By 
Equity markets appear to be relapsing into the euphoria of a bull market. The term "FOMO" (Fear Of Missing Out) is making a comeback, describing a trend where investors, driven by fear of missing out on the gains others are achieving, fuel buying momentum. Additionally, I recently noted the resurgence of the term "Fed Put," which suggests that the US central bank might adopt a more flexible approach to its monetary policy in the future, essentially providing a broad safety net to the markets.
On another note, the concept of "TINA" (There Is No Alternative), which refers to the idea that equities are the only viable investment option, hasn't resurfaced yet. Currently, treasury bills are presenting a strong alternative, as underscored in a Bloomberg article. The article explains that sustained high interest rates - a return to normalcy in economic history - have revitalized the fixed-income market by offering solid returns for low risk, which is the fundamental nature of bonds. The bond market is now functioning more or less normally and has likely bolstered the wealth of US savers. This situation could change if interest rates begin to drop again, but it remains promising given the anticipated pace of future rate reductions. However, this could be upended if the US central bank needs to implement the aforementioned Fed Put due to worsening economic conditions.
Yesterday, stock market indexes continued to climb, with the Nasdaq posting its third session of gains in excess of 1%. With the exception of Apple, which needed to digest its 6% rebound from Friday's session, the 15 biggest companies on the US stock market advanced. In some cases strongly, as in the case of Nvidia (+3.8%), Meta Platforms (+3%) and Eli Lilly (+4.3%). Since May 1, in the USA, large-cap stocks have been outperforming the rest, while growth stocks have largely outperformed low-value stocks: a sign that risk appetite is growing.
There are quite a few earnings releases today. Two trends stand out: on the one hand, the semiconductor world is clearly divided into two categories: those who are highly exposed to AI, who are pulled along by a superhuman force and are multiplying their forecast increases, and the others, who don't seem to belong to the same universe. On the other hand, European banks are publishing well and competing with each other to buy back shares. On the other hand.
In today's economic and geopolitical news, the Bank of Australia's key interest rate remains unchanged at 4.35%, as expected. The RBA is still swaying between different monetary outlooks. However, its comments were seen as calming by economists, who had feared a slightly more offensive rhetoric around the risk of a rate hike. Still on the subject of central banks, two Fed representatives, Thomas Barkin and John Williams, were relatively confident that the next move would be a rate cut in the US, reinforcing market sentiment. In the Middle East, ceasefire talks between Israel and Hamas are telescoping with Hebrew strikes at Rafah. This situation is helping to boost oil prices.
In the Asia-Pacific region, the Hang Seng is in a poor position to continue its upward trend, losing 0.6% during the session. The Hong Kong index has posted ten consecutive rises, symbolizing the return of Chinese equities to favor with investors. However, we'll have to wait a little longer before we can be definitively enthusiastic: in recent years, China has been more of a flash in the pan than a bonfire on the stock market. Meanwhile, the Shanghai and Shenzhen CSI300s are hovering around equilibrium. In Japan, on the other hand, the Nikkei 225 continued its rebound, gaining 1.3%, helped by its technology stocks. But it's South Korea that's shining brightest this morning, with the KOSPI jumping more than 2%, thanks to semiconductor stocks that followed in the footsteps of their US counterparts last night. Heavyweights Samsung Electronics and SK Hynix gained around 4%. Australia's ASX finished strongly, up 1.3%, boosted by the RBA's dovish stance. India, on the other hand, lost its initial gains, retreating by 0.4%. European leading indicators are bullish.
On another note, the concept of "TINA" (There Is No Alternative), which refers to the idea that equities are the only viable investment option, hasn't resurfaced yet. Currently, treasury bills are presenting a strong alternative, as underscored in a Bloomberg article. The article explains that sustained high interest rates - a return to normalcy in economic history - have revitalized the fixed-income market by offering solid returns for low risk, which is the fundamental nature of bonds. The bond market is now functioning more or less normally and has likely bolstered the wealth of US savers. This situation could change if interest rates begin to drop again, but it remains promising given the anticipated pace of future rate reductions. However, this could be upended if the US central bank needs to implement the aforementioned Fed Put due to worsening economic conditions.
