US EARLY MORNING: Equity futures lower ahead of OpEx and Biden/Xi meeting at 13:00GMT/09:00EDT

EQUITIES: US equity futures are lower across the board, with all major US indices seeing similar losses of around -0.6%, which comes despite the APAC gains overnight, whilst European indices opened essentially flat, but they have held a downside bias since the cash open. Nonetheless, market participants are firmly focussed on the key risk events that lie ahead on Friday, with the highlight being US President Biden and Chinese President Xi call at 13:00GMT/09:00EDT. As a reminder, US Secretary of State Blinken said on Thursday China will be responsible for any actions supporting Russia. Whilst from a Chinese perspective, overnight the Global Times, citing an official, stated China will never accept US threats/coercion, and will urge the US to fulfil Biden's commitment not seeking a new Cold War, changes in China's system, a stronger alliance against China. Moreover, attention will be on any further updates regarding Ukraine/Russia rhetoric, as the tone of commentary seemingly sours, highlighted by Russia setting up a no-fly zone over the Donbass region. Elsewhere, focus resides on Fed speak, in the the form of Waller (voter), Barkin (2024 voter, Evans (2023 voter), and Bowman (voter), as well as existing home sales. Lastly, eyes will be on on quad-witching, where Goldman Sachs noted "[Fri] equity option expiration is large, with more near-the-money SPX open interest than any since '19, and investors will also be watching the ETN market given the substantial size of expiring VXX (VIX futures ETN) call options w/o the potential for new shares to be created".

DOLLAR: Dollar is firmer on the session and attempting to recoup some of Thursday's weakness, and as such the Buck has pressed back above the key 98 handle, to highs of 98.241. Nonetheless, against its G10 counterparts the Buck is mixed, but within very contained ranges with the safe-havens JPY and CHF the relative under and outperformers, respectively, but with losses and gains capped at 0.2% either way. Highlighting the lacklustre direction of trade in FX, cyclicals such as AUD, NZD, GBP, are all flat against the Buck. Moreover, overnight the BoJ, as expected, kept monetary policy settings unchanged with rate at -0.10% and 10yr JGB yield target at 0%, while it reiterated it will take additional easing steps as necessary with an eye on the impact of the COVID-19 pandemic. Following the rate decision, little reaction was observed in USD/JPY. Finally, it is expected that the Biden-Xi talks, 13:00GMT/09:00EDT, will provide the key catalyst for the day ahead and set the risk tone into the weekend, but in addition there is Fed speak and quad witching to keep an eye on.

CRUDE: Crude complex is firmer on Friday, with WTI and Brent seeing gains just shy of USD 1/bbl, and on USD 104/bbl and USD 107/bbl handles, respectively. However, the complex is well off earlier highs, following the pull back seen ahead of the European cash open. Furthermore, crude futures continue to rally on Friday as the Ukraine/Russia tone seemingly looks more pessimistic, with latest comments from Senior EU officials giving a dire assessment about the likely trajectory of Russia's war of aggression in Ukraine over next few weeks, according to Eurasia's Rahman. Whilst, Ukrainian President Zelenskiy noted talks with Russia are progressing, but only slowly, and reiterated will not negotiate an inch of Ukrainian territory. Lastly, an update from the IEA, who added the 10-point plan to lower oil use after the Ukraine invasion, focusses on transport of people and goods.

TREASURIES: Treasuries are firmer, with a slight bear-steepening bias, highlighted by the short-end 2yr up 2ps, the 10yr 4bps and the long-end 30yr firmer by roughly 5bps. Continuing, Treasuries do continue to edge higher in early European trade. Nonetheless, Treasuries are seemingly lack fresh direction or impetus, following on from Thursday where Treasuries were steeper with the front-end bid on the "dovish hike" out of the BoE and unwind from FOMC, while the long-end unwound APAC strength on strong data and renewed oil strength. However, looking to the day ahead the key risk events, focus will be on the Biden-Xi meeting, Fed speak  and quad witching. 

EQUITY NEWS:

INDUSTRIALS

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  FedEx Corp (FDX) – Fell 4% after-hours following earnings. Q3 2022 (USD): Adj. EPS 4.59 (exp. 4.64), Revenue 23.60bln (exp. 23.44bln). Operating income improved due to higher revenue per shipments and a net fuel benefit at all transportation segments. Results were partially offset by effects of Omicron, as well as higher purchased transportations costs and wage rates. Affirmed FY22 Adj. EPS view. (BusinessWire)After earnings, President estimated effect of Omicron-driven volume softness in Q3 results was around 350mln and labour shortage lowered ground Q3 sales by 200mln, adds H2 ground margins will be lower than expected. (Newsquawk)


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  Tesla (TSLA) - Restarts output at Shanghai plant following temporary halt and nots the easing of COVID-related movement controls. (Reuters)


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  Airbus (EADSY) - Unite union members at Airbus have rejected the company's improved pay offer. (The Leader)


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  Allegiant Travel (ALGT) – After a slow start to the quarter, attributable to the Omicron variant, we saw a significant step-up in leisure demand beginning mid-February and persisting into March. As such, we expect total revenue to come in on the high-end of our initial revenue guide. Finally, Co. is to reduce capacity due to volatile fuel prices. (PR Newswire)


