to formalize a takeover bid for John Wood Group by 17 May for around 1.66 billion pounds, as the UK oil and gas services specialist has entered into commitments with the US private equity group.
  • Fox Corp - The opening of a defamation lawsuit between e-voting company Dominion Voting Systems and Fox News, accused of reporting allegations of voter fraud after Donald Trump's defeat in the 2020 US presidential election, has been postponed until Tuesday as the media group continues to seek an out-of-court settlement, a source said.
  • Netflix - More than 11,000 users in the US were briefly cut off from the video streaming and gaming platform's services on Sunday night due to an outage, according to Downdetector.com.
  • Tesla - Informed over the weekend of a cut in their performance bonuses, employees at the US group's Shanghai plant took to social media to express their discontent, a rare occurrence in China.

 

Analyst recommendations:

  • Biogen: Piper Sandler upgrades to overweight from neutral. PT up 20% to $346.
  • Diageo: Goodbody initiates coverage with a Hold recommendation and targets GBp 3700.
  • HP inc: J.P. Morgan upgrades to overweight from neutral. PT up 17% to $35.
  • Meta:  New Street Research downgrades to neutral from buy. PT down 0.7% to $220.
  • Murphy Oil: Jefferies upgrades to buy from hold. PT up 4.9% to $41.
  • National Grid: JP Morgan remains Overweight and upgrades its target to GBp 1,275 from 1,150.
  • Penn Entertainment: JMP Securities downgrades to market perform from market outperform. PT jumps 57% to $45.
  • RS Group: RBC Capital Markets upgrades from sector perform to outperform and targets GBp 1000
  • Staar Surgical: Piper Sandler initiated coverage with a recommendation of neutral. PT set to $65.
  • Teradyne: J.P. Morgan downgrades to underweight from neutral. PT down 20% to $81.
  • Wolfspeed: J.P. Morgan downgrades to neutral from overweight. PT up 16% to $65.