The postmodern age of investment
Market regime change is here. It won’t be pretty.
DAX:
- Airbus (AIR TH) +1.9%
- BMW (BMW TH) +1.7%
- Deutsche Post (DPW TH) +1.6%
- VW (VOW3 TH) +1.5%
- HeidelbergCement (HEI TH) +1.4%
- Fresenius SE (FRE TH) -0.3%
- Fresenius SE Cut to Hold at HSBC; PT 39 euros
- Munich Re (MUV2 TH) -0.4%
- Munich Re 1Q Operating Profit Misses Estimates
- Qiagen (QIA TH) -1.2%
MDAX:
- Siltronic (WAF TH) +4.2%
- Siltronic 1Q Ebitda Beats Estimates
- Varta (VAR1 TH) +2.2%
- Duerr (DUE TH) +1.7%
- Thyssenkrupp (TKA TH) +1.6%
- Commerzbank (CBK TH) +0.9%
- Fraport (FRA TH) -0.2%
- Fraport 1Q Ebit Loss EU41.3M, Est. Loss EU16.1M
- Aixtron (AIXA TH) -0.7%
SDAX:
- About You (YOU TH) +5%
- Adler Group (ADJ TH) +2.8%
- SMA Solar (S92 TH) +1.9%
- Deutz (DEZ TH) +1.9%
- Eckert & Ziegler (EUZ TH) +1.7%
- DIC Asset (DIC TH) -1.2%
- DIC Asset Maintains FY FFO Forecast
- SGL (SGL TH) -1.7%
Stocks pared losses and U.S. equity futures climbed, providing a little respite for global markets from concerns about an economic downturn An Asia-Pacific equity gauge Tuesday trimmed a drop of about 2% in half, aided by a turnaround in China. S&P 500, Nasdaq 100 and European contracts rose, pointing to steadier sentiment following a Monday rout in U.S. shares. A haven bid for Treasuries eased. Uncertainty over how far the Federal Reserve will hike interest rates to stem high inflation continues to shadow bonds. Oil fell below $102 a barrel on the economic worries and the European Union’s move to soften some proposed sanctions on Russian oil over the Ukraine war. A dollar gauge dipped but remained in sight of the highest level since 2020. In cryptocurrencies, Bitcoin added over $1,000 after sliding below $30,000. China’s growth-sapping Covid lockdowns, a global wave of monetary tightening and the Ukraine war continue to cast a pall over the world economy. The Fed in a report warned of deteriorating liquidity conditions in key financial markets. US After Hours UPST -44.5%, GDRX -28.4%, NVAX -16.7%, GRPN -12.3%, CARG -10% down on earnings; VRM +17.6% higher on new CEO/earnings; AFRM -13.6% heads lower in sympathy with UPST
Nikkei -0.34% Hang Seng -1.95% CSI +1.06% Shanghai +1.02% Shenzen +1.38%
Eur$ 1.0577 CNH 6.7230 CNY 6.6984 JPY 130.36 GBP 1.2366 CHF 0.9914 RUB 69.5750 TRY 15.1258 WTI$ 101.94 -1.10% Gold 1,865 +0.58% BTC 31,900 ETH 2,400
S&P +0.82% Nasdaq +1.35% EuroStoxx +0.80% FTSE +0.10% Dax +0.75% SMI -0.02%
Macro :
- Goldman Sachs and the Rest of Wall Street Are Souring on S&P 500
- Fed Warns of Worsening Market Liquidity in Stability Report (1)
Keep an eye on :
- AGFB BB : Agfa-Gevaert 1Q Adjusted Ebit EU4M Vs. Loss EU1M Y/y
- AIR FP : Airbus Shipped 48 Jets in April, on Course For 2022 Target
- BAKKA NO : Bakkafrost 1Q Operating Ebit Misses Estimates
- BAYN GY : Bayer 1Q Adjusted Ebitda Beats Estimates
- COFB BB : Cofinimmo to Buy 2 Belgian Care Homes for ~EU24m in Cash & Stock
- CCAP GY : Corestate 1Q Adjusted Net Loss EU9.1M Vs. Loss EU9.1M Y/y
- CSGN SW : Credit Suisse Pulls Out of Settlement Talks W/ GFG Alliance: FT
- DIC GY : DIC Asset Maintains FY FFO Forecast
- EDF FP : France to Modify Wind, Solar Contracts to Help Cap Prices: Echos
- ELE SM : Endesa 1Q Ebitda Misses Estimates
- FRA GY : Fraport 1Q Ebit Loss EU41.3M, Est. Loss EU16.1M