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  Brink's (BCO) - Announced Mark Eubanks, executive VP and COO, has been appointed president and CEO, effective May 6th. Current CEO Pertz, who has served as president and CEO since July 2016, will transition to executive chairman of the board. (BusinessInsider)


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  Triumph Group (TGI) - Awarded five-year contract with US Navy. (PRNewswire)

FINANCIALS

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  Bank of New York Mellon (BK) - Government sanctions on Russia and these actions are expected to result in a roughly USD 100mln one time reduction in revenue in Q1. Added actions to impact Co. annual revenue by estimated USD 80-100mln going forward. (Reuters)


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  Independent Bank (INDB) - Raises dividend 6% to USD 0.51/shr. (BusinessWire)

MATERIALS

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  US Steel (X) - Lower after-hours by roughly 3.5% following weak guidance. Q1 Adj. EPS view USD 2.96-3.00 (exp. 3.77), whilst adj. EBITDA view circa USD 1.30bln (exp. 1.54bln). X noted exiting Q1 with spot business accelerating, steel prices rising, and longest backlog at our big river steel operations since October. Moreover, realizing significant upside on our fixed price contracts but expects improving market conditions to continue. (BusinessWire)

TECHNOLOGY 

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  Apple (AAPL) - To reduce the role of carriers in the iPhone SE buying process. (Bloomberg)


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  StoneCo (STNE) – Surged 24% after-hours on strong guidance, as opposed to the Q4 numbers. STNE said “our outlook for 2022 is positive, strong growth and improving margins”, while management added all margins will start improving in Q1, and as such Q1 revenue view topped expectations. (STNE) Separately, Co. announced new executive manager appointments. (STNE)


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  Adobe (ADBE) - Recommends that shareholders reject mini-tender by Tutanova, as it recently became aware of an unsolicited "mini-tender" offer to purchase up to 100k shares of Adobe's common stock, representing significantly less than one percent of Adobe's common stock outstanding. (BusinessWire)

AIRLINES

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  American Airlines (AAL) - Will resume alcohol sales on flights from April 18th. (CNBC)


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  Ryanair (RYAAY) - Which? is calling on the UK CAA to investigate Ryanair’s refund policy, which has refunds paid into a wallet attached to their account, withdrawals are the initiated by the customer requesting this from Ryanair. (City AM)

COMMUNICATIONS

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  Tencent (TCEHY) - China is said to weigh a Tencent overhaul through separating WeChat Pay from core business and a new licence requirement. (Bloomberg)


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  Warner Bros. (T) - Said its upcoming video game "Hogwarts Legacy," a role-playing game set in the "Harry Potter" franchise, will be released Holiday 2022 for PC, PlayStation 4 (SONY), PS5, Xbox One (MSFT), and Xbox Series X/S. (Twitter)

AUTOMOBILES

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  Toyota (TM ) – Reportedly halted 11 factories with a total of 18 lines after recent earthquake. (Reuters) Separately, estimates lost production from 3-day suspension next week at 20k vehicles, while sees total March lost production due to earthquake, COVID, chip shortage and cyber attacks at suppliers at 50k vehicles. (Newsquawk)

CONSUMER DISCRETIONARY

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  Torrid Holdings (CURV) – Mixed earnings report, where EPS and revenue printed more-or-less inline but gross margins fell short. Looking ahead, guidance was poor as Q1 revenue and EBITDA view fell short, as did FY22 EBITDA view. (Torrid Holdings)


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  JOANN (JOAN) – Dropped 5% after-hours following a poor earnings report. Revenue, gross margins, and EBITDA all fell short of Wall St. consensus, but EPS did beat. (JOANN)

RIDE HAILING

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  Uber (UBER), Lyft (LYFT) - High gas prices in the US are discouraging workers who drive for Cos. such as Uber and Lyft, according to NYT. Recently, both Cos. added surcharges on ride prices in most places to help the contract workers, who are not reimbursed "for the cost of fuelling up". (NYT)

HEALTHCARE

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  Amneal Pharmaceuticals (AMRX) - Awarded sub-license to manufacture and commercialise a generic version of Nirmatrelvir, co-packaged with Ritonavir, in 95 low- and middle-income countries. Note, Pfizer (PFE) markets co-packaged Nirmatrelvir and Ritonavir in the US and other countries as PAXLOVIDTM. (BusinessWire)

ENERGY

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  Ranger Energy (RNGR) - Surged 30% after-hours after strong earnings. EPS posted a surprise profit per share, whilst revenue also surpassed consensus. Looking ahead, RNGR raised FY22 revenue view. (Ranger Energy)

OTHER

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  GameStop (GME) – Slumped 8% after-hours after posting a surprise loss per share, and a deep one, whilst revenue marginally beat. Gross margins also fell well short of consensus. Moreover, it is to launch NFT marketplace by close of Q2 FY22. GME added this is the first Q in which revenue growth surpassed pre-pandemic levels. (GameStop)

18 Mar 2022 - 09:38- EquitiesResearch Sheet- Source: Newsquawk