US EARLY MORNING: Index futures are higher within recent consolidation ranges, Treasuries are lower; geopolitics and Fedspeak ahead

EQUITIES: APAC equities traded cautiously; European stocks started the day constructively, and have extended to the upside in wake of flash PMI data for March, where the Eurozone aggregate, German and French releases were stronger than analyst expectations; the takeaway, according to IFR, is that the COVID recovery is helping mitigate the impact of the Ukraine war, while demand may be being brought forward amid expectations of continued supply chain issues and expectations of price rises. Geopolitics continues to feature; Russia’s invasion of Ukraine has now entered its fourth week, and the prospects of peace remain distant despite the sides continuing to talk (EU diplomat said Russia seeks to isolate Ukraine from the sea, and has no interest in negotiating until then; we therefore keep a close eye on developments in the strategically important Mariupol area). Biden will formally announce new sanctions today (primer for today’s NATO/Biden visit here). Elsewhere, there are further reports noting that Iran nuclear talks (which had apparently been close to a deal for several weeks now) are subject to increasing pessimism on the chances of restoring the JCPOA. Stocks have essentially been consolidating sideways this week, with technical factors playing a role (the 200dma in ES at 4470 appears influential, and similarly the NQ 50ma at 14330) ahead of key risk events (geopolitics, Fed normalisation, inflation, etc). Barclays is the latest bank to warn on risks ahead, and reportedly have ended the long-held overweight on global stocks over bonds, according to Bloomberg; they cite slowing earnings growth and valuation risks; their strategists argue that the global growth slowdown, hot inflation (and the policy reaction), pickup in services over goods are all headwinds to earnings.

TREASURIES: Yields are higher along the Treasury curve by 2-5bps, with the belly standing out in its underperformance. Major curve spreads are mixed. Markets have coalesced their views around a 50bps Fed rate hike in May (75% implied probability according to money markets), and today’s heavy dose of Fedspeak is likely to do little to shake that; Powell and Williams stayed clear of monetary policy in their latest remarks, while Governor Waller’s hawkishness is known; Kashkari, Evans and Bostic have all spoken recently, so we are unlikely to get anything incremental in remarks today. Elsewhere, weekly jobless claims (continuing claims this week coincides with the traditional BLS jobs report survey window) will be eyed, but durable goods data and final Q4 growth data aren’t likely to change the narrative too much. The US will sell 10yr TIPS in the afternoon. Full Day Ahead here.

EQUITY NEWS:

KEY LEVELS (via Credit Suisse)

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  SPX: 4424, 4434, 4469/61, 4482, 4495, 4526/30, 4550, 4577, 4590/95, 4612.


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  NDX: 14020/14, 14190, 14385/43, 14471, 14577, 14689, 14769,/70, 14893, 15037/58, 15109.


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  RUT: 1978, 2027/19, 2038/34, 2055, 2076/74, 2105/10, 2123/26, 2133/38, 2162, 2177.

TECH:

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  Alphabet (GOOG), Spotify (SPOT) - Alphabet plans to allow app developers to offer their own billing systems; will conduct a pilot program with Spotify. The two announced "user choice billing", a multiyear agreement. (SPOT)


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  Riot Blockchain (RIOT) - Rose around 2% after hours. COO Megan Brooks-Anderson to leave (was appointed in April 2021); filing did not specify any reason for her leaving. (COIN)


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  Uber (UBER) - Having twice postponed its return-to-office plans, CEO told employees return to the office April 25th; contrasts with rival Lyft, which has adopted a flexible approach allowing staff to work remotely as much as they want. (Business Insider)

MATERIALS:

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  Glencore (GLNCY) - Qatar SWF to sell USD 1.1bln stake in the miner; secondary guidance GBP 4.97/shr according to some reports (vs GBP 5.12 Wednesday close). (Times)


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  H.B. Fuller Company (FUL) - Rose 5.1% in after hours. Q1 adj. EPS 0.80 (exp. 0.73), Q1 revenue USD 857mln (exp. 817mln). Raised FY22 adj. EPS guide to between USD 4.10-4.35 (exp. 4.16, prev. 4.00-4.25), and raised FY22 revenue growth view to 15-20% (prev. 10-15%). (FUL)


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  Miners - Morgan Stanley downgraded Alcoa (AA), Vale (VALE), CSN (SID), Southern Copper (SCCO); upgraded Buenaventura (BVN), raised PT for Teck Resources (TECK), raised PT for Nexa Resources (NEXA), raised PT for Freeport McMoRan (FCX), raised PT for Largo Resources (LGO).

INDUSTRIALS:

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  Hertz (HTZ), Tesla (TSLA) - Hertz adds Tesla Model Y to EV fleet after last year announcing a deal to buy 100k Model 3 vehicles. (Electrek)


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  Nikola (NKLA) - Has now begun production of its commercial electric truck. (MarketWatch)


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  Auto names - RBC auto forecasts for 2023 and 2023 trimmed due to continuing supply chain issues, which have not recovered as expected; sees 2022 US auto demand at 15.2mln units (prev. 15.75mln). RBC also note macro concerns ahead which could impact demand. Lowers 2023 auto demand view to 16.1mln units (prev. 16.5mln).


