A Russian strike hit the largest Ukrainian nuclear power plant today, causing a fire that was later contained. This event has contributed to another escalation of fears. Where everyone is thinking that you must be out of your mind to target a nuclear power plant in the heart of Europe, the Russian General Staff shows that all means are good to put the adversary under pressure. The power plant has fallen into the hands of the occupying forces shortly afterwards, which will pose other energy problems for Ukraine.

While the world is still stunned by the Russian aggression and its aftermath, macroeconomic news made a comeback this week with an adjustment in the prognosis of the US central bank's decisions. The yield on the US 10-year government bond fell to 1.68%, down from over 2% in mid-February. This development reflects two concomitant movements, including investors' appetite for safe haven products, and expectations of key rates. The situation has changed significantly in the last 48 hours, after Jerome Powell's speech to US lawmakers and the continuing uncertainty in Ukraine. The continued surge in inflation at the beginning of the year had led the market to anticipate seven rate hikes in 2022. But investors are already not expecting as many and even think that the Fed could scale back its plans to reduce support to the economy.

The release of February employment figures in the US are likely to fuel this debate, since U.S. employers hired far more workers than expected in February. The Labor Department's employment report's survey of establishments on Friday showed nonfarm payrolls rose by 678,000 jobs last month, vas 400,000 expected in a Reuters poll.

While Vladimir Putin is trying to scare the West, the Russian economy is crumbling under the weight of Western sanctions. Notably the freezing of the country's reserves. Financier Jon Turek points out that the financial fortress built by Russia since the invasion of Crimea in 2014, i.e., colossal foreign exchange reserves, little debt, a large current account surplus or high real interest rates "completely collapsed in a weekend." One after another, Western companies are ceasing their activities in the country. This schism will have lasting consequences. It is reflected in the continued surge in commodities.

 

Economic highlights of the day:

European retail sales for January and monthly employment figures in the United States are the main indicators of the day.

The dollar is up 1.5% against the euro to EUR 0.9176, while the ounce of gold surpasses USD 1940. Oil is still trading high: Brent is at USD 113.84 and WTI at USD 111. The yield on US debt falls to 1.68%% (vs. 1.85% the day before) on 10 years and the Bund remains stable at 0.01. Bitcoin is down to USD 41,300.

 

On markets:

* Alphabet - Google announced Thursday it has suspended its online advertising business in Russia, a move that includes its online search engine, YouTube video platform as well as external publishing partners.

* Broadcom on Thursday issued a revenue forecast for the second quarter above expectations thanks to strong demand and the rollout of 5G technology. The stock is up 3.4% in pre-market trading.

* Gap is gaining nearly 9% in pre-market trading after reporting a full-year profit guidance above market expectations on Thursday, with the fashion group banking on strong demand for its Old Navy and Athleta brands.

* Costco Wholesale reported quarterly sales and earnings above market expectations on Thursday, but its shares were down slightly in after-hours trading due to a slowdown in constant-store sales in February.

 

Analyst recommendations:

  • American Airlines: Evercore ISI adjusts price target for american airlines to $16 from $19, maintains in-line rating.
  • Best Buy: Raymond James downgrades to market perform from outperform.
  • Beazley: RBC resumes tracking at Outperform, targeting GBp 600.
  • Burlington Stores: Cowen Lowers Price Target for Burlington Stores to $258 From $292, Maintains Outperform Rating
  • Delta Air Lines: Evercore ISI Adjusts Price Target for Delta Air Lines to $52 From $55, Maintains Outperform Rating.
  • Exxon Mobil: BMO Capital adjusts price target to $86 from $75, maintains market perform rating.
  • Fedex Corporation: JPMorgan adjusts price target to $297 from $312, keeps overweight rating.
  • Hiscox: RBC resumes sector performance tracker targeting GBp 1000.
  • Made Tech: Berenberg resumes its Buy rating, targeting GBp 75.
  • Neurocrine Biosciences: Piper Sandler downgrades to neutral from overweight, reduces price target to $94 from $114.
  • Polymetal: JP Morgan downgrades from overweight to neutral, targeting GBp 1,400.
  • Pure Storage: Goldman Sachs  adjusts price target for pure storage to $48 from $34, maintains buy rating.
  • Snowflake: Stifel adjusts price target to $240 from $350, keeps hold rating.
  • Synthomer: Berenberg remains "Hold" with a price target reduced from GBp 410 to GBp 350.
  • United Continental Holdings: Evercore ISI adjusts price target for united airlines to $48 from $55, maintains in-line rating.
  • Veeva Systems: UBS adjusts the price target to $210 from $290, maintains neutral rating.
  • Victoria's Secret: Wells Fargo cuts price target to $75 from $85, maintains overweight rating.
  • Victrex: Berenberg remains "Hold" with a price target reduced from GBp 2600 to GBp 2200.