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Romain Fournier

Chief Editor
Having worked in the British, French and Swiss financial press, Romain is able to report on local and international issues, as comfortable in French as in the language of Shakespeare, Romain Fournier leads the editorial team at Marketscreener. Fine connoisseur of the English-speaking markets, Romain delivers an editorial every day on US and UK markets.

Investors cheer as more signs that inflation is cooling keep coming

11/15/2022 | 10:17am EST
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Monday wasn’t a great start to the week, as the rally that began after Wednesday’s lower-than-expected US inflation reading fizzled following hawkish comments from Fed official Christopher Waller. But today, the mood improved again after Fed vice-president Lael Brainard gave a reassuring speech, along with the release of good October price data.

Yesterday’s session ended with a decline of close to 1% for the S&P500 and the Nasdaq, after a strong rebound the week before. But volatility was strong with an attempt to break out to the upside after Lael Brainard took a stance. In a public speech, she said that the central bank would soon be able to moderate its rate hikes, a sign that the famous "pivot" expected by investors is approaching. Brainard is in her role: she is in the camp of the "doves" of the American central bank, i.e. the supporters of flexibility.

Meanwhile, the meeting yesterday in Bali between Joe Biden and Xi Jinping seems to have gone rather well. The G20 leaders are expected to adopt a draft release rejecting the "era of war". This should have about as much impact as declaring the end of world hunger, but it’s the sentiment that counts, and it shows that China is taking a bit of distance with Russia and can still align with the West on some issues.

Another good news today is the release of reassuring inflation numbers. Stock index futures rose sharply this morning as U.S. producer prices rose lesser than expected in October, raising hopes that the Fed would now move to smaller interest rate hikes.

The Labor Department's producer prices index gained 8% in the 12 months through October, versus 8.3% expected and down from 8.5% in September.

On the corporate side, there are still a few earnings releases, but they are starting to be seriously sparse.

 

Economic highlights of the day:

The Empire State and producer price index are today’s main indicators. All the macro agenda is here. Overnight, Japan announced a slight contraction of its GDP in Q3, while economists were expecting a slight increase. At the same time, China announced a contraction of its retail sales in October of -0.5% while the market was targeting a growth of 0.7%.

The dollar is down 0.9% against the euro to EUR 0.9597 and fell 1.7% against the pound to GBP 0.8365. The ounce of gold is up to 1776 dollars. Oil is floundering, with North Sea Brent crude at USD 92.43 a barrel and U.S. WTI light crude at USD 85.09. The yield on 10-year U.S. debt is up to 3.87%. Bitcoin is attempting a small rebound, around 16,940 dollars this morning.

 

In corporate news:

* The Home Depot - The world's number one home improvement retailer on Tuesday reported better-than-expected same-store sales growth in the third quarter of its fiscal year, at 4.3% versus the 3.1% expected by the Refinitiv IBES consensus. The stock was up 2.3% in pre-market trading.

* Walmart is expected to release its quarterly results before the opening of the U.S. markets.

* Several Chinese stocks listed on the U.S. markets rose in pre-market trading as comments on the meeting between the U.S. and Chinese presidents on the sidelines of the G20 summit were dominated by renewed optimism about the relationship between the two countries.

* Apollo Global Management - The private equity group completed the purchase of a significant portion of Credit Suisse's securitized products business for an undisclosed amount.

* Berkshire Hathaway - The Warren Buffett-led group announced Monday that it had sold its stake in Procter & Gamble and bought more than $4.1 billion of Taiwan Semiconductor Manufacturing Co (TSMC) shares. TSMC was up more than 10% in pre-market trading.

* Tencent Music Entertainment reported better-than-expected quarterly results on Tuesday, thanks to growth in the number of paying subscribers and advertising revenue, even though its revenue fell by nearly 6%. The stock gained 12.8% in pre-market trading.

 

Analyst recommendations:

Activision Blizzard: MKM Partners upgrades to buy from neutral. PT jumps 28% to $95.

Aston Martin Lagonda: Jefferies downgrades from hold to underperform targeting GBp 120.

Equifax: Atlantic Equities LLP upgrades to overweight from neutral. PT up 16% to $230.

ITM Power: Jefferies downgrades from buy to hold, targeting GBp 105.

Roche ADRs: Cowen downgrades to market perform from outperform. PT down 16% to $48.

W.W. Grainger: Atlantic Equities downgrades to neutral from overweight. PT up 7.7% to $630.


© MarketScreener.com 2022
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Stocks mentioned in the article
ChangeLast1st jan.
ACTIVISION BLIZZARD, INC. 0.80% 76.57 Delayed Quote.0.03%
APOLLO GLOBAL MANAGEMENT, INC. 0.55% 70.82 End-of-day quote.11.02%
ASTON MARTIN LAGONDA GLOBAL HOLDINGS PLC -2.88% 165 Delayed Quote.7.11%
BERKSHIRE HATHAWAY INC. 1.71% 472999.9 Delayed Quote.0.92%
EQUIFAX INC. 2.23% 222.2 Delayed Quote.11.83%
ITM POWER PLC 13.41% 101.3 Delayed Quote.10.54%
ROCHE HOLDING AG -1.02% 285.25 Delayed Quote.-0.79%
TENCENT MUSIC ENTERTAINMENT GROUP 0.84% 8.39 Delayed Quote.1.33%
THE HOME DEPOT, INC. 3.16% 324.17 Delayed Quote.2.63%
W.W. GRAINGER, INC. 2.46% 589.48 Delayed Quote.5.97%
WALMART INC. 1.21% 143.87 Delayed Quote.0.25%
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