- HOLN SW : JSW Group to Make $7b Bid for Holcim’s Indian Businesses: FT
- IPH FP : Innate Pharma 1Q Revenue EU2.6M Vs. EU4.5M Y/y
- KOG NO : Kongsberg 1Q Ebitda Misses Estimates
- LHA GY : Lufthansa Seeks to Ride Cargo Boom With Boeing Freighter Order
- DRLCO DC : Maersk Drilling Gets $21 Million Contract Extension in Brazil
- MEL FP : Melia Hotels 1Q Revenue EU271.4M Vs. EU76.3M Y/y
- MTGB SS : MTG Proposes Extraordinary Cash Dividend of SEK25.00/Share (1)
- MUV2 GY : Munich Re Books Almost EU700M 1Q Russia, Ukraine Bond Writedown
- MUSTI FH : Musti Group 2Q Operating Profit Misses Estimates
- RAL FP : Rallye Approved to Complete EU37m Unsecured Debt Tender
- RNO FP : Renault Confirms Mobilize to Account for 20% of 2030 Group Rev.
- RNO FP : Geely Automobile to Buy 34.02% in Renault Korea for 264B Won
- RVRC SS : RVRC Holding 3Q Net Sales SEK367.4M Vs. SEK244.5M Y/y
- RWE GY : Germany, Qatar at Odds Over Terms in Talks on LNG Deal: Reuters
- SFQ GY : SAF-Holland SE 1Q Sales Beats Estimates
- SPM IM : Saipem Now Plans EU2b Cap Hike During Summer, CEO Tells Sole
- SFER IM : Salvatore Ferragamo Fluctuates After Betaville ‘Uncooked Alert’
- SHA GY : Schaeffler Sees FY Revenue in Constant Currency +6% to +8%
- WAF GY : Siltronic 1Q Ebitda Beats Estimates
- STLN SW : Swiss Steel Group 1Q Revenue EU1.03B
- SWMA SS : Swedish Match Confirms Talks on Possible Philip Morris Offer
- TRI FP : Trigano 1H Net Income EU141.2M Vs. EU114.3M Y/y
- TWTR US : Musk’s Twitter Would Comply With EU Rules Governing Content
- UCB BB : UCB’s Phase 3 RAISE Study Met Primary And Secondary Endpoints
- VIE FP : Veolia to European Sell Mobile Water Services Ops to Saur
- WAC GY : Wacker Neuson Maintains FY Revenue Forecast
- WDP BB : WDP Pulls Stock Dividend Offer Over Market Turbulence
>>> Up
* Airbus Raised to Buy at SocGen; PT 132 euros
* Enefit Green Raised to Buy at Citi
* Schroders Raised to Buy at Citi; PT 2,900 pence
* Swedish Match Raised to Neutral at JPMorgan; PT 81 kronor
* TGS Raised to Hold at Fearnley; PT 170 kroner
* Viafin Service Raised to Buy at Inderes; PT 17 euros
>>> Down
* DBV Tech ADRs Cut to Neutral at Goldman; PT $1.50
* DBV Tech Cut to Neutral at Goldman; PT 3 euros
* Direct Line Cut to Hold at Deutsche Bank; PT 300 pence
* Fresenius SE Cut to Hold at HSBC; PT 39 euros
* Huscompagniet Cut to Neutral at Citi; PT 90 kroner
>>> Initiation
* Alstom Rated New Hold at Stifel; PT 23 euros
* BioArctic Rated New Outperform at RBC; PT 230 kronor
* BMW Rated New Buy at Berenberg; PT 110 euros
* Euroapi Sasu Rated New Outperform at Exane; PT 19 euros
* Euroapi Sasu Rated New Buy at Deutsche Bank; PT 20 euros
* Euroapi Sasu Rated New Outperform at Oddo BHF; PT 17.80 euros
* Ford Rated New Hold at Berenberg; PT $17
* General Motors Rated New Buy at Berenberg; PT $55
* Renault Rated New Hold at Berenberg; PT 27 euros
* Shop Apotheke Reinstated Overweight at Barclays; PT 138 euros
* Stadler Rail Rated New Buy at Stifel; PT 44 Swiss francs
* Stellantis Rated New Buy at Berenberg; PT 21 euros
* Tesla Rated New Hold at Berenberg; PT $900
* VW Rated New Hold at Berenberg; PT 175 euros
* Zur Rose Reinstated Overweight at Barclays; PT 178 Swiss francs
>>> Call
* Domino’s Pizza Upgraded at Berenberg With Bad News Priced In
