Sentiment was further dented today with the news that Russia sent missiles to several cities in Ukraine. The attacks severely hit the capital Kyiv, as Russia apparently retaliated after the explosion on the bridge to Crimea.

Stock markets are still looking for support from central banks, which have turned their backs on them to focus on a lowly task: taking care of economic stability. A more fundamental and obviously more subtle task than printing money.

Last week was a peculiar one, with a Thursday-Friday sequence painted in bright red, after copious gains on Monday-Tuesday. Tesla dropped -15% because investors are concerned about the ability of Elon Musk to run several companies at once, since it seems that the purchase of Twitter by the billionaire will finally take place. After trying to explain to Ukraine and Russia how to redraw their territories, Musk has offered his geopolitical expertise to Taiwan and China... Other peculiar highlights of the week include Advanced Micro Devices, the processor specialist, which warned that its results won't be great because demand is slowing for semiconductors. According to Nomura, sales of global semiconductor chips are expected to decline further for the rest of 2022 and in early 2023. Not a very good omen at the opening of a new earnings season.

The problem with quarterly results is that they have an annoying tendency to reappear every three months, as one financial influencer rightly pointed out. PepsiCo (Wednesday), BlackRock (Thursday) and then UnitedHealth, JPMorgan Chase, Wells Fargo and Morgan Stanley (Friday) are on the agenda this week. These are mature companies with extremely efficient operational management, so they should be able to avoid catastrophic messages. The earnings release/forecast announcement exercise might be more delicate than it was in previous quarters.

There will also be four important US statistics this week. The producer price index (Wednesday) and consumer price index (Thursday) for September, followed by retail sales for September and the preliminary University of Michigan consumer confidence index for October (Friday). Central banks are still at the forefront, with a speech by Lael Brainard (Fed) scheduled for Monday, followed on Wednesday by a speech by Christine Lagarde (ECB) and the release of the minutes from the last Fed meeting.

 

Economic highlights of the day:

There will be no major macroeconomic indicators today. China's Caixin services PMI moved into contraction territory (49.3 points) in September, after 55 points in August.

The dollar gained 0.30% to EUR 1.0304 and GBP 0.9039. The ounce of gold fell back to USD 1,680. Oil continued its rebound, with North Sea Brent crude at USD 96.97 per barrel and U.S. light crude WTI at USD 91.75. The yield on 10-year U.S. debt continues its rally to 3.88%. Bitcoin is falling back to around USD 19,500 per unit.

 

In corporate news:

* Semiconductor groups Nvidia, Qualcomm, Micron Technology and Advanced Micro Devices are down 0.9% to 1.5% in premarket trading, while Intel is down 0.3%, after the U.S. decided Friday to impose new export controls on China in an effort to curb Beijing's technological and military advances.

* Merck & Co - The pharmaceutical company's stock gained 1.5% in pre-market trading after announcing positive results from a clinical trial of sotatercept, a treatment for pulmonary hypertension.

* Tesla sold 83,135 vehicles produced in China in September, surpassing its previous monthly record of 78,906 units recorded in June, according to data released Sunday by the China Passenger Car Association (CPCA), an industry federation.

* Amazon announced Monday that it plans to invest more than $1 billion over the next five years in electric vans and low-emission truck fleets in Europe to accelerate its carbon neutrality project.

* Apple - The U.S. company will produce some of its Airpods wireless headphones in India, CNBC TV18 reported Monday, citing India's information technology ministry.

* Exxon Mobil - Strike action continued Monday in France at several refineries and fuel depots of ExxonMobil subsidiary TotalEnergies and Esso, two CGT officials said, as more and more gas stations suffered shortages, causing long lines of motorists.

* Rivian Automotive fell 7.2 percent in premarket trading after the company recalled 13,000 electric vehicles because of a problem with the car's steering.

 

Analyst recommendations:

  • Balfour Beatty: Jefferies starts tracking as Buy, targeting GBp 375.
  • Bristol-Myers Squibb: Guggenheim downgraded its recommendation to "neutral" from "buy".
  • Corebridge Financial: Wells Fargo Securities initiated coverage with a recommendation of overweight. PT up 15% from last price to $23.
  • Fevertree: HSBC moves from light to hold, targeting GBp 799.60.
  • Ford Motor:  UBS lowered its recommendation to "sell" from "neutral", with a price target cut from $13 to $10, which the bank justified by its exposure to the risk of recession.
  • General Motors: UBS lowered its recommendation to "neutral" from "buy".
  • Highwoods: Baird downgrades to neutral from outperform. PT up 25% to $31.
  • Kilroy:  Baird analyst downgrades to neutral from outperform. PT  up 20% to $49.
  • Kroger: Exane BNP Paribas upgrades to outperform from neutral. PT rises 19% to $51.
  • Lincoln National: Jefferies downgrades to hold from buy. PT up 9% to $51.
  • Omega Healthcare: Baird downgrades to neutral from outperform. PT up 2% to $30.
  • Procter & Gamble: Goldman Sachs downgrades to neutral from buy. PT up 15% to $143.
  • Qiagen: Oddo BHF downgrades to neutral from outperform. PT up 11% to $47.
  • Ventas:  Baird analyst downgrades to neutral from outperform. PT up 0.7% to $38.