Oil prices are down after the US and European Union announced a deal on liquefied natural gas to help Europe end its reliance on Russian gas.

Stock markets are holding up. Many sectors are in turmoil, but on the surface, indexes are doing rather well given the context. The Nasdaq recovered 2.2% and the S&P500 1.4% yesterday.

Energy was the main topic of Joe Biden's visit to Europe, and a new deal was announced at the G7 meeting to supply LNG to reduce the continent's dependence on Russian gas. The objective is to replenish the old continent's stocks in preparation for the winter of 2023. A sort of new transatlantic supply bridge, to stop fattening the Russian trade balance.

Joe Biden is also scheduled to visit Poland today, after having been firm yesterday in his condemnation of Russia. Along with the Europeans, the U.S. president has proposed excluding Russia from the G20, promised a strong response to the use of unconventional weapons, and announced new sanctions against Russian interests.

The Institute of International Finance (IIF), which tracks global cash flows in near-real time, has noticed that there have been significant outflows from China since Russia invaded Ukraine. This has been in both equities and bonds, at an unprecedented rate. The IIF has not seen any major changes in other emerging countries. It's a bit early to draw any definitive conclusions, admits the organization's senior economist, Robin Brooks, but "the timing of the exits suggests that foreign investors may be looking at China in a new light." In other words, they may have introduced an additional risk premium labeled "geopolitical uncertainty," since China, too, has expansionary aims. It should be noted, however, that these exits also coincided with a sharp decline in Chinese equity markets, which have only recently rebounded on the back of soothing statements from Beijing on supporting financial markets.

Yesterday, new data showed the number of Americans filing new claims for jobless benefits fell to a level not seen since 1969, while unemployment rolls continued to decline. The strength in the job market could strengthen the case for a 0.5% rate hike by the Federal Reserve in May.

 

Economic highlights of the day:

The US consumer confidence index by the University of Michigan is today's main indicator.

The dollar is trading at 0.9080. Gold is down to USD 1943. Oil retreats a bit but remains high, with North Sea Brent at $116.99 and U.S. WTI light crude at $110.27. US debt yields hold at 2.36% over 10 years, while German debt offers a coupon of 0.53% over the same duration. Bitcoin is trading around USD 44,000.

 

On markets:

* The Boeing Company - The second black box from the China Eastern Airlines Boeing 737-800 that crashed in the mountains of southern China on Monday has not yet been found, the China News Agency reported, denying a report published by CAAC News, a publication run by the Civil Aviation Administration of China.

Separately, the Federal Aviation Administration (FAA), the U.S. civil aviation authority, has warned Boeing that it may not obtain certification for the 737 MAX 10 by the end of the year, according to a source.

* Netflix on Friday announced a third acquisition in the video game sector since its diversification into this segment with the purchase of Texas studio Boss Fight Entertainment for an undisclosed amount.

* AbbVie, Endo International - Texas authorities on Thursday asked the two companies to turn over documents related to drugs that block puberty in children who consider themselves transgender as part of an investigation into improper use of the treatments.

* Wall Street-listed Chinese technology companies such as Alibaba, JD.Com and Pinduoduo fell 4.4 percent to 6.7 percent in premarket trading on fears of a delisting from the New York Stock Exchange as U.S. regulators demanded access to the companies' audit records.

* NIO - The Wall Street-listed Chinese electric vehicle maker fell 5.1% in premarket trading after reporting a net loss of 2.18 billion yuan in the fourth quarter compared to 1.49 billion yuan a year ago.

 

Analyst recommendations:

  • Ansys: Daiwa Securities initiated coverage with a recommendation of sell. PT down 19% to $253.
  • Avery Dennison Corporation: Truist Securities starts at buy with $227 price target
  • Axalta: RBC Capital Markets downgrades to sector perform from outperform. PT up 6% to $26.
  • Carvana: Wedbush lifts price target to $160 from $140, outperform rating kept
  • Ceres: Jefferies maintains a Hold rating with a price target reduced from GBp 1,150 to GBp 700.
  • Drax: Morgan Stanley upgrades from in-line to overweight targeting GBp 935.
  • Farfetch: Societe Generale upgrades farfetch to buy from hold; price target is $22
  • Homeserve: Jefferies upgrades from underperform to hold targeting GBp 830.
  • Indivior: Morgan Stanley starts in-line weighted tracking targeting GBp 330.
  • Intuitive surgical: RBC Capital Markets reinstated coverage of Intuitive Surgical Inc. with a recommendation of outperform. PT up 21% to $340.
  • ITM Power: Jefferies remains Buy with a price target reduced from GBp 800 to GBp 600.
  • Nutrien: Berenberg retains his positive opinion on the stock with a Buy rating. The target price has been lifted and is now set at USD 120 compared to USD 90 before.
  • Prudential Financial: Credit Suisse downgrades to neutral from outperform. PT up 1.5% to $121.
  • PPG Industries: RBC cuts price target to $158 from $169, citing near-term cost pressures, maintains outperform rating.
  • RPM International: RBC trims price target to $93 from $94, keeps sector perform rating.
  • Stellantis: Mediobanca downgrades to neutral from outperform. PT rises 72% to $27.42.
  • The Sherwin-Williams Company: RBC cuts price target to $315 from $332, maintains outperform rating.