* Philip Morris Deal for Swedish Match Likely to Close: Bernstein
After Hours Summary: UPST -44.5%, GDRX -28.4%, NVAX -16.7%, GRPN -12.3%, CARG -10% down on earnings; VRM +17.6% higher on new CEO/earnings; AFRM -13.6% heads lower in sympathy with UPSTAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: VRM +17.6% (also CEO Paul Hennessy steps down; Tom Shortt appointed as CEO), CLOV +14.5% (also files for $300 mln mixed securities shelf offering), UNVR +14%, MRC +12.5%, SWAV +9.4%, SDC +8.6%, HIMS +7.1%, FROG +6.1%, ROVR +4.8%, AMC +4.4%, NCMI +3.6%, BLNK +3%, MCHP +2.6% (also increases dividend), HRTX +2.5%, ZNGA +2.1%, DHT +1.6%, SPG +1.4% (also dividend increase and new $2 bln buyback plan), XPO +1.4%, RNG +1.3% (also names new CFO), OPRT +1%, TREX +0.2%, LFST +0.2%, MGY +0.1%, NHI +0.1%, SU +0.1%
Companies trading higher in after hours in reaction to news: CENN +5.7% (NVVE and CENN announce alliance to offer electrification solution for commercial fleets), NVVE +5.2% (NVVE and CENN announce alliance to offer electrification solution for commercial fleets), QSI +4.9% (names new COO), MTCH +3.2% (MTCH sues GOOG over alleged unlawful billing mandates), BRSP +2.5% (authorizes new $100 mln share repurchase program), KKR +1.6% (expands industrial real estate investment strategy in US), TINV +1.1% (announces business combination agreement with Grindr), PRAX +0.8% (reports top-line results from Part B of Phase 2a study of PRAX-944), SNCR +0.8% (signs multi-year agreement with Brightspeed), KRUS +0.4% (CFO to retire), GOOG +0.3% (MTCH sues GOOG over alleged unlawful billing mandates), EPAC +0.1% (names new CFO)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: UPST -44.5%, GDRX -28.4%, NVAX -16.7%, MAXR -13.4%, GRPN -12.3%, CARG -10%, TDUP -10%, DDD -8.2%, PLUG -7.3%, MESA -5.6%, PUBM -4.5%, ALGM -3.8% (also CEO to retire), YMAB -3.2%, OPK -2.9%, XPER -2.9% (also remains on track to separate product and IP businesses in the fall), CRSP -1.5%, LMND -1.4%, BWXT -0.6%, AMWL -0.4%, HBM -0.4%, IFF -0.3%, ESE -0.2%, HI -0.2%, RBA -0.2%, DNB -0.1%, HLIO -0.1% (also to acquire the assets of Taimi R&D), PRA -0.1%, RCUS -0.1%
Companies trading lower in after hours in reaction to news: AFRM -13.6% (in sympathy with weak earnings report from UPST), OVV -3.3% (increases dividend, plans to double shareholder returns, reports earnings), FSLY -1.7% (postpones Investor Day), INN -1.6% (files mixed securities shelf offering)
Closing Stock Market SummaryThe S&P 500 fell 3.2% on Monday, closing below the 4,000 level in a broad-based retreat led by the growth stocks. The Nasdaq Composite (-4.3%) and Russell 2000 (-4.2%) both fell more than 4.0% while the Dow Jones Industrial Average outperformed on a relative basis with a 2.0% decline.
The persistently weak price action, while not quite panicky today, remained a hindrance to risk sentiment at a time when the market has been contending with growth concerns. The latter have been tied to rising interest rates, Russia's war in Ukraine, and China's COVID-related lockdowns (which, according to Bloomberg, caused Saudi Arabia to cut oil prices for Asian buyers due to weak demand).
Ten of the 11 S&P 500 sectors closed lower with selling interest accelerating in the last 45 minutes of action.
