Wednesday morning brought a splash of green to US equity futures, as the announcement of US-China trade talks in Switzerland sent the markets into a cheerful spin. Treasury Secretary Scott Bessent is leading the charge to ease trade tensions, and investors are clearly hopeful.

All eyes are on the Fed, although financiers are not expecting the central bank to cut rates this afternoon. The real hope among financiers is for the Fed to strike a dovish tone rather than a hawkish one. In simpler terms, they want the Fed to signal its readiness to step in if the U.S. economy starts showing signs of trouble. Of course, the central bank is always prepared to act, but it faces the delicate task of maintaining balance. It must carefully choose its words to avoid tipping the scales too far in favor of the market or coming across as overly strict.

Tuesday's trading session started with a cloud over Wall Street, but an afternoon announcement brought a ray of hope to the financial markets. Let's break it down. Ahead of the US central bank's interest rate decision, stock indices were generally in the red. Wall Street dipped just under 1%, marking a second day of consolidation after enjoying a nine-day winning streak. Across the pond in Europe, the mood wasn't much brighter, though there were a few glimmers of hope. London's FTSE 100 managed a minuscule gain of 0.01%, but that was enough to extend its winning streak to an impressive 16 days, a feat not seen since the index's inception in 1984. While London hasn't yet reclaimed its record high from February's end, there might be a boost on the horizon, which I'll touch on shortly.

In the United States, investors find themselves in a classic tug-of-war. On one side, there's the anxiety over the unpredictable nature of Donald Trump's policies. On the other, the tantalizing prospect of snapping up stocks at prices that are more attractive than they were a mere three months ago. So, which side is winning? It seems the allure of a bargain is proving irresistible, driven by two key factors. First, there's the anchoring bias at play. The White House applied significant pressure at the start of April, creating an impression that the situation could only improve from there. This has led investors to believe that the worst is behind us. Second, there's the ever-reliable safety net of the U.S. central bank. Investors are confident that if things start to go awry, the central bank will step in to stabilize the situation, as it has done in the past. In this high-stakes game, the fear of missing out is proving to be a powerful motivator, nudging investors to seize the moment and invest while the opportunity is ripe.

This was illustrated yesterday, as Wall Street's leading indicators roared with delight at the announcement of preliminary talks between China and the US in Switzerland starting this weekend. Investors were all the more pleased by the news because the negotiators are not underlings, but heavyweights. Treasury Secretary Scott Bessent will lead the US side, and Vice Premier He Lifeng will represent China. This will be a simple introductory meeting, but for now the financial markets are more concerned about the existence of the dialogue than its outcome.

This has not prevented the two rivals from continuing to proclaim that they will maintain a firm stance, nor has it prevented China from unveiling a major monetary easing package. On the agenda are a cut in the seven-day repo rate, a reduction in the reserve requirement ratio, a 500 billion yuan refinancing program for consumption and elderly care, a 300 billion yuan extension of the technology fund, and a cut in housing-related loan rates. If you want something done right, do it yourself. At the same time, other trade negotiations are underway. The United Kingdom, for example, believes it has made good progress with the US administration towards a trade agreement, although the scope of the agreement remains unclear.

Meanwhile, geopolitical tensions have shifted from Ukraine and the Middle East to the Indo-Pakistani border. India has struck targets described as “terrorist camps” inside Pakistan in retaliation for an attack that killed many tourists in Kashmir last month. Pakistan said it shot down several Indian aircraft and vowed to retaliate, while saying it was open to talks with its neighbor. 

Returning to the financial world, there are still many earnings reports due today in Europe and the US. Yesterday's announcements were fairly mixed: AMD was fairly reassuring, but other technology players such as Arista, Marvell, and Super Micro disappointed. Today, the spotlight is on heavyweights such as Novo Nordisk in Europe and Walt Disney in the US, as we wait for the Fed's decision at 2:00 pm ET, followed by Jerome Powell's press conference at 2:30 pm.

In Asia-Pacific, all major markets are open after a series of public holidays. Japan, Australia, China, and South Korea are posting gains of between 0.1% and 0.5%. The Indian market is down slightly, while the Pakistani stock market is falling more heavily. European indices are in the red, with the Stoxx Europe 600

Today's economic highlights:

Eurozone retail sales, US oil inventories and the Fed's interest rate decision are on the calendar today.

