(Boursier.com) – Wall Street appears to be up before the market on Friday, after its correction the day before and following encouraging comments from Vladimir Putin. The DJIA and the S&P 500 advanced 1% in pre-session, while the Nasdaq took 1.3%. The barrel of WTI crude remains volatile and lost 0.5% to $105.4 on the Nymex. The ounce of gold consolidates by 1.6% to $1,967. The dollar index is stabilizing against a basket of currencies. Bitcoin is trading in the $39,000 area.
It is therefore to Russian President Vladimir Putin that we owe this better stock market trend. The Russian leader reported this Friday on positive developments in discussions with the Ukrainian authorities, without however providing further details. “There are some positive developments, the negotiators on our side tell me,” Putin said during a meeting with his Belarusian counterpart, Alexander Lukashenko, adding that these discussions were continuing daily.
However, Russian forces are reportedly reorganizing north of kyiv, satellite images show, and the UK today indicated that Moscow may attempt a new attack on the Ukrainian capital in the coming days, as the EU and member states States are organizing the response. In addition, Russian bombardments continue to target several cities in eastern Ukraine, including Kharkiv and Mariupol. Ukrainian authorities have accused the Russian army of hitting a psychiatric hospital in the town of Izium, two days after the shelling of a maternity ward in Mariupol.
Putin has also paved the way for an escalation of the conflict in Donbass, as part of a “special military operation” aimed at “denazifying” Ukraine. The Russian president has given the green light to send 16,000 volunteers from the Middle East to the separatist republics of Donetsk and Luhansk. Ukrainian President Volodimir Zelensky claimed that Moscow had started deploying Syrian mercenaries to Ukraine.
In economic news this Friday on Wall Street, the preliminary US consumer sentiment index for March 2022 will be released at 4 p.m. (FactSet consensus 62). There would therefore be no improvement for this already depressed confidence indicator in March. In February, it stood at 62.8.
Elsewhere in the world, among other statistics from the day, real household consumption spending in Japan for the month of January rose 6.9%, while real incomes rose 1.6%.
In Germany this time, the consumer price index for the month of February, in harmonized data (EU), was confirmed at +0.9% in final reading and compared to the previous month (+5.5% compared to last year).
In the UK, GDP figures exceeded expectations, as did those for industrial and manufacturing production, while the trade deficit widened. Data released earlier on Friday showed the UK economy rebounded much more than expected in January, with gross domestic product rising 0.8% on the month after falling 0.2% in December. The consensus was for 0.2% growth in January.
Western countries are preparing to tighten sanctions against Russia following the invasion of Ukraine. Joe Biden would demand an end to Russia’s privileged trade status this Friday, paving the way for an increase in tariffs on Russian products – an announcement that would be made alongside G7 and EU leaders.
At the same time, EU leaders pledge to increase economic pressure on Russia and Belarus, including by imposing new sanctions on Russian banks and blocking Russian ships from EU ports. The leaders of the European Union, meeting in Versailles since yesterday, will take new measures to support Ukraine and to stop sourcing Russian hydrocarbons. Biden is expected to announce soon after that the United States and its G7 allies and the EU will strip Russia of its preferred trading partner status. The US Senate has also adopted a law releasing 13.6 billion dollars for the purchase of ammunition and military equipment for the Ukrainian army, as well as humanitarian support for Ukraine. The European Commission intends to double its military aid to Ukraine and has requested the release of an additional 500 million euros. The EU is already supplying kyiv with defensive weapons.
The economic fallout from the Russian invasion continues as soaring commodity prices threaten to deepen inflation and limit scope for further easing. Vladimir Putin plans to nationalize the activities of foreign companies fleeing Russia following its invasion of Ukraine…
The United States has threatened retaliation against Chinese companies defying sanctions against Russia. Meanwhile, five Chinese companies could be delisted from the NYSE for failing to meet new audit requirements.
Russian Foreign Minister Lavrov met his Ukrainian counterpart Kuleba in Turkey yesterday, the first high-level face-to-face meeting since the start of the conflict, but without any progress. Lavrov noted that no one plans to negotiate a ceasefire during these talks and said that lower-level officials will meet again soon on this subject in Belarus (three rounds have already taken place). He added that there could be a Putin/Zelensky meeting at some point in the future. Kuleba said a ceasefire was mentioned but nothing was accomplished. Ukraine reiterated that it would not surrender, but said its country was ready to seek balanced diplomatic solutions.
