Gonet: market news from March 22

Dow -0.58%, S&P 500 -0.04%, Nasdaq 100 -0.31%, Russell 2000 -0.97%, SOX -0.26%, Eurostoxx -0.53%, SMI -0.11 %.

Wall Street is showing a somewhat discouraging resilience after Jerome Powell’s very hawkish remarks. The head of the Fed says now is the time to act quickly and aggressively to fight inflation. Read: A 50 basis point hike at the next Fed meeting cannot be ruled out. The bond market reacts instantly and sends a 2.32% yield on 10-year US bonds. The US yield curve is also shifting, with the spread between the 2-year and 10-year yields shrinking to 15 points and the 5/10-year rollover by -3 points. If we look at the technical configuration of 10-year US bonds, we see that the yields of the latter are trying to break out of their downward channel that began in the late 1980s, which makes us wonder… The yield curve keeps telling us, rather screaming at us that worrisome signs of a recession are just around the corner…

Meanwhile, in the fun realm of stocks, things seem to be going well. We care little or nothing about Uncle Jay’s words, which we’ll talk about later. I am surprised to note that small investors were especially active yesterday, as this is the day of the year when they contribute the most to trading volumes. The indices are definitely falling, but really very little due to the incessant SOS signals sent by the bond big brother. In terms of sectors, today’s S&P500 (SPX) podium consists of Energy, Materials and Utilities. SPX remains slightly below its 200-day MA (4461 vs. 200-day MA at 4471). Volatility rose very slightly, with the VIX gaining 1.5% to hit 23.88. In terms of breadth (the difference between securities closing higher than lower), it’s disappointing with 37% positive results for SPX and 30% for Nasdaq100 (NDX).

As you know, the credibility of the central bank is fundamental to ensure the stability of its financial market. Yesterday Jerome Powell clearly showed us that the Fed is “behind”, it smells of haste, the Fed boss and his colleagues should start to sweat a little, they are alone in the face of galloping inflation, who is galloping …

In this context, seeing stock markets in a state of “not even being afraid” is bewildering. Here we recall that last week the indices jumped strongly, that many of them are above the level at which they developed on the eve of the Russian invasion of Ukraine, that this is a real mess at the level of international relations, monetary policy and supply chains. TINA and FOMO are probably still there, lack of alternatives to stocks and fear of not being there.

Amid other asset classes, oil continues to recover, a barrel of WTI Light Crude returns to $113.29, news about the war remains very bad. Gold stabilizes at $1931 an ounce as the dollar is back in demand, EUR/USD trades at 1.0982 and dollar/yen crosses 120 below 1.0300 against the euro. We feel that risk aversion is trying to come back this morning.

Joe Biden says Russia’s use of a hypersonic missile against Ukraine is a sign that Vladimir Putin is becoming increasingly desperate. He also warns of a possible Russian cyberattack on the United States as sanctions tighten. Ukraine will hold a referendum on the terms of any peace deal with Russia, President Volodymyr Zelensky has said. If NATO membership is not possible, Ukraine may consider security guarantees from members of the alliance. The Russian coupon payment on sovereign bonds maturing in 2029 was carried out by JP Morgan’s correspondent bank, Reuters reported. This debt is repayable in rubles. According to Ukraine, more than 3,000 people were evacuated from Mariupol and arrived in Zaporozhye, with seven of the eight humanitarian corridors functioning. The Moscow Exchange will not open today. S&P announces the withdrawal of the rating of all Russian organizations.

The Richmond Fed manufacturing index will be published at 15:00.

Moncler: Goldman Sachs has moved from selling to a price neutral targeting 62 euros. Ryanair: Bernstein goes from neutral to better, aiming for €16.80. Swatch: Goldman Sachs cuts its price target from CHF430 to CHF350. Russia bans Facebook and Instagram (meta platforms) for “extremism”. Nike rebounded 5% after posting strong quarterly results. Alibaba will launch a $25 billion share buyback program, representing 8.9% of its current capitalization. Shell is rethinking the decommissioning of the Cambo oil field in the face of soaring crude oil prices. GlaxoSmithKline is issuing $8.75 billion in bonds to spin off its consumer division. Partners Group beat AWP consensus forecasts, including a 90% increase in net income to 1.46 billion francs in 2021. Volkswagen will purchase mild steel from Salzgitter for future projects. US antitrust authorities are asking Activision and Microsoft for more information. Prologis plans to make an informal bid to buy Milway (owned by Blackstone) for $21 billion. Financial Times.

Tonight and this morning in Asia, the indexes are trading up. Tokyo added 1.48%, Hong Kong – 3.15%, Shanghai – 0.19%, and Seoul – 0.89%. SPX futures are trading in balance and Europe opens with a very slight 0.1% decline.

Leave a Comment