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  Renault (RNLSY) - Has now shut down operations in Russia, mulls exiting venture. Revised 2022 outlook; sees Group operating margin of around 3% (prev. 4%+), and a "positive" automotive operating FCF (prev. EUR 1bln+). (Bloomberg)


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  Volkswagen (VWAGY) - To resume EV production at Dresden and Zwickau from next week, sooner than planned. (ANE)


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  Daimler Trucks (DTRUY) - Adj. EBIT rose significantly to EUR 2.552bln (prev. 657mln); sees little impact from Ukraine, pandemic in 2022. (Reuters)


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  Airbus (EADSY) - Said the current geopolitical crisis will impact the aviation industry, centre of gravity in aviation moving east, has a trajectory to land in India. (Newsquawk)


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  Steelcase (SCS) - Declined almost 6% in after hours. Q4 EPS -0.02 (exp. 0.00), Q4 revenue USD 753mln (exp. 752.7mln). Q4 orders +27%; end Q4 order backlog approx USD 787mln (+77% Y/Y); backlog includes a higher than historical percentage of orders scheduled to ship beyond the end of the next quarter, and supply chain disruptions are expected to continue. Accordingly, sees Q1 loss per share between 15-20c (exp. -0.07), and sees Q1 revenue between USD 680-705mln (exp. 689.5mln). (SCS)

CONSUMER STAPLES:

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  Ollie's Bargain Outlet Holdings (OLLI) - Fell almost 3% in after hours. Q4 adj. EPS 0.69 (EXP. 0.66), Q4 revenue USD 501.1mln (exp. 513.2mln). Q4 comps -10.5%. Sees Q1 EPS between 0.31-0.33 (exp. 0.39), and sees Q1 revenue between USD 417-422mln (exp. 445.2mln), and sees Q1 comp sales down 14%-15% (said comps QTD tracking 'little ahead of guidance'). FY22 adj. EPS seen between 2.15-2.22 (exp. 2.33), and sees FY22 revenue between USD 1.91-1.93bln (exp. 1.7bln), FY22 comp sales seen flat-to-up-1%. (OLLI)


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  Casino (CGUSY) - Reportedly mulls offloading part/all of its 73% stake in GreenYellow; could be valued at over EUR 1bln. (Bloomberg)

CONSUMER CYCLICAL:

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  KB Home (KBH) - Fell 4.3% after hours. Q1 EPS 1.47 (exp. 1.56), Q1 revenue USD 1.4bln (exp. 1.5bln). Said market conditions were healthy, driven by a low supply of available inventory and favorable demographics, steady employment and wage growth. However, noted supply chain issues intensified and an already-constrained construction labour force was further stressed, which extended build times, delayed completions and planned deliveries. Sees Q2 housing revenue seen USD 1.55-1.65bln, and Q2 avg. selling price seen at USD 490k; FY22 housing revenue between USD 7.2-7.6bln, and sees FY22 avg. selling price between USD 490-500k. (KBH)


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  Next (NXGPY) - FY21 pre-tax GBP 823mln (exp. 822.5mln). Cuts profit guidance amid the Russia-Ukraine war. To restart dividend payment, and will return to pre-pandemic dividend cycle in the year ahead. (Newsquawk)


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  Oxford Industries (OXM) - Rose 6.5% after hours. Q4 EPS 1.68 (exp. 1.43), Q4 revenue USD 299.9mln (exp. 294.6mln). Raised quarterly dividend +31% to 0.55/shr. Sees Q1 EPS 2.65-2.85 (exp. 1.91), and sees Q1 revenue USD 315-335mln (exp. 271.6mln). Sees FY22 EPS between 8.75-9.15 (exp. 7.91), and sees FY22 revenue between USD 1.245-1.285bln (exp. 1.17bln). (OXM)

COMMUNICATIONS:

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  Telecom Italia (TIIAY), KKR (KKR) - KKR reportedly reiterated interest in Telecom Italia. (Reuters)


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  Playtika Holding Corp. (PLTK) - Acquires JustPlay.LOL, creator of the multiplayer game '1v1.LOL'; expands Playtika's offering into the Action and Battle Royale genres. No terms. (PLTK)


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  Stagwell (STGW) - Rose 3.1% after hours following board authorising USD 125mln stock repurchase programme. (STGW)

HEALTH CARE:

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  AstraZeneca (AZN) - Phase III trial for Imfinzi did not achieve statistical significance for the primary endpoint. (Reuters)


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  Novartis (NVS) - FDA approves Pluvicto for treatment of progressive, PSMA positive metastatic castration-resistant prostate cancer. (NVS)


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  Bristol-Myers (BMY) - CEO sold USD 1.8mln of common stock, according to a filing. (BMY)


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  Moderna (MRNA) - Finalised strategic partnership with Australia. (MRNA)


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  Ligand Pharmaceuticals (LGND), Avista Public Acquisition Corp. II (AHPA) - Ligand and Avista to merge, providing for the spin-off of OmniAb, Ligand’s antibody discovery business, immediately followed by a merger with a newly formed subsidiary of APAC. (LGND)

UTILITIES:

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  Southwest Gas Holdings (SWX) - Investor Icahn amends tender offer. (IEP)

ENERGY:

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  Tullow Oil (TUWOY) - Appoints Jonathan Swinney as CFO. (Newsquawk)

REAL ESTATE:

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  KKR (KKR) - KKR expands self-storage real estate portfolio with acquisitions in Denver and Nashville. (KKR)

24 Mar 2022 - 09:34- EquitiesResearch Sheet- Source: Newsquawk