(Boursier.com) — Wall Street evolves in dispersed order at the start of the session. The S&P 500 is currently down 0.13% to 5,174 pts, while the Dow Jones is down 0.48% to 38,279 pts. The Nasdaq advances 0.38% to 16,232 pts. After the unpleasant surprise in consumer prices for March yesterday, producer prices for the same month came out quite mixed and are struggling to really reassure. The producer price index actually increased by 2.1% over one year, its biggest increase in 11 months, although lower than expectations. On the employment front, jobless claims fell more sharply than expected last week, once again demonstrating the strength of the labor market in the world’s largest economy.
“Easy financial conditions continue to significantly support growth and inflation. As a result, the Fed is not done fighting inflation and rates will remain high for longer,” Torsten Slok at Apollo tells ‘Bloomberg’ Global Management. “We remain convinced that the Fed will not cut rates in 2024.” Former Treasury Secretary Lawrence Summers went further, saying that we should “take seriously the possibility that the next rate move will be up rather than down.” Such a probability is between 15 and 25%, he told ‘Bloomberg Television’. The CME Group’s ‘Fedwatch’ tool now assigns a probability of 81% to a new Fed status quo in June compared to 37.1% last week.
In Europe, the ECB has just kept its borrowing costs at a record level, for the fifth time in a row, but it has introduced an explicit reference to future rate cuts (June?), as inflation approaches of its 2% objective, even if it remains dependent on data. “June is really the time for the ECB to start the cycle of rate cuts,” Evelyn Herrmann, economist at Bank of America Securities Europe, said on Bloomberg Television. “They probably have a fairly superficial reduction cycle in mind.” The ECB faces different factors than the Fed, with more pronounced disinflation and economic weakness in the region, she added.
In the bond market, Treasury yields are tightening again after their surge on Wednesday. The 10-year rate thus rose by 3.7 bp to 4.580%, the highest since last November. On the micro side, Constellation Brands and CarMax revealed their quarterly reports. Financials JP Morgan, Wells Fargo, BlackRock and Citi will really kick off the earnings season on Friday.
Quoting…
On the oil market, a barrel of WTI crude returns 0.8% to 85.5 dollars on the Nymex. The dollar index stabilizes against a basket of currencies and Bitcoin rises 2.7% to $70,940. Finally, gold regained 0.2% to 2.338 dollars per ounce.
Values
* Astrazeneca increases by 1.3% after announcing its intention to increase its annual dividend by 7% for 2024, the pharmaceutical group banking on strong performance and cash generation thanks to its anti-cancer drugs.
* Constellation Brands (+0.7%) anticipates annual profit above Wall Street expectations, banking on the resilience of demand for its main beer brands despite persistent inflation. The firm forecasts comparable earnings per share for 2025 of between $13.50 and $13.80, compared to a consensus of $13.42. With benefits from sales growth, price increases, reduced marketing expenses and cost reduction initiatives, Constellation was able to counter rising packaging and raw material costs. The company had net revenue of $2.14 billion in the quarter ended February 29, compared to a consensus of $2.10 billion. Comparable earnings per share came in at $2.26, beating estimates of $2.08.
* United States Steel (stable). Unsurprisingly, the U.S. Department of Justice has opened an extensive antitrust investigation into the company’s $14.1 billion takeover bid. Nippon Steel on the American group. At the end of December, the Biden administration announced that careful review was necessary following the Japanese group’s offer for the American steel giant. The survey signals further delays in a deal that the companies had hoped would be approved in the second or third quarter and may not be resolved before the U.S. presidential election in November. The extensive antitrust investigation, which was reported by ‘Politico’, comes as President Joe Biden meets with Japanese Prime Minister Fumio Kishida in Washington this week. Biden has said he wants US Steel to remain domestically owned, but he has not made an explicit commitment to end the deal. Donald Trump, Biden’s main challenger in the upcoming elections, declared that he would try to block him, recalls ‘Bloomberg’.
The DOJ’s investigation is particularly focused on Nippon Steel’s ownership of a steel mill in Calvert, Alabama, which is a joint venture with ArcelorMittal, the world’s second-largest steelmaker, according to an agency source. The Calvert plant re-mills raw steel into flat steel, which is used in many products, from pipes and tubes used in the oil industry to products for the automotive and automotive industries. construction. Calvert does not produce raw steel and therefore must import or purchase steel slabs from other companies like US Steel to make its products. If Nippon Steel completes its takeover bid, the Japanese company would control approximately 20 million tons of U.S.-based capacity. The DOJ will likely examine all other assets that Nippon Steel currently owns to ensure that there would be no anti-competitive practices in the event of a merger between the two players.
* Blackstone (-0.3%) and CVC are among a list of potential bidders for European festival organizer Superstruct Entertainment, several sources familiar with the situation told ‘Reuters’. Superstruct, which organizes events such as electronic music festival Sonar in Spain and Mysteryland in the Netherlands, could be valued at up to 1.5 billion pounds ($1.9 billion) in a sale . The Providence investment fund is working with advisers from Liontree and HSBC to gauge interest and is expected to launch a formal auction process within the next month, the sources said. Superstruct was founded in 2017 by Providence and James Barton, a former chairman of Live Nation and founder of British nightclub Cream, with Providence providing seed funding.
* Regeneron Pharmaceuticals fell by 2.3%. The US Department of Justice accused the laboratory of manipulating the pricing process for Eylea, its very expensive drug against macular degeneration.
* CarMax plunged 13.5% after the used vehicle retailer missed analysts’ estimates, penalized by falling profitability of cars sold. In its fourth fiscal quarter, the group recorded a net profit of $50.3 million or 32 cents per share compared to a profit of $69 million and 44 cents per share a year earlier. The consensus was for EPS of 49 cents. Revenues fell 1.7% to $5.6 billion, compared to $5.8 billion expected. “We believe vehicle affordability issues continued to impact our unit sales in the fourth quarter, with continued headwinds from widespread inflationary pressures,” the company said. The improved supply of new vehicles has forced used car sellers to cut costs and offer deep discounts on vehicles. In some cases, this has led to vehicles costing less than what they were acquired for.