Who would have thought that quarterly corporate results would allow markets to return to various shades of green so quickly? The first earnings reports are solid across all sectors, even if financials are overrepresented. Next week, a good 50 or so very large multinationals and a host of smaller companies will provide more robust trends.
Yesterday saw gains between 1.5% and 2% for the three Wall Street indexes, boosted by technology and cyclical values. Even oil companies, which are decidedly all-rounders at the moment, have continued their rise, in parallel with the oil barrel.
Let's take a look at Microsoft, but not because it could once again challenge Apple's capitalization (there is still a $100 billion gap). Rather because it gained 2.2% yesterday while the company announced the closure of Linkedin in China. Of course, no financial analyst was seriously valuing this presence. But Linkedin (acquired by Microsoft in 2016) still had 53 million users in the country, or about 7% of the total number of registrants on the professional social network. Such an announcement in a Western market would probably have caused quite a stir.
As it happens, Microsoft closed Linkedin, which will be replaced by an ultra-lightweight network without as much interaction, because the pressure from Beijing became unbearable, with "a significantly more difficult operating environment and increased compliance requirements in China". In fact, Microsoft was already censoring its network under pressure from authorities, both on content and on profiles. Last March, Chinese regulators had already fired a warning shot.
This closure is symbolic in many ways. It is often ignored, but Linkedin was one of the last Western platforms to operate in China. Google had thrown in the towel more than ten years ago and Facebook or Twitter are persona non grata in the country.
It is a bridge that is cut between China and the rest of the world, one more. The CCP, the Chinese Communist Party, is strengthening its hold on the digital world by cutting off the country's leading figures, from Alibaba to Tencent, via WeChat, Sina Weibo or Douyin, but also by strengthening its virtual Chinese wall, the "great firewall" which has been controlling access to the network since 2003. The CCP dictatorship versus the digital dictatorship? The worst of both worlds, in short.
On markets, investors seem to have regained a taste for positive interpretation of the information they receive, which has been the norm since 2008. Corporate results are reassuring, the Chinese central bank has renewed its measures in favor of liquidity, US macroeconomic statistics have provided some (slim) positive surprises ... inflationary fears have been diluted in this ocean of news.
Economic highlights of the day:
Empire State index and Retail Sales, the University of Michigan consumer confidence index and business inventories are the main indicators of the day.
The dollar inches down to EUR 0.8627, while the ounce of gold dropped at USD 1771. In the oil market, Brent crude is up to USD 84.60, while WTI is at USD 81.87 this morning. The easing continued in the rate market, with US 10-year debt paying 1.52%, while its German counterpart is at -0.19%. Bitcoin is once again approaching USD 60,000 per unit.
* Moderna climbs 3% in pre-market trading after a U.S. Food and Drug Administration panel voted unanimously to require a booster dose of the company's COVID-19 vaccine for people 65 and older and those at high risk of developing severe disease or at particular risk of exposure to coronavirus.
* Goldman Sachs reports third-quarter results before the Wall Street opening.
* Virgin Galactic plunged 20.1% in premarket trading after the company announced that it would postpone its space flights for tourists until the fourth quarter of 2022.
* Amazon - U.S. Senator Elizabeth Warren called for Amazon to be dismantled after a Reuters investigation revealed that the group had engaged in a campaign to manipulate search results to favor its own brands in India, when it was not simply copying the products of other sellers on its marketplace.
* Apple - South Korea on Friday urged Apple to comply with new regulations on online app stores that prohibit major platforms from imposing a payment system on developers.
* Microsoft will shut down its professional social network LinkedIn in China, seven years after its launch, citing a "difficult" environment as authorities tightened their control over the Internet sector in recent months.
* Ford, General Motors - According to the European Automobile Manufacturers Association (ACEA), new car sales fell 25.2% year-over-year in September in the European Union, the United Kingdom and European Free Trade Association (EFTA) countries due to the continuing shortage of semiconductors.
* Tesla - Jefferies raised its price target on the automaker's stock to $950 from $850, estimating that Elon Musk's group should produce between 1.3 and 1.7 million vehicles in 2022-2023.
BP Plc: Berenberg upgrades from Hold to Buy targeting GBP 425.
Domino's Pizza: Wedbush cuts price target on domino's pizza to $550 from $585, stays outperform
Generac: Truist Securities starts at buy with $500 price target
IQVIA : KeyBanc lifts price target to $270 from $260, keeps overweight rating
KLA Corp.: KGI Securities raised the recommendation on KLA Corp. to outperform from neutral. PT up 27% to $420
Quanta Services : B. Riley lifts price target to $107 from $92, keeps neutral
Moderna: Piper Sandler analyst Edward Tenthoff raised the recommendation on Moderna Inc. to overweight from neutral. PT set to $445, implies a 34% increase from last price. Moderna average PT is $331.92.
Morgan Stanley: RBC Capital Markets downgrades to sector perform from outperform. PT down 4% to $97
Nature's Sunshine: D.A. Davidson & Co initiated coverage with a recommendation of buy. PT set to $22, implies a 48% increase from last price. Nature's Sunshine average PT is $17.58.
Range Resources: Stifel upgrades range resources to buy from hold, boosts price target to $32 from $18
Rathbone: Jefferies remains Buy with a price target raised from GBp 2075 to GBp 2175.
Tesla: Jefferies raised the target on Tesla Inc. to $950 from $850. Maintains buy rating.
The Weir Group: Jefferies remains at Hold with a price target reduced from GBp 1845 to GBp 1800.
US Bancorp : Raymond James downgrades to underperform from market perform
Western Digital Corp: Goldman Sachs cut the recommendation to neutral from buy. PT up 9.6% to $62
XP Inc.: JPMorgan upgrades XP to Overweight From Neutral