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THE BEAR MARKET RALLY IS OVER - MORGAN STANLEY (1019 EDT/1419 GMT)
With Q1 in the rearview mirror, Morgan Stanley chief U.S. equity strategist Michael Wilson notes the rough quarter which saw the S&P 500 fall about 5% was largely in-line with the firm's view entering the year, with a rally in the latter half of March helping to salvage the quarterly performance.
But that rally in the latter half of March was a bear market rally, according to Wilson, and that is now over.
While concerns about the Federal Reserve's hawkish turn weighed on stocks in the quarter, the other major driver of markets was the war in Ukraine, which Wilson said was not in their initial forecast on 2022 and has made the firm "incrementally more negative on growth trends than we were at the end of last year."
Wilson said investors now face multiple headwinds to growth that will be harder to ignore, including payback in demand from last year's stimulus, high prices causing demand destruction, the war in Ukraine pushing up food and energy prices that serve as a tax and inventory builds that have caught up to demand.
With inventory catching up to demand, pricing power will dissipate, and "discounting could return in many areas of consumer goods that typically are price takers," while there is also the likelihood of order cancellations as shortages caused an increase.
With the defensive tack, Wilson remains overweight utilities , REITs and healthcare while underweight consumer discretionary and cyclical tech.
(Chuck Mikolajczak)
AIRLINES WEIGH ON EUROPE'S TRAVEL AND LEISURE STOCKS (0913 EDT/1312 GMT)
Europe's travel and leisure index is flashing green, outperforming the wider index with a 0.9% gain while the STOXX 600 is currently only 0.5% higher.
But zooming in, the story is more complicated, with leisure doing the heavy lifting as travel stocks topple.
Airlines are suffering, with Easyjet down about 1.7%, Wizz Air falling 2.7% and BA-owner IAG down 0.4%. Ryanair and Deutsche Lufthansa are down 1.1% and 0.7% respectively.
Flight disruption in the UK is topping headlines today after EasyJet cancelled hundreds of flights due to staff sickness levels amid a surge in Covid-19 infections in the country.
Meanwhile gaming company Evolution is lifting the travel and leisure index, up 5.6%. Betting giant Flutter Entertainment is 0.94% higher and French lottery operator FDJ is 1.2% up.
U.S. FUTURES MODESTLY HIGHER AS TWITTER SURGES (0847 EDT/1247 GMT)
U.S. futures were little changed on Monday, slowly losing steam as the opening bell approached in a somewhat light week for economic data with eyes on the latest round of talks between Ukraine and Russia as the West mulls more sanctions against Moscow.
As global outrage grew following civilian killings in North Ukraine, the possibility of additional sanctions against Russia by the U.S. and Europe increased, while peace talks between Moscow and Ukraine were poised to restart on Monday.
The S&P 500 used a late flurry to the upside to snap a two-day losing skid on Friday, following a payrolls report that was widely expected to keep the Federal Reserve on its aggressive monetary policy path, which expectations solidifying for a 50 basis point hike at its May meeting.
Shares of Twitter surged more than 20% in premarket trade, however, as Tesla CEO Elon Musk disclosed a 9.2% stake in the social media company.
Below is your premarket snapshot:
(Chuck Mikolajczak)
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