Whispers of progress in trade talks between the U.S. and Japan wafted through Wall Street. Donald Trump teased "big progress" without spilling the beans on specifics. Meanwhile, Japanese Finance Minister Katsunobu Kato voiced his unease over U.S. tariffs. In the premarket shuffle, the S&P 500 futures ticked up 0.4%, and the Nasdaq futures climbed 0.8%.

However, the Dow Jones futures took a 1.5% tumble, weighed down by a 20% fall in UnitedHealth after the insurer posted worse-than expected results and guidance. Fellow health insurers CVS Health, Centene, and Humana also felt the pinch.

Yesterday, Jerome Powell gave a speech that spooked markets as it warned about the impact of Trump's tariff policies on the global economy. This didn't seat well with the U.S. President, who nudged the Fed Chair to slash interest rates, accusing him of tardiness.

Wall Street suffered a sharp fall on Wednesday after Powell's comments. He stressed that tariff increases could fuel inflation while slowing activity. He also suggested that markets are currently where they should be given the circumstances, while ruling out the idea of a “Fed Put,” i.e., a level of pain in the economic and financial world that would trigger a response from the US central bank. To put it simply, Powell shares the same concerns as the rest of the world about the consequences of US trade policy. But he is the Fed chairman and he has now made his position clear, and his statements carry significant influence.

Nvidia also warned about the impact of trade restrictions on its earnings. The Dow Jones lost 1.73%, the S&P 500 2.24% and the Nasdaq 100 just over 3%, in a context weighed down by trade tensions between Washington and Beijing. The climate of uncertainty is weighing on the outlook for companies such as ASML and AMD, which are also affected. The fear index, the VIX, remains above the 30-point mark, signaling persistent tension in the markets. Yesterday, rumors of possible trade talks between Chinese and US representatives briefly fueled a bullish trend. We can expect this kind of announcement to continue to fuel volatility. In response to US tariff measures, China is seeking to strengthen ties with other Asian countries, excluding Japan, to counteract these economic pressures. Meanwhile, Japan is maintaining its strategy of negotiating directly with the US, positioning itself as a cooperative partner.

In this context, Europe could return to center stage. It has an opportunity to improve its position by acting quickly and constructively, which has not been its strong point in recent years. Today, the European Central Bank unveiled another 25-basis-point interest rate cut to 2.25%, which was widely expected. In a statement, the ECB said that the “outlook for growth has deteriorated owing to rising trade tensions.”

Unlike Jerome Powell, Christine Lagarde has some leeway to deploy her monetary policy. On the political front, Giorgia Meloni is meeting Donald Trump in Washington today. Other European leaders are divided between criticism of this solo trip and curiosity about the Italian prime minister's ability to shift the lines with the White House.

The day is also marked by a flurry of corporate earnings reports, with heavyweights such as Netflix, Siemens Energy, Hermès, L'Oréal, UnitedHealth and  American Express. 

In Asia-Pacific markets, Tokyo is up 1.3% on hopes of an agreement with Washington on tariffs. South Korea is up 0.9% and Australia 0.6%. India is stable, while Hong Kong is up 1.6%. European leading indicators are bearish. Note that the monthly settlement, which normally takes place on the third Friday of the month, has been brought forward to today due to tomorrow's public holiday on the major stock exchanges.

Today's economic highlights:

On today's agenda: the adjusted trade balance in Japan; in Germany, the producer price index; in Switzerland, the real export figures; in the eurozone, the ECB rates including the deposit facility rate, the refinancing rate, and the marginal lending facility; in the United States, building permits, housing starts, new unemployment claims, and the Philadelphia Fed business outlook. See the full calendar here.

