Gonet: market news from April 11

Dow +0.40%, S&P 500 -0.27%, Nasdaq -1.34%, Russell 2000 -0.76%, SOX -2.42%, Eurostoxx +1.48%, SMI +1.09% .

Wall Street is ending its fishtail week. Only the venerable Dow Jones manages to stay in positive territory on the call, elsewhere a sense of unease again prevails, the US yield curve does not ease the pressure. The US 10-year bond yield continues to move north and hit 2.76% this morning. The 2 to 10 year part trades at +19 pips, while the 5 to 10 year part remains at -5 pips. The S&P500 (SPX) is erasing its gains early in the session due to its tech heavyweights like Tesla (TSLA -3%), Apple (AAPL -1.2%), Nvidia (NVDA -4.5%) or even Microsoft (ISFT -1.46%). The technology sector, in particular the semiconductor industry, is buckling under pressure. Eventually, the SPX closed just below its 200-day moving average. The catwalk of the day consists of energy, finances and health. Value stocks logically outperform growth stocks, risk aversion remains in control ahead of the weekend.

The semiconductor sector needs to be closely monitored. On Friday, it rallied despite the good results of Taiwan Semi (TSM -1.18%). The firm reports net income of $5.94 billion in March, up 33.2% from a year earlier, and total revenue of $17 billion, up 36% from last year. And yet the market is selling. Investors don’t seem to believe the encouraging claims from TSM or even Micron Tech. The SOX index has lost 12% over the last 9 trading sessions.

Current problems continue to affect the collective psyche. The war in Ukraine is the X-factor of sentiment, and its medium and long-term consequences are still very difficult to assess. The monetary policy of central banks, led by the Fed, is a sword of Damocles that is increasingly difficult for stock market players to bear. In China, covid is far from having its last word, and Beijing’s “zero covid” policy is greatly worrying the population, who are increasingly annoyed by the shortages it causes, especially food and medicine. To make matters worse, last night the consumer price index beat expectations and further worsened the general mood.

Goldman Sachs chief economist says a 4% Fed rate is not out of the question: “The Fed may need to raise interest rates ‘significantly’ higher than currently planned to cool the overheated US economy.” If the economy does not slow down, and if, in particular, we do not have a large enough slowdown in employment growth, then we can expect significantly higher rates, in the range of 4% or more.” This is something to please our bull friends…

Over the past week, US indices have retreated, especially noting the Nasdaq, which added almost 4%. European indices are experiencing a completely different scenario, with the Stoxx 600 up 0.57% over the week. And the star of the week is just around the corner, it’s our SMI, which is winning 2.7%, owned by Novartis, Roche and Nestlé, which tells us how defensive the market is these days.

Emmanuel Macron will face Marine Le Pen in the last round of French elections on April 24, just like in 2017. Two runoff polls predict Macron to win with between 52% and 54.5% of the vote. Investors will see if the incumbent can shore up his lead after a recent push from Le Pen lifted French 10-year bond yields to their highest level in seven years last week. First, the euro rose after the election was announced, and then lost most of its midday gains in Asia.

Ukraine is ready to postpone the expansion of the Russian offensive to the east expected this week, Volodymyr Zelenskyy said. The new commander of the Russian army in Ukraine, Gen. Oleksandr Dvornikov, is worrisome to US officials, who have said efforts are being made to bring more weapons to Ukraine. The EU Military Committee met to discuss expected attacks in eastern and southern Ukraine, and on Saturday, Boris Johnson made a surprise visit to Kyiv.

Elon Musk will not join Twitter’s board of directors, CEO Parag Agrawal has said. Musk talked to Twitter administrators but ultimately turned down their offer to take a seat on the board. “I think it’s for the best,” says Parag Agrawal. Elon Musk wonders if Twitter is dying.

The upcoming shortened week will see the start of the first season of corporate earnings for 2022, with many banks publishing their results, such as JP Morgan Chase, Citigroup, Morgan Stanley, Goldman Sachs and Wells Fargo. We will also follow with interest the results of LVMH tomorrow and Sika and Hermès on Thursday. We will also be eligible for important economic events, in particular the US inflation in March tomorrow and the ECB’s decision on its monetary policy on Thursday.

Leading macroeconomic indicators are not expected today.

Compagnie Financière Richemont: Jefferies starts tracking the purchase, targeting 140 francs. WarnerMedia and Discovery merge to become Warner Bros. Opening. Amazon’s first American syndicate wants to capitalize on other warehouses. The BMW CEO fears the shortage will last until 2023. The German BaFin is withdrawing control of its European subsidiary from the Russian bank VTB Bank. YouTube (Alfavit) suspends the work of the channel “Parliament of Russia” for violating the terms of service. Deutsche Lufthansa is not going to sell Swiss.

Indices are trading sharply lower this evening and this morning in Asia, covid and inflation are weighing heavily on the mood in China, which is spreading across the continent of the stock market. Tokyo lost 0.61% after the bell, Hong Kong 3.17%, Shanghai 2.91% and Seoul 0.27%. SPX futures fell 19 points and Europe opened slightly lower by 0.25%. Gold edged up slightly to $1943 an ounce, oil dropped to $96.14 a barrel of WTI Light Crude and demand for the dollar remained, with EUR/USD trading at 1.0882 this morning.

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