Historically, April is the second-best stock market month of the year, behind December (almost 60% rise over a century in the US). But April 2024 will weaken this statistic: the S&P500 lost over 4% and the STOXX Europe 600 around 1.5%. Even the invincible Nikkei 225 was down 3%. Against this backdrop, the British FTSE found the resources to gain 2.4%. Other indices were swept along by dashed hopes of Fed rate cuts this year, due to a small inflationary upturn that knocked out the prevailing market scenario. Fortunately, tech giants played the role of shock-absorbers that they have assumed for several years, keeping the market's appetite going with their impeccable results.

The widespread stock market downturn in April came after a series of big gains. The &P500 just came out of five months of gains. And the 1st quarter earnings season is going rather well, with figures broadly in line with analysts' expectations. Against this backdrop, the US economy is holding up well, and Europe could be back in the black if the ECB cuts rates, as investors expect, in June.

April thus bears the scars of the resurgence of US inflation, which has upset bets on the evolution of key rates. The market no longer knows whether the Fed will cut rates three, two, one or zero times this year. It has even caught itself dreading a rate hike. (Old) investors remember the stories they were told about the US central bank's timing errors in the 1970s and their terrible effects on the economy. Yesterday, Jerome Powell had the opportunity to restructure a narrative that had been lacking body for some weeks. He didn't do too badly, more or less dismissing the market's biggest fear and more or less reassuring about the central bank's intentions. Once again, it's this "more or less" that investors are trying to interpret in their own way.

The Fed left rates unchanged, as expected. I'm using a sentence I read this morning in the commentary of US bank First Trust, which reads "without definitively ruling out a hike, Mr. Powell made it clear that the Fed believed current monetary policy was already tight enough to bring inflation down, and anticipated that the next move would be a cut". Quite reassuring, given the market's ultimate fear. Nevertheless, the central banker insisted that inflation remains too high and the labor market too tight. A small incongruity in the previous day's announcements, the Fed announced a slowdown in the pace of its quantitative tightening. The cocktail of this measure, perceived as a form of easing, and Powell's tone, which was slightly less severe than expected, enabled US indices to rebound during yesterday's session. However, this confidence did not last, and May 1st ended on a curious note on Wall Street: +0.2% for the Dow Jones, but -0.3% for the S&P500 and -0.7% for the Nasdaq 100.

One of today’s big event is the release of Apple’s earnings report after the bell. Statistics are also on the agenda, with the final manufacturing PMI indicators for the major economies, ahead of the publication of the official US employment statistics for April, scheduled for Friday. There are also some fairly sharp movements in oil and bitcoin. The black gold stabilized after losing quite a bit of ground over the last two days. The downward movement was accentuated by the sharp rise in US crude oil inventories, which some translated as a slowdown in demand. As for the crypto-currency, it stalled after what appeared to be a mini-fiasco when several bitcoin ETFs were launched in Asia. Six funds were launched this week in Hong Kong, but initial fundraising has been meagre, casting doubt on investor appetite.

In Asia Pacific, the yen fell sharply this morning, a sign, according to traders, that the Japanese authorities have pulled out the Big Bertha behind the scenes to halt the currency's slide against the dollar. The Nikkei was cautious, closing at almost zero. Elsewhere, the situation was all over the place, with the Hang Seng gaining 2.5% in Hong Kong, but declines in Taiwan and Seoul. India and Australia were slightly up. European indices are mixed while Wall Street futures rebounded after yesterday's curious session.

Economic highlights of the day:

It's a day dedicated to manufacturing PMI indicators for the major economies. In the US, we also have Challenger layoff figures, new jobless claims, productivity excluding agriculture, trade balance and unit labor costs, as well as durable goods orders. The full agenda is here. 

The dollar is worth EUR 0.9345 and GBP 0.7993. The ounce of gold is down to USD 2,302. Oil remains under pressure, with North Sea Brent at USD 84.23 a barrel and US light crude WTI at USD 79.50. The yield on 10-year US debt falls to 4.62%. Bitcoin is trading at USD 58,000.

In corporate news:

