Following in the footsteps of German Chancellor Olaf Scholz and Joe Biden, British Prime Minister Rishi Sunak traveled to Israel in a bid to iron out a conflict that is increasingly polarizing positions between the Hebrew state and Arab countries. The explosion which caused a massacre in a Gaza hospital further worsened the climate, with both sides passing the buck as to the origin of the catastrophe. Against this backdrop, the risk premium on financial markets has logically risen, even if the VIX index, which measures the prevailing nervousness, has not quite broken through the 20-point barrier, a level that could heighten anxiety.

Nevertheless, several assets are already bearing the scars of rising risk aversion. Indices went in the red, with the Nasdaq losing 1.4%. In terms of sectors, only the energy sector and its oil stocks, helped by persistently high oil prices, managed to hold their own. The bond market also took another beating, with yields on treasury bills rising (bond prices fall when yields rise). In the United States, the 10-year maturity is flirting this morning with 4.97%, not far from the symbolic 5% mark. The 5-year is at 4.99%. All other conventional maturities (3 months, 6 months, 2 years and 30 years) are above 5%. The bond market seems to have fully embraced the incantations of Fed central bankers, who have been chanting "rates will be high longer than the market thinks" in unison for some time. Their guru, Jerome Powell, will have the opportunity to hammer home the point at 12:00 pm ET, when he takes part in a conference followed by a question-and-answer session at the Economic Club of New York. But will he put a smile back on investors' faces? That is the question.

The other financial news of the moment is the publication of Q3 2023 corporate results. Yesterday, Netflix delighted its aficionados by announcing subscriber increases along with price hikes. Tesla has disappointed with results that bear the scars of the price war with the rest of the industry. On the whole, companies are doing relatively well so far: they are still managing to get through the quarter by maintaining high prices. I noticed, however, that announcements of redundancy plans are multiplying, which was not the case in previous quarters. Rolls-Royce, Microsoft, Lanxess, Deutsche Telekom, Nokia and Glencore have all announced hundreds of job cuts in recent days.

In other news, Chinese developer Country Garden Holdings officially defaulted on its offshore debt.

US stock futures were struggling for direction in premarket trading after the release of the weekly jobless claims report and the Philly Fed manufacturing index.

For the week ended October 15, jobless claims were expected to rise to 210,000 from 209,000 the previous week, but they came in slightly lower at 198,000.

The Philadelphia Federal Reserve's monthly manufacturing index for October was expected to improve to negative-7 for the month. It increased 5 points but remained negative at ‑9.0 this month. This is the index’s 15th negative reading in the past 17 months. Almost 35 percent of the firms reported decreases in general activity in October while 26 percent reported increases and 38 percent reported no change.

Economic highlights of the day:

US weekly employment figures, the Philadelphia Fed index and housing data are on the agenda, along with Jerome Powell.

The dollar is trading at EUR 0.9468 and GBP 0.8247. The ounce of gold breaks new ground at USD 1952. Oil is firm, with North Sea Brent at USD 90.75 a barrel and US light crude WTI at USD 86.70. The yield on 10-year US debt rises to 4.97%. Bitcoin trades at 28,400 dollars.

In corporate news:

  • Tesla was down 4.7% in premarket trading on Wednesday, as the automaker reported a year-on-year decline in gross margin for the July-September period, narrowly missing Wall Street expectations.
  • Netflix jumped 13.3% in pre-market trading following the publication of its quarterly results, which showed that the video-on-demand platform had smashed expectations in terms of new subscribers. The group also announced an increase in the price of certain subscriptions in the United States, Great Britain and France.
  • VMware loses 7.7% in pre-market trading after reports that Beijing is considering delaying the planned $69 billion takeover of the cloud computing group by chipmaker Broadcom.
  • AT&T jumped 4.5% as the telecom operator reported higher-than-expected subscriber numbers in the third quarter.
  • Blackstone dropped 2.74% in premarket trading after third-quarter profit attributable to shareholders fell to $1.2 billion.
  • Walt Disney will report its sports programming revenues separately from the fourth quarter as part of the restructuring announced this year, the entertainment group said on Wednesday.
  • Alphabet - The Google subsidiary is counting on India for the production of its smartphones, Rick Osterloh, a group executive, said on Thursday.
  • Ford Motor announced on Wednesday that it had laid off an additional 150 employees in Michigan due to the strike initiated by the United Auto Workers union, bringing the total to 2,730.
  • Costco Wholesale announced on Wednesday that its Managing Director Craig Jelinek would be stepping down by the end of the year and would be replaced by Ron Vachris, Chief Operating Officer.
  • Lam Research fell 3.6% in pre-market trading, as the semiconductor manufacturing equipment supplier forecast second-quarter sales slightly below Wall Street estimates due to weak demand for memory chips.

