This morning, futures on Wall Street were down and then slightly up. Investors remain on edge, assessing the consequences that the situation in Ukraine will have on the global economy.

The United States, the European Union and some other countries imposed a flurry of sanctions on Thursday, making it very difficult for Russia to do business in major currencies.

Stock market indexes also went in all directions yesterday, with a marked split between Europe and the United States. There was a 3.8% fall of the CAC40 in Paris, while the Nasdaq100 gained 3.4% in New York. This does not mean that the perception is different on each market, even if Kiev is closer to Paris than to New York. It is primarily a question of time difference: Wall Street started in the red yesterday before ending the session at its highest. European indexes could not follow the same trajectory as American tech indexes, for the simple reason that they were already closed at that time. I say technology because it was these stocks that drove the market yesterday in the US.

How could Wall Street soar on the day that Vladimir Putin brings down a European democratic regime with his tanks? As is often the case, there are a number of explanations behind all this.

First of all, the Western response to Russian aggression in Ukraine is financial and not military. This was broadly expected, but the various statements yesterday confirmed this. Moreover, the sanctions announced so far do not directly concern the oil and gas sector nor the SWIFT banking network, which are perceived as the two retaliations that would be most destabilizing for European economies.

Other explanations for the turnaround include risk management by investors, who are directing flows to the safest market, the US. In normal times, investors react to the basic scenario they have composed. But during these more volatile periods, the anchor of the scenario tends to shift. Last week, markets were initially appalled by the risk of a full-scale invasion of Ukraine. When Russia finally gave the impression that it would limit itself to providing support to the breakaway regions, investors were almost relieved.

In this period of adjustment, philosophical, geopolitical and prospective considerations tend to take a back seat to epidermal reactions on stock markets.

The session is punctuated by a series of statistics which could revive the discussion on the Fed's monetary policy. Personal income remained unchanged in January , which is better than the expected 0.3% decline in a survey conducted by Bloomberg. Personal consumption expenditures gained 2.1%, better than the expected 1.6% increase. After adjustment for inflation, real PCE rose 1.5% after a 1.3% decrease in December, vs 1.2% expected. The PCE price index rose by 0.6%, in line with expectations. 

The core PCE price index increased by 0.5% for a fourth straight month, as expected. The year-over-year rate accelerated to 5.2% from 4.9% in the previous month, well above the Federal Reserve's 2% target.

 

Economic highlights of the day:

On the agenda today, US household income and spending and durable goods orders, as well as PCE inflation, sales of old homes and the consumer confidence index of the University of Michigan.

The dollar/euro pair is trading at EUR 0.8922. The ounce of gold fell to USD 1904. Oil remains high at USD 93.3 per barrel of WTI and USD 99.2 per barrel of Brent. US debt yields are back up to 1.96% on 10 years, while the Bund is paying 0.17%. Bitcoin is back at USD 39,500.

 

On markets:

* Johnson & Johnson, McKesson, AmerisourceBergen, Cardinal Health - The pharmaceutical company and the three largest U.S. drug distributors have reached a $26 billion settlement to end state and local lawsuits related to their liability in the opioid crisis.

* Dell Technologies said Thursday it expects the personal computer market to surge in the first quarter because of supply chain tensions, but the stock was losing 7% in after-hours trading as quarterly profit fell short of expectations.

* Block - The former Square, a payment services company founded by Twitter founder Jack Dorsey, reported a better-than-expected quarterly profit Thursday night thanks to bitcoin's volatility and growth in online transactions. The stock jumps 15.5% in pre-market trading.

* Tesla - The Securities and Exchange Commission (SEC) is investigating suspected insider trading related to sales of Tesla stock by CEO Elon Musk and his brother Kimbal, the Wall Street Journal reported Thursday, citing sources close to the matter. In addition, Daiwa Capital Markets raised its recommendation to "outperform" from "neutral."

* Beyond Meat reported Thursday a lower-than-consensus annual sales forecast, reflecting increased competition in the plant-based protein products market. The stock was down in after-hours trading and several analysts lowered their price targets.

* Zscaler - The online IT security services provider fell 13.3% in pre-market trading after the release of its quarterly results, with several analysts lowering their price targets.

* CoinBase - The crypto-asset exchange platform loses about 2% in pre-market trading after saying it expects trading volumes in the current quarter to be lower than the previous one.

* Carvana - The online used car sales network has completed the acquisition of KAR GLOBAL, a U.S. car auction specialist, for $2.2 billion to strengthen its physical presence and support growth.

 

Analyst recommendations:

  • Americold Realty Trust: JPMorgan downgrades to neutral from overweight, adjusts price target to $30 from $35
  • Anglo American: Jefferies remains "Hold" with a price target raised from GBp 3300 to GBp 3800.
  • Autodesk: Piper Sandler adjusts price target to $298 from $340, reiterates overweight rating
  • BAE Systems: JP Morgan upgrades from Underweight to Neutral, targeting GBp 630.
  • Booking Holdings: Piper Sandler adjusts price target to $2,440 from $2,470, maintains neutral rating
  • Dish: J.P. Morgan raised its recommendation on Dish Network Corp. Class A to overweight from underweight. PT up 36% to $40.
  • Docusign: Morgan Stanley adjusts price target to $121 from $165, maintains equalweight rating
  • Dollar General: Wells Fargo Securities raised to overweight from equal-weight. PT up 15% to $220.
  • Neurocrine Bio: Goldman Sachs upgrades to buy from neutral. PT up 32% to $115.
  • Polymetal: Berenberg remains Buy with a price target reduced from GBp 1500 to GBp 1000.
  • Rentokil: Jefferies remains Buy with target raised from GBp 650 to GBp 675.
  • Sealed Air: J.P. Morgan downgrades to neutral from overweight. PT up 6.4% to $71.
  • S4 Capital: Jefferies remains Buy with a target reduction from GBp 930 to GBp 720.
  • Teleflex Incorporated: Piper Sandler adjusts price target to $335 from $320, maintains neutral rating
  • Tesla: Daiwa Securities upgrades to outperform from neutral. PT up 12% to $900.