Wall Street opens lower on inflation concerns
The Federal Housing Finance Agency’s house price index for March is due today. Economists forecast a 1.9% rise for March, compared to a 2.1% rise in February. Also today, Chairman Joe Biden will meet with Fed Chairman Jerome Powell to discuss inflation.
Moreover, the EU finally agreed on a form of embargo on Russian oil, and it was not an easy task. They reached a compromise, with some adjustments for Hungary and other countries ultra-dependent on energy supplies from Moscow. “Instead of targeting all Russian crude oil imports, the EU will ban Russian crude oil imports by sea for the next six months,” ING said, which could account for two-thirds of volumes. But as Germany and Poland have announced their decision to reduce their purchases via the pipeline that feeds them to zero, this could affect around 90% of imports by the start of 2023. The aim is to increase the pressure on the Russian finances. The barrel logically reacted on the rise, but part of the news was already in the course, so there was no explosion. Brent is still above 119 USD, which will not help our energy bills.
There is good news from China, with the number of coronavirus infections in the country reducing. Given China’s prominence in the global production scene, any improvement is good for reducing disruption to supply chains. Secondly, the publication of a less degraded than expected manufacturing PMI indicator in April. The official Purchasing Managers’ Index rose more than 2 points to 49.6. This is above the average expectation of economists (49). While this indicator must be above 50 points to signal a positive economic phase, it has rallied in the right direction, something investors will be sensitive to.
Today’s economic highlights:
Three important indicators today, May inflation in the eurozone, US house prices and the Conference Board’s US consumer confidence index. This morning, Japan announced a contraction of -1.3% in its industrial production in April, while the consensus was expecting -0.2%.
The dollar is up 0.7% at 0.9351. The ounce of gold lost a few dollars to 1849 USD. North Sea Brent is trading at $119.89 a barrel and US Light WTI at $119.35. The yield on the US 10-year debt stands at 2.84%. Bitcoin is up to 31,700 USD.
On the stairs :
* The company Boeing – Norwegian Air announced on Monday that it has placed an order for 50 737 MAX aircraft and an option for 30 additional aircraft for an unspecified amount.
* Apple – Taiwan’s Foxconn Group, one of the iPhone maker’s main contractors, said on Tuesday that the outlook for the second half of this year is “moving in the right direction” with the announced lifting of the lockdown in Shanghai . The action is down 0.5% in pre-market trading.
* US Airlines canceled more than 2,500 total flights over the Memorial Day long weekend due to weather disruptions but also labor issues. Delta Air Lines alone has canceled about 700 flights in the past four days, according to FlightAware.
American Eagle: Morgan Stanley downgrades to underweight from equal weight. PT down 39% to $8.
Atom Energy Plc: Liberum begins tracking as a long, targeting 181 GBp.
Bill.com: KeyBanc adjusts price target on bill.com holdings to $175 from $225, reiterates overweight rating.
Eastman Chemical: Credit Suisse initiated the hedge with an outperformance recommendation. PT up 19% to $130.
FMC Corp: Credit Suisse reinstated coverage with an underperformance recommendation. PT down 13% at $109.
International Consolidated Airlines: Morgan Stanley moves from overweight to weight online, targeting GBP 144.89.
Linde: Credit Suisse initiated the hedge with an outperformance recommendation. PT up 15% to $380.
Mercury Systems: Credit Suisse reinstated coverage with an underperformance recommendation. PT down 12% at $115.
NuStar Energy: Wells Fargo Securities moves from equal weight to overweight. PT up 12% at $18.
PPG Industries: Credit Suisse reinstated coverage with an underperformance recommendation. PT down 12% at $115.
The Sherwin-Williams Co: Credit Suisse reinstated coverage with an underperformance recommendation. PT down 11% to $245.
Steel Dynamics: Goldman Sachs downgrades to neutral on buy. PT up 4.8% at $92.