Analyst recommendations:

  • Abbott lab: Morningstar upgrades to buy from hold with a target price of USD 104.
  • Abrdn plc: Numis downgrades to hold from add with a price target reduced from GBX 184 to GBX 167.
  • Amgen inc: BMO Capital Markets maintains its market perform recommendation with a price target raised from USD 260 to USD 286.
  • Best Buy: Goldman Sachs upgrades to buy from neutral. PT up 21% to $85.
  • Biogen inc: BMO Capital Markets maintains its outperform rating and reduces the target price from USD 336 to USD 314
  • Bristol-myer: BMO Capital Markets maintains its outperform rating and reduces the target price from USD 79 to USD 70.
  • Crowdstrike: Jefferies upgrades to buy from hold with a price target raised from USD 170 to USD 225.
  • Easyjet plc: Barclays downgrades to equalweight from overweight with a price target reduced from GBP 5.50 to GBP 4.15.
  • Eli lilly: BMO Capital Markets maintains its outperform recommendation and raises the target price from USD 633 to USD 710.
  • Fidelity nationa: Barclays upgrades to overweight from equalweight with a price target raised from USD 62 to USD 69.
  • First solar: JP Morgan upgrades to overweight from neutral with a price target reduced from USD 239 to USD 220.
  • Fortinet: Jefferies downgrades to hold from buy with a price target reduced from USD 85 to USD 65.
  • Foot Locker: Goldman Sachs downgrades to sell from neutral. PT down 18% to $18.
  • Incyte corp: BMO Capital Markets maintains its market perform recommendation with a price target reduced from USD 68 to USD 58.
  • Johnson & Johnson: DZ Bank AG Research maintains its buy recommendation and reduces the target price from USD 186 to USD 182.
  • Lam Research: Goldman Sachs maintains its buy recommendation and raises the target price from USD 684 to USD 700.
  • Lockheed martin: DZ Bank AG Research maintains its buy recommendation and reduces the target price from USD 570 to USD 550.
  • London stock ex: Goldman Sachs maintains its buy recommendation with a price target reduced from GBX 11100 to GBX 10900.
  • Man group: Barclays maintains its equalweight recommendation with a price target raised from GBP 2.75 to GBP 2.80.
  • Microsoft corp: Citi maintains its buy recommendation with a price target raised from USD 420 to USD 430.
  • Nasdaq: Morningstar upgrades to buy from hold with a target price of USD 55.
  • Netflix: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 510.
  • Pembina pipeline: CIBC Capital Markets upgrades to outperform from neutral with a price target reduced from CAD 53 to CAD 51.
  • Schroders plc: Panmure Gordon & Co. Limited maintains its hold recommendation with a price target reduced from GBX 430 to GBX 420.
  • Targa resources: Haitong International Research Ltd initiates its outperform recommendation with a target price of USD 116.95.
  • Tesla: Fubon Securities downgrades to neutral from buy with a price target reduced from USD 330 to USD 275.
  • Unity software i: Jefferies downgrades to hold from underperform with a price target reduced from USD 29 to USD 27.
  • Visa: Mizuho Securities maintains its neutral recommendation with a price target reduced from USD 255 to USD 240.
  • Xylem inc: Oppenheimer upgrades to outperform from market perform with a target price of USD 118.
  • Zscaler: Jefferies upgrades to buy from hold with a price target raised from USD 170 to USD 225.