  • Qualcomm on Wednesday issued third-quarter sales and earnings forecasts ahead of Wall Street expectations, buoyed by the faster-than-expected recovery of the smartphone market. The stock is up 4.1% in pre-market trading.
  • Apple is due to publish its quarterly results after the close of trading on Wall Street. The group's plans to integrate artificial intelligence (AI) into its iPhone and to boost sales on the Chinese market will be at the center of investors' attention.
  • eBay on Wednesday forecast second-quarter sales below Wall Street estimates, as demand slows for certain product categories such as collectibles and auto parts. The stock lost 3.3% in after-hours trading.
  • Microsoft announced on Thursday its intention to invest $2.2 billion over the next four years in Malaysia to develop cloud computing and generative artificial intelligence (AI) services in Asia.
  • Moderna reported quarterly sales ahead of Wall Street expectations on Thursday, but well below those of the previous year, which benefited from high demand for COVID-19 vaccines. The stock gained 1.9% in pre-market trading.
  • American International Group - First-quarter earnings beat expectations, thanks to growth in the general insurance, life insurance and pension insurance divisions, and lower claims.
  • MetLife reported a rise in first-quarter earnings on Wednesday, thanks to higher premiums and solid returns on investments.
  • Etsy fell by 12.5% in pre-market trading, as the group reported lower-than-expected first-quarter gross merchandise sales and earnings, due to lower demand.
  • DoorDash on Wednesday forecast lower-than-expected second-quarter earnings, despite better-than-consensus first-quarter revenues, as rising costs erode gains from increased orders. The share plunged 13.8% in pre-market trading.
  • Exxon Mobil is close to closing its $60 billion merger with Pioneer Natural Resources, with antitrust authorities demanding in exchange that Pioneer executive Scott Sheffield not sit on Exxon Mobil's board, the Wall Street Journal revealed Wednesday.
  • Marathon Oil narrowly beat first-quarter earnings forecasts on Wednesday, helped by rising oil and natural gas prices.
  • Devon Energy - The shale oil producer's first-quarter profit on Wednesday beat consensus, as higher production in the Delaware Basin helped offset lower natural gas prices.
  • APA - First-quarter earnings were below consensus on Wednesday, as the oil and gas producer suffered from lower production over the period.
  • Albemarle - The world's largest producer of lithium for electric vehicle batteries posted first-quarter earnings below consensus on Wednesday, due to lower prices. The stock nevertheless climbed 1.7% in pre-market trading.
  • First Solar reported a year-on-year rise in first-quarter earnings on Wednesday, helped by resilient demand for solar energy. The share is down 4% in after-hours trading.
  • Mosaic narrowly missed Wall Street estimates for its first-quarter profit on Wednesday, which suffered from lower fertilizer prices.
  • Corteva - The food company posted above-consensus first-quarter earnings, thanks to strong sales in North America.
  • Wolfspeed - On Wednesday, the chipmaker forecast lower-than-expected sales for the current quarter, due to lower demand from automakers. The stock is down 6.2% in pre-market trading.
  • Qorvo - The chipmaker announced Wednesday that it expects first-quarter sales and earnings to be below Wall Street estimates, as demand from smartphones is expected to decline. The stock lost more than 11% after the close.
  • Monolithic Power Systems said Wednesday it expects sales for the current quarter to beat estimates due to strong demand for its power control modules and hardware used in artificial intelligence applications.
  • Cognizant Technology Solutions - Sales on Wednesday beat Wall Street estimates thanks to higher customer spending. The stock gained 3.3% in after-hours trading.
  • Ansys - First-quarter sales and earnings came in below consensus on Wednesday, as demand for its software eroded.
  • Aflac - The insurance provider reported higher-than-expected first-quarter earnings on Wednesday, helped by higher premium income in the United States.
  • Carvana - jumped nearly 40% in pre-market trading, as the used car dealer announced that it expected unexpectedly higher sales and earnings in the current quarter.
  • C.H. Robinson - On Wednesday, the logistics company reported first-quarter sales ahead of Wall Street estimates, thanks to higher prices. The stock soared 13% in after-hours trading.
  • Paycom Software on Wednesday forecast second-quarter sales below consensus, as demand for its payroll and human resources management solutions proved sluggish.

Analyst recommendations:

  • AT&T Inc.: Baptista Research upgrades to outperform from hold with a target price of USD 19.80.
  • IBM: BNP Paribas Exane initiates an underperform recommendation with a target price of USD 145.
  • General Motors Company: Baptista Research downgrades to hold from outperform with a price target raised from USD 44.10 to USD 51.50.
  • Kinder Morgan, Inc.: Bernstein drops coverage on the stock previously rated outperform.
  • MSCI, Inc.: Baptista Research upgrades to outperform from hold with a price target reduced from USD 631.60 to USD 566.30.
  • Meta Platforms, Inc.: BNP Paribas Exane initiates an underperform recommendation with a target price of USD 360.
  • Snowflake Inc.: BNP Paribas Exane upgrades to outperform from neutral with a price target raised from USD 181 to USD 200.
  • The Trade Desk, Inc.: Jefferies upgrades to buy from hold with a target price raised from USD 95 to USD 105.
  • AMD (Advanced Micro Devices): Huatai Research maintains its buy recommendation and reduces the target price from USD 226 to USD 180.
  • Spotify Technology S.A.: Baptista Research maintains its hold recommendation with a price target raised from 259.30 to USD 316.90.
  • Starbucks Corporation: Redburn Atlantic maintains a neutral recommendation with a price target reduced from USD 103 to USD 82.
  • Super Micro Computer, Inc.: Nomura maintains its buy recommendation and raises the target price from USD 600 to USD 930.
  • Trane Technologies Plc: JP Morgan maintains its neutral recommendation and raises the target price from 247 to USD 300.
  • Bridgepoint Group Plc: Deutsche Bank initiates a Hold recommendation with a target price of GBX 275.
  • Shopify Inc.: BNP Paribas Exane upgrades to outperform from underperform with a price target raised from USD 68 to USD 94.
  • AJ Bell Plc: Deutsche Bank initiates a Buy recommendation with a target price of GBX 395.
  • Netflix, Inc.: CICC initiates an outperform recommendation with a target price of USD 650.