COSMETICS BRANDS WITH STRONGEST PRICING POWER (1145 GMT)
As earnings season kicks in, and investors look for clues on which companies will be able to weather surging inflation, strategists and fund managers seem to agree that cosmetic companies with strong brands might show more resilience.
Companies with strong brands have more pricing power is the simple explanation.
"Brands can command, sustain and extend their pricing power, if well recognized by consumers," says Bernstein in a note.
There are five cosmetics brands in "the top 100 Intrinsically Differentiated brands", Bernstein adds.
Those are SK II, Estée Lauder, Lancome, L'Oréal and Shiseido. Those companies have the largest revenue among the global skincare companies, the analysts noted.
L'Oreal reported this week it beat expectations for first-quarter sales growth.
(Joice Alves)
"BEARISHNESS IS PEAKING" (1020 GMT)
Positioning across S&P 500 futures is the most net short since records began in 2019 and the 5-day ETF outflow is the largest over the same time frame.
That's the main highlight of Citi's latest investor positioning update which indicates a "distinct increase" in bearish bets on the U.S. benchmark over the past week.
But there also seems to be good news.
"Investors were already positioned for further downside in markets, and this could indicate that bearishness is ‘peaking’ around these levels," said analysts at the U.S. investment bank.
“Reprinted with permission of Citi Research. Not to be reproduced.”
(Danilo Masoni)
FISHING IN CHEAP WATERS: 11 UK PICKS (0857 GMT)
One of the key features of UK stocks since Brexit is that their relative valuation discount has been progressively widening and this trend has accelerated over the past year.
Now, according to Bernstein, the UK valuation discount relative to Europe ex UK has reached levels last seen in 2000 and the dividend yield premium now stands at 76%.
On top of that, the U.S. bank highlights how UK funds have not seen an acceleration in outflows as severe as the one suffered by European funds following the invasion of Ukraine.
That being said, for those looking to get exposure to the UK, Bernstein outpoints 11 picks where it has strong conviction on the upside.
They are: Tesco, SSE, Compass, Royal Mail, ITV, Vodafone, BP, AVEVA, HSBC, IG Group, St James's Place .
(Danilo Masoni)
BANKS AND FOOD HELP STOXX BOUNCE BACK (0804 GMT)
European stocks kicked off the session on a strong footing as gains in banking stocks on rising yields and upbeat results from food and beverage companies helped offset worries over the war in Ukraine and central bank tightening.
The STOXX 600 was last up 0.4%, recovering part of losses seen yesterday. Danone was top gainer on the pan-European equity benchmark following well-received results and press rumours Lactalis could bid for the company, while Heineken also rallied after a solid update.
Banks were the biggest sectoral gainers, up 1.4%, as you see in the snapshot..
MORE OF THE SAME (0640 GMT)
Many recent trends seem to be accelerating across financial markets this morning with notably the dollar climbing to a fresh two-decade peak against the yen while benchmark 10-year Treasury yields are now a whisker from 3%.
The rhetoric from U.S. Federal Reserve officials is getting more hawkish by the day, pushing up expectations for interest rate hikes, while at the same time the Bank of Japan stepped into the market again to defend its ultra-low rate policy.
The BoJ just offered to buy an unlimited amount of 10-year Japanese government bonds (JGB) at 0.25%, in its third move since February to defend its yield target.
In the euro zone, Germany's benchmark 10-year bond yield remains in striking distance of 1%, its highest since July 2015 as investor brace for the European Central Bank to tighten monetary policy in order to tame rising inflation.
Oil prices, well above $100 a barrel, are back on a rise after heavy losses on Tuesday when the International Monetary Fund (IMF) slashed its forecast for global growth due notably to Russia's invasion of Ukraine exacerbating rising inflation.
Meanwhile, the resurgent COVID-19 pandemic continues to take its toll on Chinese equities.
The CSI300 index and the Shanghai Composite Index are down over one percent after the central bank surprisingly kept its benchmark lending rates unchanged, despite frequent government pledges to support a slowing economy.
In Europe, stocks futures are slightly higher as the first-quarter earnings seasons brings some comforting news with notably ASML Holding, a key supplier to computer chip makers, reporting net income ahead of expectations.
Results from France's Cosmetics group L'Oreal, food group Danone and Heineken also seem to support the view that most companies are managing, so far, to weather the Ukrainian crisis.
Key developments that should provide more direction to markets on Wednesday:
- German producer prices at record high amid Ukraine war
- Credit Suisse expects to report a Q1 loss after increasing legal provisions
- Just Eat Takeaway weighs GrubHub sale, scales back 2022 growth view
- Participation by ECB President Christine Lagarde and ECB's Executive Board Member Fabio Panetta in G7 and G20 Finance Ministers' and Central Bank Governors' Meeting.
- IMF Chief Kristalina Georgieva holds opening news conference at the IMF/World Bank Spring Meetings - 1230 GMT.
- Riksbank executive board meeting - 1100 GMT
- Federal Reserve issues the Beige Book of economic condition
(Julien Ponthus)
EUROPE SET FOR POSITIVE START, EYES ON EARNINGS (0625 GMT)
European shares look set for a slightly positive start today following gains on Wall Street on some upbeat earnings news and dovish comments from two Fed speakers, although the gains could be tested later on when U.S. markets reopen.
While futures on the EuroStoxx50, DAX and FTSE indices were up between 0.1% and 0.4%, U.S. contracts pointed to a 0.9% drop for the Nasdaq after Netflix reported its first subscriber loss in over a decade, sending its shares down 26% after the close.
Investors will also have to digest a flurry of earnings releases in Europe too. ASML, a key supplier to computer chip makers, saw Q1 profits beat forecasts slightly, while food group Danone kept its 2022 financial goals after posting a stronger-than-expected 7.1% sales growth in Q1.
Eyes also on Credit Suisse, whose shares are indicated 3% lower after the Swiss bank said it would report a Q1 loss after increasing legal provisions.
(Danilo Masoni)