Yesterday, stock market indexes continued to climb, with the Nasdaq posting its third session of gains in excess of 1%. With the exception of Apple, which needed to digest its 6% rebound from Friday's session, the 15 biggest companies on the US stock market advanced. In some cases strongly, as in the case of Nvidia (+3.8%), Meta Platforms (+3%) and Eli Lilly (+4.3%). Since May 1, in the USA, large-cap stocks have been outperforming the rest, while growth stocks have largely outperformed low-value stocks: a sign that risk appetite is growing.
There are quite a few earnings releases today. Two trends stand out: on the one hand, the semiconductor world is clearly divided into two categories: those who are highly exposed to AI, who are pulled along by a superhuman force and are multiplying their forecast increases, and the others, who don't seem to belong to the same universe. On the other hand, European banks are publishing well and competing with each other to buy back shares. On the other hand.
In today's economic and geopolitical news, the Bank of Australia's key interest rate remains unchanged at 4.35%, as expected. The RBA is still swaying between different monetary outlooks. However, its comments were seen as calming by economists, who had feared a slightly more offensive rhetoric around the risk of a rate hike. Still on the subject of central banks, two Fed representatives, Thomas Barkin and John Williams, were relatively confident that the next move would be a rate cut in the US, reinforcing market sentiment. In the Middle East, ceasefire talks between Israel and Hamas are telescoping with Hebrew strikes at Rafah. This situation is helping to boost oil prices.
In the Asia-Pacific region, the Hang Seng is in a poor position to continue its upward trend, losing 0.6% during the session. The Hong Kong index has posted ten consecutive rises, symbolizing the return of Chinese equities to favor with investors. However, we'll have to wait a little longer before we can be definitively enthusiastic: in recent years, China has been more of a flash in the pan than a bonfire on the stock market. Meanwhile, the Shanghai and Shenzhen CSI300s are hovering around equilibrium. In Japan, on the other hand, the Nikkei 225 continued its rebound, gaining 1.3%, helped by its technology stocks. But it's South Korea that's shining brightest this morning, with the KOSPI jumping more than 2%, thanks to semiconductor stocks that followed in the footsteps of their US counterparts last night. Heavyweights Samsung Electronics and SK Hynix gained around 4%. Australia's ASX finished strongly, up 1.3%, boosted by the RBA's dovish stance. India, on the other hand, lost its initial gains, retreating by 0.4%. European leading indicators are bullish.
Economic highlights of the day:
The dollar rises to 0.9289 EUR and 0.7973 GBP. The ounce of gold recovers to 2313 USD. Oil slightly decreases, with North Sea Brent at 83.04 USD a barrel and US light crude WTI at 78.06 USD. The yield on 10-year US debt falls to 4.49%. Bitcoin is trading at 63,530 USD.
In corporate news:
- Tesla sold 62,167 electric vehicles manufactured in China in April, marking an 18% year-on-year decrease, according to data released Tuesday by the China Passenger Car Association (CPCA). The stock is down 2.5% in pre-market trading.
- Apple is developing its own chip to run artificial intelligence programs in data centers, as revealed by the Wall Street Journal on Monday. The stock is up 0.8% before the opening, while Nvidia is down 1.6%.
- Amazon plans to spend $8.9 billion over the next four years to expand its cloud computing infrastructure in Singapore, announced by Amazon Web Services on Tuesday. The e-commerce group also announced the launch of an online shopping service in South Africa on the same day.
- Microsoft has been targeted by a complaint filed with the Spanish competition authority by a Spanish association representing over 700 startups, accusing the American group of unfair practices in cloud computing.
- Coty - The beauty products group reported higher than consensus revenue for its third quarter on Monday, while also expecting to meet its annual targets thanks to steady demand for its luxury and consumer products. The stock is up 3% in after-hours trading.
- Boeing is down 1.13% in pre-market trading as the first crewed test flight of its Starliner spacecraft has been postponed to Friday, announced by NASA, after the planned launch on Monday was aborted due to a failure in the Atlas V rocket that will carry the new capsule into orbit.
- Walt Disney, which is due to publish its quarterly accounts before the opening on Wall Street, is up 1% in pre-market trading.
