Equity markets recovered significantly on Friday after a difficult start to the week, and they generally maintained their gains yesterday, but in minimal effort mode. Most financial markets were open on May 8, except for London, where her majesty's subjects were pinching themselves in honor of King Charles III of England, the most stubborn crown prince on the planet, since he had to wait 69 years before taking the crown.

On Monday,  the Nasdaq 100 gained 0.25% and the S&P500 some 0.05%, while the Dow Jones slid by 0.17%. In corporate news, Apple's reassuring results lifted markets at the end of last week while Berkshire Hathaway showed that it is still making good money. At the same time, things are looking up for US regional banks, which had a wild rebound on Friday and gained a little more ground yesterday, within more reasonable limits.

The market is marveling at the resilience of the U.S. economy to the rate shock, and is getting hopeful that the Fed will start easing policy in the coming months before things get out of hand. This scenario sort of goes against all the conventional models, but since it is the economy we are talking about, it is not unthinkable.

Among other news that investors should pay attention to, Bitcoin fell back after Binance temporarily suspended withdrawals, saying it had to adjust its rates with its own increased transaction fees.

The quarterly U.S. bank lending survey released yesterday shows that conditions continue to tighten. In the same vein, Janet Yellen, on CNBC last night, sought to be reassuring about the strength of the banking system. She reiterated her calls for a quick solution to the issue of the U.S. debt ceiling, which is a real sword of Damocles for the economy and more generally the nation. Joe Biden is meeting with House leaders today on the issue, but nothing concrete is expected to come out of the discussions at this stage, at least if we believe the specialists of American politics.

There are no major "macro" events today other than the U.S. small business lending report, which is becoming more important as rates rise.

In China, April export figures were strong but import figures were particularly weak. Beijing has also launched a major "anti-spy operation" targeting consulting firms based in China.

Another big session of earnings releases today, which includes Airbnb, Duke Energy, Air Products and Occidental Petroleum.

US stock futures were slightly in the red this morning after Apple supplier Skyworks Solutions issued weaker-than-expected guidance. Investors are also trading carefully ahead of tomorrow’s key inflation data.

 

Economic highlights of the day:

This morning, China announced exports in April that were slightly more dynamic than expected, but imports were down.

The dollar is slightly up to EUR 0.9120 and GBP 0.7941. Gold is steady at around USD 2029. Oil is consolidating its recent gains, with North Sea Brent crude at USD 76.18 per barrel and U.S. light crude WTI at USD 72.31. The yield on 10-year US debt is climbing back up 3.50%. Bitcoin moves slightly below USD 28,000.

 

In corporate news:

  • Under Armour - The sports equipment maker was down 2.5% in premarket trading after it issued annual sales and earnings guidance below market expectations due to slowing demand.
  • Coty again raised its annual profit target and posted better-than-expected quarterly results, helped by price increases and sustained demand for both its high-end and affordable products. The cosmetics and fragrance group was up 2% in pre-market trading.
  • PayPal Holdings was down 4.4% in after-hours trading after the payment group lowered its adjusted operating margin forecast for this year.
  • Tesla opened a lithium refinery in Texas on Monday that group CEO Elon Musk said would produce batteries for about a million electric vehicles by 2025, making it the largest such plant in North America.
  • Lucid Group - The electric vehicle (EV) maker reported lower-than-expected first-quarter sales Monday and lowered its production forecast for this year amid a price war unleashed by Tesla, rising interest rates and fears of a recession. Lucid shares were down about 9% in after-hours trading.
  • Devon Energy on Monday reported a quarterly profit above Wall Street expectations amid strong oil demand. The company also increased its share buyback program by 50% to $3 billion.
  • Western Digital said Monday that it expects to report lower-than-expected sales for the current quarter and a larger-than-expected loss, as the company believes that demand for memory chips will take longer to recover. The stock was down about 1% in after-hours trading.
  • Globalfoundries reported better-than-expected quarterly sales, a sign that chip demand is recovering.
  • Palantir Technologies said Monday it expects to make a profit in each quarter this year, thanks in part to its new artificial intelligence platform. The stock jumped about 20% in after-hours trading.
  • Fisker fell 12.7% in pre-market trading after lowering its production target for the full year as the electric vehicle manufacturer seeks to limit its spending.
  • Tempur Sealy fell 9% in pre-market trading after announcing the acquisition of mattress distributor Mattress Firm, partly owned by Steinhoff International Holdings, for about $4 billion in cash and stock.
  • Skyworks Solutions fell 9.8 percent in premarket trading after the chipmaker, a supplier to Apple, reported lower-than-expected third-quarter sales and adjusted earnings.
  • Valero Energy announced the resignation of its CEO Joseph Gorder who will be replaced by Lane Riggs at the end of June.
  • KKR - The U.S. private equity group and Australia's Macquarie Asset Management are among the potential bidders to buy the waste and recycling division of Singapore's Sembcorp Energy Group, valued at about $500 million, two sources familiar with the matter said.
  • The New York Times will receive about $100 million from Google over three years as part of a sweeping deal that allows the Alphabet subsidiary to feature content from the New York daily on some of its platforms, The Wall Street Journal reported Monday.

 

Analyst recommendations:

  • AstraZeneca: Berenberg remains Buy with a price target raised from 124 to 135 GBp.
  • Haleon: Jefferies maintains a Hold rating with a price target raised from GBp 330 to GBp 350.
  • International Consolidated Airlines: Peel Hunt upgrades from hold to buy targeting GBp 175.
  • Intertek: RBC upgrades from Underperform to Sector Perform with a target of GBp 3900.
  • Moody's: Wells Fargo Securities reinstated coverage with a recommendation of equal-weight. PT up 2% to $312.
  • Nabors: Barclays downgrades to equal-weight from overweight. PT rises 56% to $150.
  • Reckitt: Jefferies remains "Hold" with a price target raised from 5870 to 6750 GBp.
  • Shell: Berenberg remains Buy with a price target reduced from 3000 to 2850 GBp.
  • Skyworks: BMO Capital Markets downgrades to market perform from outperform. PT down 5% to $100.
  • S&P Global: Wells Fargo Securities reinstated coverage with a recommendation of overweight. PT up 17% to $415.
  • Unilever: Jefferies remains Buy with a price target raised from GBp 4650 to 5000.
  • XPO: Stifel downgrades to hold from buy. PT up 5.3% to $51.