Markets Pull Back as War Pressures Begin to Surface in the Real Economy

Stock markets are easing back this morning as early signs suggest the war is beginning to weigh on the global economy and specific industries. The impact is becoming more visible at the company level, particularly in airlines, where both American Airlines and Southwest Airlines have cut guidance, pointing directly to rising fuel costs. What may be notable here is not just the headlines themselves, but the shift toward second-order effects, where higher energy prices are now filtering into corporate outlooks and forward expectations.

Flash PMI reports, the first look at April economic activity, came in mixed. Europe generally disappointed, with readings slipping below 50 into contraction territory, while the UK showed unexpected strength.
UK Flash Manufacturing PMI (53.6 vs Street 49.9 and previous 51.0)
UK Flash Services PMI (52.0 vs Street 50.0 and previous 50.5)

On the earnings front, results and reactions appear uneven, particularly across technology. Tesla reported ($0.41 vs Street $0.37) but raised capital spending guidance, with shares down 3.1% premarket. Texas Instruments delivered a stronger result ($1.68 vs Street $1.36), with shares up 9.5% premarket. Lam Research* ($1.47 vs Street $1.36) is trading flat, while IBM ($1.91 vs Street $1.81) is down 7.5% premarket. In contrast, the airline space is reacting more directly to cost pressures, with Southwest Airlines ($0.45 vs Street $0.47) disappointing and cutting guidance, and American Airlines (-$0.40 vs Street -$0.47) reporting a smaller loss but also lowering its outlook.

US index futures are pointing lower this morning, down 0.2% to 0.5%, with Dow futures leading the move to the downside.

Overseas, weakness is fairly broad. In Asia, the Nikkei fell 0.8% and the Hang Seng declined 1.0%. In Europe, the DAX is down 0.4% while the FTSE is lower by 0.7%.

In commodities, trading is mixed. Crude Oil is up 0.3% while Gasoline is down 0.6%. Gold is off 0.3%, Copper is down 1.3%, and Silver is weaker by 3.0%.

In currencies, the USD is relatively quiet. Bitcoin is down 1.4%.

Looking ahead, US Flash Manufacturing PMI (Street 52.5) and US Flash Services PMI (Street 50.0) are due at 9:45 am EDT and could provide further insight into whether the weakness seen in Europe is beginning to appear in North America. After the close, Intel is scheduled to report earnings.

Shares of Lam Research and Intel are held in some portfolios managed by SIA Wealth Management.

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