Market participants are also digesting yesterday’s update from the ECB, which signaled a more rapid reduction in support with the possibility of QE ending in the third quarter if the inflation outlook does not falter. not attenuate. Uncertainty is also growing with the approach of a very delicate monetary meeting of the Fed, scheduled for March 15 and 16.
US Treasury Secretary Janet Yellen warned yesterday that the US is likely to see another year of “very uncomfortably high” inflation. This makes it significantly more difficult for Fed boss Jerome Powell as the US central bank is expected to lift support and begin a rate hike cycle.
Yellen was cautiously optimistic on CNBC, despite US inflation at a 40-year high and massive geopolitical uncertainty. “I think there’s a lot of uncertainty related to what’s going on with Russia and Ukraine,” Yellen said. “I think it exacerbates inflation.” As Americans grapple with the consequences of tough sanctions on Russia, Yellen put it into perspective: “We have a good, strong economy with great prospects for the labor market and real activity ahead. Inflation is a problem. , and it’s something we need to address, but I don’t expect a recession in the United States,” the Treasury Secretary said.
According to the CME Group’s FedWatch tool, a 25 basis point rate hike from the Fed is still expected for March 16, following next week’s monetary meeting. Thus, the probability of a fed funds rate raised between 0.25 and 0.5% on Wednesday is estimated at 97.8%, against 2.2% for the probability of a status quo. Regarding the May 4 meeting, a rate hike of 25 or 50 basis points is expected (respective probabilities of 53.7% and 45.1%).
The strategists of Goldman Sachs do not exclude the formation of a recession, in the face of the current combination of adverse elements. “We now see the risk of the US entering a recession over the next year as broadly in line with the 20-35% probabilities currently implied by models based on the slope of the yield curve,” he said. said Jan Hatzius, chief economist at Goldman Sachs. Wall Street’s most listened-to strategist cut his 2022 US GDP growth forecast to 1.75% from 2% previously. Consensus estimates call for a 2.7% increase.
Values
Oracle Thursday evening published quarterly results below market expectations, initially causing a drop of up to 8% in its share price in electronic quotations after the close. However, the stock then reduced its losses to around 1.5%. For its third fiscal quarter, the American group reported net income of $2.32 billion (84 cents per share) less than half compared to $5.02 billion ($1.68 per share) released a year earlier. Adjusted for non-recurring items, earnings per share reached $1.13, compared to $1.16 a year earlier. Analysts polled by FactSet had expected adjusted EPS in the range of $1.14 to $1.18. The group’s quarterly revenues amounted to $10.51 billion, compared to $10.09 billion an earlier (+4%), and in line with consensus expectations.
Oracle explained the disappointment in its earnings by the drop in its investments in two companies, Oxford Nanopore (specialized in genetic sequencing), whose stock price fell, and Ampere Computing, a microprocessor developer, which suffered operational losses. “We remain confident that our investments in these two advanced technology companies will produce significant returns on investment,” Oracle said.
Rivian fell last night by an additional 13% after trading on Wall Street below $36. Since its peaks in November, the title of the designer of electric vehicles has been divided by three! Yesterday evening, the American manufacturer of electric cars missed the consensus of place in terms of income and profits for the quarter ended. It has also adjusted its production targets, still suffering from supply problems. The quarterly loss topped $2 billion. Supply chain constraints are weighing on the outlook, the group estimating that they could reduce its 2022 production ambitions by half, to 25,000 vehicles.
As of March 8, Rivian has built 1,410 vehicles this year and 2,425 since production began. For the fourth quarter, the group posted a net loss of $2.46 billion or $4.83 per title, against $353 million a year earlier. Revenue was just $54 million, versus the consensus $60 million. In the short term, the group is pessimistic. Nevertheless, a significant resumption of production is expected in the second quarter for the EDV-700 van intended for Amazon – which holds 20% of the capital and has ordered no less than 100,000 vans. Production of a new van for Amazon, the smaller EDV-500, is expected later this year.
Meta. Russia has indicated that it will end the activities on its territory of Meta Platforms, operator of Facebook, Instagram and WhatsApp, if a Reuters report that the company allows users from certain countries to call for violence against Russians and Russian soldiers was proven.
Meta and Alphabet also defended their ‘Jedi Blue’ advertising deal today, after EU and UK antitrust authorities opened investigations into the contract for allegedly restricting competition.
Twitter, the American social media network, has just appointed three new leaders, including Jay Sullivan, former product director at Facebook in charge of virtual and augmented reality, to oversee the development of new services in its consumer division. Twitter is targeting 315 million daily active users by the end of 2023, up from 217 million currently.