  • Dollar index: 99,600
  • Gold: $3,331
  • Crude Oil (BRENT): $66.5 (WTI) $62.80
  • United States 10 years: 4.29%
  • BITCOIN: $84,770

In corporate news:

  • OpenAI is considering a UK investment and negotiating a $3 billion acquisition of Windsurf.
  • Microsoft announced new iterations in its O-Series Reasoning Series.
  • Pershing Square holds a 19.8% stake in Hertz through shares and swaps.
  • Kinder Morgan missed Q1 profit estimates but expects increased LNG imports to offset market losses.
  • Intel will need to obtain a license to export AI chips to its Chinese customers, according to the Financial Times.
  • Ford Motor may raise prices if Trump's tariffs on cars remain in place, according to an internal memo.
  • Instagram and WhatsApp would not have been as successful without Facebook, Mark Zuckerberg said during the Meta trial.
  • Ecolab will apply a 5% trade surcharge starting May 1 due to cost pressures.
  • General Dynamics announces that its G800 jet has received FAA and EASA certifications.
  • Tesla registrations in California fell 15% in the first quarter.
  • Hertz surged after announcing that Pershing Square could take a stake of up to 19.8%.
  • UnitedHealth Group reduces its annual profit forecast and EPS targets for 2025 due to increased costs.

Today's key earnings: UnitedHealth, Netflix, American Express, Charles Schwab, Marsh & McLennan, Blackstone, DR Horton, State Street, Snap...

Analyst Recommendations:

  • Bank Of America Corporation: Phillip Securities upgrades to buy from accumulate with a target price reduced from USD 50 to USD 45.
  • Bill Holdings, Inc.: Seaport Global downgrades to neutral from buy.
  • Cognex Corporation: Daiwa Securities downgrades to outperform from buy with a price target reduced from USD 40 to USD 27.
  • Microsoft Corporation: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Nasdaq, Inc.: Redburn Atlantic downgrades to buy from neutral with a target price reduced from USD 93 to USD 91.
  • Paypal Holdings, Inc.: Seaport Global downgrades to sell from neutral with a target price of USD 49.
  • Progressive Corporation: Keefe Bruyette & Woods downgrades to market perform from outperform with a target price of USD 288.
  • Sensata Technologies Holding Plc: Evercore ISI downgrades to in-line from outperform with a target price of USD 27.
  • Teradyne, Inc.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Trex Company, Inc.: BMO Capital Markets upgrades to outperform from market perform with a target price of USD 72.
  • Caesars Entertainment, Inc.: Jefferies maintains its buy recommendation and reduces the target price from USD 50 to USD 36.
  • Dupont De Nemours, Inc.: Jefferies maintains its buy recommendation and reduces the target price from USD 116 to USD 88.
  • Electronic Arts Inc.: Arete Research maintains a neutral recommendation with a price target raised from USD 130 to USD 157.
  • Elf Beauty: Raymond James maintains its strong buy recommendation and reduces the target price from 120 to USD 85.
  • Enphase Energy, Inc.: Piper Sandler & Co maintains a neutral recommendation with a price target reduced from USD 65 to USD 47.
  • Expedia Group, Inc.: Morgan Stanley maintains its market weight recommendation and reduces the target price from 190 to USD 150.
  • Las Vegas Sands Corp.: Jefferies maintains its buy recommendation and reduces the target price from USD 67 to USD 53.
  • Macy's, Inc.: Citigroup remains neutral recommendation with a price target reduced from USD 14 to USD 11.
  • Microchip Technology, Inc.: Stifel maintains its buy recommendation and reduces the target price from USD 80 to USD 60.
  • Netapp, Inc.: JP Morgan maintains its overweight recommendation and reduces the target price from 153 to USD 113.
  • Pegasystems Inc.: Loop Capital Markets maintains its buy recommendation and reduces the target price from 115 to USD 85.
  • Reddit, Inc.: Morgan Stanley maintains its overweight recommendation and reduces the target price from 210 to USD 140.
  • Rockwell Automation, Inc.: Daiwa Securities maintains its outperform recommendation and reduces the target price from USD 338 to USD 262.
  • Stellantis N.v.: RBC Capital maintains its sector perform recommendation and reduces the target price from 12 to EUR 9.
  • Target Corporation: Citigroup remains neutral recommendation with a price target reduced from USD 120 to USD 95.
  • Transunion: Jefferies maintains its buy recommendation and reduces the target price from USD 115 to USD 90.
  • Wayfair Inc.: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from 58 to USD 46.