The past week has had its shares of twists and turns, but the event that has attracted the most attention is probably the European Central Bank's monetary policy decision. As expected by a slight majority of the market, the ECB raised rates, hinting that this would be the last time for the current cycle. As economists were expecting one more hike, the news was welcomed by the stock market, with the Stoxx Europe 600 up 1.6% for the week. As I mentioned a few days ago, the financial community was talking about a "dovish hike", i.e. a rate hike accompanied by soothing rhetoric about what was to come. Meanwhile, the US central bank will probably leave rates unchanged, but will hint at the possibility of a hike later. It's all very subtle. Investors preferred to play it safe in America, with a sharp decline in indices on Friday resulting in a negative weekly performance. US bond yields tightened again, with the 10-year maturity once again flirting with its peaks, above 4.3%. This is a sign of the market's discomfort with future monetary policy.

The ECB and the Fed are not quite at the same stage of their monetary cycle, but they still fear being overtaken by inflation that has not gone away, especially since oil has decided to move towards a triple-digit price per barrel. The two central banks are therefore continuing to send out the message that, failing to pile on the rate hikes aggressively, they will be forced to keep them in the current zone for long enough. Once again, equity markets are not buying it. They have been accustomed to central banks acting as firefighters. Investors believe that the Fed, and to a lesser extent the ECB, will be forced to ease off sooner than they think to avoid economic disaster or the onset of stagflation, which is pretty much the same thing according to the specialists.

The funny thing is, there are still islands of exuberance in the midst of all this. Like IPOs. Arm Holdings for a start, with all the excitement surrounding the deal last week. Investors love the sound of good stock market stories. The Instacart and Klaviyo IPOs seem to be going the same way, with reports of price brackets that could be exceeded. Even Birkenstock is dreaming: who would have thought ten years ago that the German company would be able to afford a New York listing thanks to its cult status? In the same vein, another renowned British technology company, Imagination Technologies, is also set to turn its back on London and list in the USA, according to the British press. Wall Street is definitely stealing everything from German sandals to cutting-edge technologies.

Meanwhile, the United Auto Workers (UAW) strike against the Detroit Three automakers - General Motors, Ford, and Stellantis - continues. It has now entered its fourth day, with more than 12,000 workers participating. Its the first time the union has simultaneously targeted all three automakers. Production has stopped at plants in Michigan, Ohio, and Missouri.

The UAW is pushing for higher wages and shorter work weeks, the restoration of defined benefit pensions, and stronger job security. The automakers have offered a 20% wage increase through 2027, but the union is asking for a 40% raise.

Economic highlights of the day:

The NAHB housing market index in the United States is today’s main indicator. The full agenda is here.

The dollar is worth EUR 0.9383 and GBP 0.8078. The ounce of gold is up to USD 1924. Oil consolidates, with North Sea Brent at USD 94.75  a barrel and US light crude WTI at USD 91.04. The yield on 10-year US debt has risen to 4.33%. Bitcoin is trading at USD 27,300.

In corporate news:

  • Tesla - Turkish President Tayyip Erdogan has Tesla CEO Elon Musk to build a factory in Turkey. The brand currently has six factories worldwide and is currently building a seventh in Mexico.
  • On Monday, Chevron announced a return to normal operations at its liquefied natural gas plant in Western Australia, following strikes that led to a drop production by around a fifth last week.
  • KKR will take a 20% stake in SingTel's data center division in Southeast Asia for 807 million dollars.

Analyst recommendations:

  • Accenture: Societe Generale maintains its Buy rating. Previously set at USD 314, the target price has been raised to USD 373.
  • Admiral group: Autonomous Research upgrades to outperform from underperform. PT up 40% to GBP 28.
  • Air products & chem: Baptista Research maintains hold rating. Previously set at USD 325, the target price has been slightly reduced to USD 324.70.
  • Ameriprise: Baptista Research downgrades to underperform from hold. PT down 1% to USD 357.40.
  • Cummins inc: Baptista Research maintains its hold rating. Previously set at USD 244, the target price has been raised to USD 258.90.
  • Doordash: Mizuho Securities upgrades to buy from neutral. Target price raised by 16.7% to USD 105.
  • Electronic arts: Ascendiant Capital Markets maintains its Buy rating. Previously set at USD 154, the target price has been reduced to USD 146.
  • General dynamics: Wells Fargo maintains an overweight rating. Previously set at $258, the target price has been reduced to $243.
  • Kellogg co: Baptista Research upgrades to outperform from hold. PT down 2% to USD 70.80.
  • L3harris technol: Wells Fargo upgrades to overweight from equalweight. Target price increased from USD 204 to USD 209.
  • Laboratory : Baird maintains its outperform rating. Previously set at USD 251, the target price has been reduced to USD 237.
  • Leidos holdings: Wells Fargo maintains an overweight rating. Previously set at $129, the target price has been reduced to $121.
  • Lockheed martin: Wells Fargo upgrades to equalweight from underweight. Target price remains at USD 440.
  • Netflix: Evercore ISI maintains its outperform rating. Previously set at USD 550, the target price has been reduced to USD 500.
  • Nike inc -cl b: HSBC maintains its hold rating. Previously set at USD 120, the target price has been reduced to USD 113.
  • Northrop grumman: Wells Fargo maintains its equalweight rating. Previously set at USD 485, the target price has been reduced to USD 435.
  • Philip morris in: Baptista Research upgrades to outperform from hold. PT up 4.8% to USD 114.30.
  • Progressive corp: BMO Capital Markets maintains its market perform rating. Previously set at USD 130, the target price has been raised to USD 140.
  • Quanta services: Baptista Research downgrades to hold from underperform. PT up 17.2% to USD 216.80.
  • Rio tinto plc: Oddo BHF maintains its neutral recommendation. Previously set at GBP 60, the target price has been reduced to GBP 53.
  • S4 capital plc: Peel Hunt downgrades to add from buy. PT down 56% to GBX 110.
  • Charles Schwab: Barclays maintains its equalweight rating. Previously set at USD 70, the target price has been reduced to USD 64.
  • Simon property: Mizuho Securities maintains a neutral rating. Previously set at USD 106, the target price has been raised to USD 119.
  • Stellantis: Goldman Sachs maintains its Buy rating. Previously set at EUR 23, the target price has been raised to EUR 24.