- Palantir Technologies - The data analytics company raised its annual revenue and profit forecasts on Monday to levels below consensus. The stock is down 10% before the opening.
- Microchip Technology reported lower than expected revenue and net profit forecasts for the first quarter on Monday, due to weak demand as its customers continue to reduce their inventories. The stock is down 4.4% before the opening.
- Lucid reported higher than consensus revenue for the first quarter on Monday, as price reductions helped the company sell more luxury electric sedans. However, its production forecasts are below consensus. The stock is down 8.9% in pre-market trading.
- UPS announced on Monday that its Chief Financial Officer and Executive Vice President Brian Newman would leave the company on June 1.
- International Flavors & Fragrances - The chemicals company reported higher than consensus revenue on Monday, thanks to stable demand for its high-cost product categories.
- FMC - The agricultural chemicals manufacturer reported a loss in the first quarter, under the pressure of excessive inventory and low demand.
- Vertex Pharmaceuticals reported higher than consensus profit for the first quarter on Monday, driven by strong demand for its treatments.
- Axon Enterprise raised its full-year profit and revenue forecasts on Monday, counting on strong demand for its software products and its TASER 10 electric pulse gun.
- Realty Income reported higher than consensus revenue, benefiting from a higher occupancy rate and increased rental income.
- Air Lease reported lower than consensus profit due to higher interest payments on funds borrowed to finance aircraft purchases.
- Simon Property raised its forecast for funds from operations (FFO) for the year on Monday, supported by strong leasing demand in its shopping malls and shopping centers.
- Williams Companies reported higher than consensus profit on Monday, the pipeline operator benefiting from higher rates and favorable contributions from acquisitions.
- Coherent, which manufactures lasers and switches, now expects an adjusted annual profit between $1.56 and $1.73 per share, up from a previous forecast of $1.30 to $1.70 per share. The stock is up 11.2% before the opening.
- Target is up 1.6% in pre-market trading following an upgrade by Citi Research from "neutral" to "buy."
Analyst recommendations:
- Aptiv: Guggenheim maintains its buy recommendation with a price target raised from 92 to USD 94.
- Ares Management: TD Cowen initiates a buy recommendation with a target price of USD 154.
- Axon Enterprise: Craig-Hallum maintains its buy recommendation and raises the price target from 325 to USD 370.
- Block: BNP Paribas Exane maintains its outperform recommendation and reduces the target price from USD 106 to USD 100.
- Constellation Energy: RBC Capital maintains its sector perform recommendation and raises the target price from USD 119 to USD 211.
- Corning: Mizuho Securities initiates a neutral recommendation with a target price of USD 36.
- CVS Health: Wells Fargo maintains its equalweight recommendation and reduces the target price from USD 76 to USD 60.
- Exelon: RBC Capital maintains its sector perform recommendation with a price target raised from USD 37 to USD 41.
- Lowe's Companies: Citigroup remains neutral recommendation with a price target reduced from 243 to USD 240.
- Microchip Technology: Needham maintains its buy recommendation and raises the target price from USD 90 to USD 100.
- Nvidia: Goldman Sachs maintains its buy recommendation and raises the target price from USD 1000 to USD 1100.
- Palantir Technologies: Citigroup remains neutral recommendation with a price target raised from 23 to USD 25.
- Quanta Services: Evercore ISI maintains its outperform recommendation and raises the target price from USD 255 to USD 288.
- Rollins: Redburn Atlantic maintains a neutral recommendation with a price target raised from USD 35 to USD 37.
- Target: Citi upgrades to buy from neutral with a target price of USD 180.
- The Home Depot: Citigroup maintains its buy recommendation with a price target reduced from USD 415 to USD 395.
- Tyson Foods: BMO Capital Markets maintains its market perform recommendation and raises the target price from 55 to USD 58.
- Ventas: Evercore ISI maintains its outperform recommendation and raises the target price from USD 50 to USD 51.
- Vertex Pharmaceuticals: Stifel maintains its hold recommendation with a price target reduced from USD 430 to USD 420.
- Westlake: Piper Sandler & Co maintains its overweight recommendation and raises the price target from 160 to USD 180.
