Higher costs for gasoline and rents were the main culprits. The resilient inflation could delay the first Fed rate cut, which up to now was expected as early as June.

The consumer price index gained 0.4% last month - in line with expectations - after rising 0.3% in January. In the 12 months until February, the CPI jumped 3.2%, after a 3.1% gain in January. This was above the 3.1% forecasts by analysts in a Reuters poll.

Excluding the volatile food and energy components, the core CPI increased 0.4% last month, while 0.3% was expected. On an annual basis, it gained 3.8%, versus 3.7% expected. Yet, that was the smallest year-on-year increase since May 2021.

In any case, the market hasn’t reacted too badly to this data so far. Futures on all three Wall Street indexes remained in the green after the announcement, but things could still go haywire before the end of the session. However, there are still many reasons to be hopeful about the path of inflation. Reuters quoted Stephen Juneau, an economist at Bank of America Securities in New York, who believes that “rent and OER inflation should continue to moderate over the course of this year, helping to drive core inflation lower as goods price deflation dissipates." Progress towards price normalization is now slower in the United States, which is logical.

On another topic, four years ago to the day, financial markets sank after the WHO reclassified Covid-19 from epidemic to pandemic. The S&P 500 lost 9.5% in the session of Thursday March 12 alone. The low point was reached on March 23 of 2192 points. Since then, it has gained 133%, for an average annual rise of 23.6% over four years. A lot has happened in between. But if I had to oversimplify, I'd say that governments didn't manage the health situation very well, but they did take responsibility for the economic damage, while companies passed on their rising costs to consumers while improving their margins. The rich got richer, and the poor got poorer. For lovers of anniversaries, the second week of March was also the week that saw the Silicon Valley Bank debacle last year.

Thankfully, equity markets are unlikely to plunge 10% today. Yesterday, they oscillated up and down in the US and Europe, with no marked trend. Tech stocks, which got very popular in recent weeks (and months and years), remained under pressure, with the Nasdaq down 0.37%. But the wave of profit-taking seen on Friday seems to have been halted. The volatility brought about by the publication of companies' annual results is tending to diminish as the calendar dries up, but it's worth noting that a few emblematic stocks can still thrill investors. Such is the case with Oracle, which gained over 14% last night after the close of trading and the announcement of better-than-expected quarterly results, buoyed by cloud computing. Cloud means servers, servers mean computing capacity, computing capacity means AI, and AI means growth. In fact, Oracle mentioned the term artificial intelligence 22 times in its presentation conference (I counted).

In the Asia-Pacific region, Tokyo is still a little gloomy despite the yen's decline. The Governor of the Bank of Japan did report some weakness in consumption, but reiterated the message that the central bank is moving towards the end of its negative interest rate policy. The market is speculating whether this will be at next week's meeting or at the April meeting. In Japan, investors prefer negative rates and a weak yen. China remains on its cloud nine after the latest initiatives from the authorities, slightly improving statistics and company announcements. Xiaomi is soaring this morning after announcing the start of deliveries of its first electric vehicle on March 28. Until then, the Chinese company had been best known for its electronic products, led by smartphones. This announcement illustrates the gradual disappearance of the boundary between the automotive and electronics industries. Apple's recent abandonment of its EV project shows, however, that the gamble is probably a risky one.

Today's economic highlights

Focus on February inflation today, with the final reading for Germany and initial data for the US. The full agenda is here

The dollar is up 0.1% against the euro to EUR 0.9158 and up 0.3% against the pound to GBP 0.7830. The ounce of gold is slightly down to USD 2,165. Oil is recovering, with North Sea Brent at USD 81.77 a barrel and US light crude WTI at USD 77.17. The yield on 10-year US debt stands at 4.09%. Bitcoin trades at USD 72,130.

In corporate news:

  • Oracle - The database specialist is up 13.6% in pre-market trading after beating expectations on Monday evening with its quarterly profit and promising a joint announcement later this week with NVIDIA, the chip and artificial intelligence giant, a theme that has been driving the markets for months.
  • Intel and AMD, which have suffered on the stock market in recent sessions after posting rapid share price growth this year, gained 0.3% and 0.7% respectively.
  • Boeing lost 1.4% in premarket trading after the New York Times reported on Monday evening that the audit of the 737 MAX production process conducted by the US Civil Aviation Administration (FAA) following an incident during an Alaska Airlines flight in January had revealed problems in 33 out of 89 tests.
  • Alaska Air Group announced on Tuesday that it expected a smaller-than-expected first-quarter loss, thanks to strong travel demand.
  • Southwest Airlines - On Tuesday, the airline lowered its forecast for the number of aircraft it should receive this year from BOEING, the aircraft manufacturer facing production delays. Southwest shares fell 5.3% in premarket trading.
  • Tesla's "Autopilot" and "Full Self Driving" features and nine other driver assistance systems marketed by major automakers received "poor" ratings from the Insurance Institute for Highway Safety (IIHS) in a new study published Tuesday. In other news, Tesla's stock advanced 1% in pre-market trading as power was restored to its factory near Berlin.
  • Kohl’s reported quarterly sales down 1.1% to $5.71 billion on Tuesday, pushing the share price down 5.5% in premarket trading. The drop in sales was less marked than expected, however, with holiday discounts and strong beauty sales in its Sephora stores providing some support for the quarter.
  • Pfizer announced on Tuesday that a combination treatment with Adcetris and two other drugs had achieved the primary objective of a late-stage study, namely to prolong the survival of patients with a type of blood cancer.
  • Goldman Sachs Asset Management aims to expand its private credit portfolio to $300 billion in five years, from the current $130 billion, Marc Nachmann, the group's global head of asset and wealth management, told Reuters in an interview.
  • New York Community Bancorp advanced 3.4% after completing the $1 billion capital injection agreed last week with a group of investors. The troubled regional bank also plans to submit a three-for-one reverse stock split to its shareholders.
  • Innodata proposes to merge with Australian software company Appen in an all-share deal, the latter announced on Tuesday.

Analyst recommendations:

  • Coinbase Global, Inc.: Raymond James upgrades to market perform from underperform. Redburn Atlantic maintains a neutral recommendation with a price target raised from USD 131 to USD 169.
  • Dollar General Corporation: JP Morgan upgrades to neutral from underweight with a price target raised from USD 120 to USD 158.
  • Target Corporation: Cowen maintains its market perform recommendation and raises the target price from USD 148 to USD 185.
  • Veeva Systems Inc.: Morgan Stanley maintains its underweight recommendation and raises the target price from USD 160 to USD 210.
  • Capita Plc: RBC Capital maintains its sector perform recommendation and reduces the target price from GBX 23 to GBX 18.