Equity markets continued their upward trend last week, with the exception of Japan. The Tokyo Stock Exchange is coming off six consecutive weekly performances in the green, which probably warranted a pause. Elsewhere, China finally woke up, thanks to a raft of measures taken by the authorities in support of the financial sector. As for Western markets, they continued to rise, but it was Europe, and not the United States, that saw the strongest acceleration.

On the macroeconomic front, Western investors and central banks agree on one thing: interest rates have peaked, so they will eventually come down. However, they are divided over the timing of the first easing. The optimists believe that the Fed and ECB will act before June. The reasonable ones are counting on early summer. The pessimists see a later first rate cut, depending on what happens between now and then: inflation, conflicts, civil war in the US... The Fed will have a chance to say more this week. It will issue a monetary policy decision on Wednesday, against a backdrop that is almost too good to be true: inflation is moderating and the economy is performing well despite high interest rates, which are just begging to be lowered. But the Fed won't do anything on Wednesday: this configuration gives it the luxury of waiting before deciding on its next move, just to see if anything goes wrong in the weeks ahead.

On the geopolitical-economic front, tensions in the Red Sea seem to be having an impact on world trade. Shipping costs have soared and oil prices are on the rise.

On Wall Street, the tech sector has been leading the way since the beginning of the year. On the S&P500, it gained 7% in 2024, making it the biggest contributor to Wall Street's gains. Far ahead of healthcare and consumer staples. The rest are stagnating or even falling sharply, like real estate and basic materials. Financiers are a little alarmed that the uptrend is still largely based on technology, but FOMO - the fear of missing out - remains the strongest factor. Investors will be able to take the pulse of the sector as five of the Magnificent Seven, as the US oligopolistic giants are now called, will publish results and guidance this week: Microsoft, Apple, Alphabet, Amazon and Meta Platforms.

China is still on the agenda, and almost on its own, as the country operates differently from the others. There, inflation is non-existent and interest rates are relatively low, but the stock market is falling and the economy is suffering. Stock markets finally rebounded last week, thanks to a series of announcements by the authorities in support of the financial sector. Investors are content with this for the time being, even if the measures are distilled down to a trickle, reinforcing the feeling that the overall stimulus plan is vague. Beijing once again restricted short selling in an attempt to bolster the rebound initiated a few days ago. At the same time, rumors are circulating about the creation of a large investment fund to support the market, through the merger of several local players. China's real estate sector is caught in the crossfire: on the one hand, restrictions on home purchases have been eased in the city of Guangzhou, but on the other, a Hong Kong court has ordered the liquidation of failed developer China Evergrande. The bottom line this morning: Hong Kong rose and mainland China fell. My advice, which comes from a well-known old American financier: since you should only invest in what you understand, the Chinese market still doesn't look very friendly.

In addition to publications from the big US technology companies, the week's earnings reports in Europe include Novo Nordisk, Novartis, BNP Paribas, Glencore and Dassault Systèmes. On the macro agenda, monetary policy decisions by the US Federal Reserve (Wednesday) and the Bank of England (Thursday) are eagerly awaited, even if rates are likely to remain unchanged. US employment figures for January (Friday) are also expected.

In the Asia-Pacific region, Japan started the week up 0.8% on the Nikkei 225. In China, Shanghai lost 0.3%, while Hong Kong gained 0.8%. South Korea and India recovered by more than 1%. Australia is more measured, but is still in the green (+0.3%). European leading indicators are mostly bearish, except for the commodity-rich FTSE 100, which benefits from higher oil prices. Futures on Wall Street are closed to equilibrium.

Today's economic highlights:

No major indicators are expected today.

The dollar is worth EUR 0.9228 and GBP 0.7868. The ounce of gold is little changed at USD 2030. Oil falls a little, with North Sea Brent at USD 82.85 a barrel and US light crude WTI at USD 77.91. The yield on 10-year US debt stands at 4.13%. Bitcoin is trading at USD 42,200.

In corporate news:

  • United Airlines has approached Airbus about buying more A321neo aircraft to fill the potential gap left by BOEING's 737 MAX 10 backlog, according to industry sources. Ryanair, for its part, said on Monday that it was ready to buy "at the right price" the 737 MAX 10s, delivery of which had reportedly been rejected by the American aerospace group's customers.
  • Intel, Micron Technology, Texas Instrument - The US administration is expected to grant billions of dollars in subsidies to major semiconductor companies in the coming weeks to help them build new factories in the USA, the Wall Street Journal reported on Saturday.
  • Lockheed Martin announced on Friday its intention to cut 1% of its workforce this year in order to reduce costs and streamline operations. The defense group employs 122,000 people worldwide.
  • Microsoft - Teams, the American group's professional messaging platform, was restored on Saturday after a disruption blocked access.
  • Sarepta Therapeutics said on Monday that a mid-term trial had shown that one of its experimental drugs was more effective than its previous drug for certain patients suffering from Duchenne disease.
  • Spotify said on Friday that Apple's plan to comply with the European Union's Digital Markets Act (DMA) was "a complete and utter farce".

Analyst recommendations:

  • 3I Group: Redburn Atlantic upgrades to buy from neutral with a price target raised from GBX 2050 to GBX 2847.
  • Baker Hughes Company: Wolfe Research downgrades to peerperform from outperform.
  • Capital One Financial Corporation: Wolfe Research upgrades to peerperform from underperform.
  • Cloudflare: Wells Fargo maintains its overweight recommendation and raises the target price from USD 72 to USD 95.
  • Colgate-Palmolive Company: Raymond James upgrades to outperform from market perform with a target price of USD 91.
  • Crowdstrike Holdings: JMP Securities maintains its market outperform recommendation and raises the target price from USD 235 to USD 330.
  • Dollar Tree: JP Morgan upgrades to overweight from neutral with a price target raised from USD 122 to USD 157.
  • Fresnillo: Berenberg maintains its hold recommendation and reduces the target price from 670 to GBX 490.
  • Imi: Berenberg upgrades to buy from hold with a price target raised from GBX 1605 to GBX 1950.
  • Intel Corporation: CTBC Securities Investment Service Co LTD downgrades to neutral from add with a price target reduced from USD 50.40 to USD 43.75.
  • Illumina: Baird maintains a neutral recommendation with a price target raised from USD 109 to USD 144.
  • Intertek Group: Jefferies upgrades to buy from hold with a target price raised from GBX 4300 to GBX 5300.
  • Kingfisher: RBC Capital downgrades to sector perform from outperform with a target price of GBX 235.
  • Lam Research Corporation: Susquehanna maintains a neutral recommendation with a price target raised from USD 655 to USD 880.
  • Learning Technologies Group: Berenberg maintains its buy recommendation and reduces the target price from GBX 175 to GBX 120.
  • Norfolk Southern Corporation: Morgan Stanley downgrades to underweight from equal weight with a price target reduced from USD 185 to USD 175. Stifel downgrades to hold from buy and reduces the target price from USD 250 to USD 233.
  • Pinterest: Bernstein maintains its market perform recommendation and raises the target price from USD 31 to USD 39.
  • Schroders: BNP Paribas Exane downgrades to underperform from neutral with a price target reduced from GBX 440 to GBX 375.
  • Seagate Technology Holdings: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 65 to USD 80.
  • Snap Inc.: Bernstein maintains its market perform recommendation and raises the target price from USD 11 to USD 14.
  • The Hershey Company: Bernstein upgrades to outperform from market perform with a price target raised from USD 220 to USD 235.
  • Warner Bros. Discovery: Wells Fargo downgrades to equalweight from overweight with a price target reduced from USD 16 to USD 12.