The energy sector (-8.3%) was the worst performer, falling 8% as weaker oil prices ($103.43/bbl, -6.57, -6.0%) contributed to some profit-taking activity in the space. The biggest drags on the market, though, were the information technology (-3.9%) and consumer discretionary (-4.3%) sectors. The consumer staples sector (+0.1%) eked out a gain.
Growth stocks continued to be loss leaders, evident by the 4.4% decline in the Vanguard Mega Cap Growth ETF (MGK 192.06, -8.63). For comparison, the Invesco S&P 500 Equal Weight ETF (RSP 142.93, -4.32) fell 3.0%, which was still a huge decline in its own right.
Uber (UBER 23.05, -3.02, -11.6%), in particular, fell nearly 12.0% after CNBC reported that the company was planning to cut costs, exacerbating the underlying growth concerns in the market.
In addition, Palantir (PLTR 7.46, -2.02, -21.3%) dropped 21% on disappointing revenue guidance while Rivian (RIVN 22.78, -6.01, -20.9%) also dropped 21% amid news that Ford Motor (F 13.37, -0.84, -5.9%) and a large unknown seller were planning to unload millions of shares, according to CNBC.
Away from equities, the Treasury market attracted some buying interest amid the carnage in stocks. The 10-yr yield, which hit 3.20% overnight, backed down to 3.05% by the settlement (down four basis points). The 2-yr yield declined six basis points to 2.60% after hitting 2.73% overnight. The U.S. Dollar Index was little changed at 103.70.
Monday's economic data was limited to Wholesale Inventories for March, which increased 2.3% m/m in March (Briefing.com consensus 2.3%) following a revised 2.8% increase (from 2.5%) in February. Looking ahead, investors will receive the NFIB Small Business Optimism Index for April on Tuesday.
- Dow Jones Industrial Average -11.3% YTD
- S&P 500 -16.3% YTD
- Russell 2000 -21.5% YTD
- Nasdaq Composite -25.7% YTD
Fed warns of ‘negative feedback loop’ as market liquidity deteriorates
US central bank says a sharp rise in interest rates could cause a large correction in asset prices
Dramatic price swings in US financial markets have probably been exacerbated by a decline in liquidity, the Federal Reserve reported on Monday as it warned of a “higher than normal risk” that trading conditions will suddenly deteriorate.
The US central bank’s warning on liquidity — the ability to buy or sell an asset without influencing the price — follows several frenzied months in US markets. A sell-off has wiped trillions of dollars off the value of stocks and bonds while closing the door on new share listings and raising borrowing costs for consumers and corporations.
Conditions in Treasury, commodity and equity markets have been noticeably poor this year, with traders reporting that they have struggled to conduct even relatively small trades without influencing price.
The Fed on Monday said the ability to buy or sell at prices quoted by broker dealers had “deteriorated” and was worse than should be expected given levels of volatility. It added that the decline in liquidity might be compounded by brokers and high-frequency trading firms “being particularly cautious” given the market conditions.
“Declining depth at times of rising uncertainty and volatility could result in a negative feedback loop, as lower liquidity in turn may cause prices to be more volatile,” policymakers wrote in the Fed’s financial stability report, which is published twice a year in May and November.
The swings in the price of everything from Treasuries to corporate bonds and stocks have also been driven in part by the Fed’s move to tighten monetary policy, as well as Russia’s invasion of Ukraine and the economic slowdown in China.
The central bank last week delivered its first half-point rate rise since 2000 and is set to implement additional increases of the same magnitude at its next two policy meetings. In June, it will also start to shrink its $9tn balance sheet — which ballooned after it hoovered up bonds during the pandemic — as it steps up its efforts to rein in the highest inflation in roughly 40 years.
The prospect of higher interest rates has pushed the yield on the benchmark 10-year Treasury to its highest level since 2018. That rise has forced investors across the globe to reassess the value of many of the stocks they bid up to record highs over the past year, with the S&P 500 stock index down more than 16 per cent this year and the technology-heavy Nasdaq Composite declining more than 25 per cent.
“A sharp rise in interest rates could lead to higher volatility, stresses to market liquidity, and a large correction in prices of risky assets, potentially causing losses at a range of financial intermediaries, reducing their ability to raise capital and retain the confidence of their counterparties,” the Fed warned in its report.