  • Dollar index: 99,275
  • Gold: $3,388
  • Crude Oil (BRENT): $62.61 (WTI) $59.24
  • United States 10 years: 4.32%
  • BITCOIN: $96,900

In corporate news:

  • Amazon's Zoox expands robotaxi production in the US, recalling 270 vehicles due to software error.
  • Meta Platforms won $168 million in damages from NSO Group for hacking WhatsApp users.
  • OpenAI plans to renegotiate revenue share with Microsoft following restructuring.
  • DoorDash involved in a potential deal with Deliveroo.
  • Qatar Airways could place an order for at least 100 aircraft with Boeing.
  • Intel shareholders approve stock incentive plan and new CEO compensation.
  • Tesla launches a cheaper Model Y in the United States.
  • Masimo sells its audio business to Harman for $350 million.

Today's top earnings: Walt Disney, Uber Technologies, MercadoLibre, Arm Holdings, AppLovin, Fortinet, Manulife Financial, Emerson Electric, Cencora, Johnson Controls, Occidental Petroleum...

Analyst Recommendations:

  • Albertsons Companies, Inc.: BMO Capital Markets upgrades to outperform from market perform and raises the target price from USD 19 to USD 25.
  • Amphenol Corporation: Zacks upgrades to outperform from neutral with a price target raised from USD 85 to USD 92.
  • Arista Networks Inc: KGI Securities Co Ltd downgrades to neutral from outperform with a price target reduced from USD 105 to USD 88.
  • Campbell Soup Company: Zacks upgrades to neutral from underperform with a target price raised from USD 32 to USD 38.
  • Columbia Sportswear Company: Zacks downgrades to underperform from neutral with a price target reduced from USD 73 to USD 53.
  • Discover Financial Services: Jefferies downgrades to hold from buy with a target price of USD 180.
  • Skechers U.s.a., Inc.: Morgan Stanley downgrades to equal weight from overweight with a target price reduced from USD 73 to USD 63.
  • Veeva Systems Inc.: Zacks downgrades to neutral from outperform with a price target raised from USD 244 to USD 249.
  • Vertex Pharmaceuticals Incorporated: Wolfe Research downgrades to peerperform from outperform.
  • Astera Labs, Inc.: Evercore ISI maintains its outperform recommendation and reduces the target price from 123 to USD 87.
  • Datadog, Inc.: Baird maintains its outperform rating and reduces the target price from USD 175 to USD 135.
  • Doordash, Inc.: D.A. Davidson maintains its neutral recommendation with a price target raised from USD 150 to USD 190.
  • Fortune Brands Innovations, Inc.: Truist Securities maintains its buy recommendation and reduces the target price from USD 87 to USD 65.
  • Global Payments Inc.: JP Morgan maintains its neutral recommendation and reduces the target price from 115 to USD 85.
  • Iqvia Holdings Inc.: Citigroup remains neutral recommendation with a price target reduced from USD 210 to USD 160.
  • Lumentum Holdings Inc.: Morgan Stanley maintains its market weight recommendation and raises the target price from 40 to USD 70.
  • Nvent Electric Plc: Haitong International Research keeps its outperform recommendation and reduces the target price from USD 91.62 to USD 68.04.
  • Ovintiv Inc.: Peters & Co. maintains its sector perform recommendation and reduces the target price from USD 54 to USD 42.
  • Robert Half Inc.: Zacks downgrades to underperform from neutral with a price target reduced from USD 51 to USD 37.
  • Sarepta Therapeutics, Inc.: BMO Capital Markets maintains its outperform rating and reduces the target price from USD 160 to USD 120.
  • Stellantis N.v.: Landesbank Baden-Wuerttemberg maintains its hold recommendation with a price target reduced from 13 to EUR 8.50.
  • The Trade Desk, Inc.: Macquarie maintains its outperform recommendation and reduces the target price from USD 150 to USD 90.
  • Ul Solutions Inc.: Jefferies maintains its buy recommendation and raises the target price from USD 62 to USD 78.
  • Unity Software Inc.: Jefferies maintains its hold recommendation with a target price raised from 16 to USD 22.
  • Westlake Corporation: RBC Capital maintains its outperform rating and reduces the target price from USD 122 to USD 96.
  • Yeti Holdings, Inc.: Roth Capital Partners maintains a neutral recommendation with a price target reduced from USD 41 to USD 32.