Wall Street’s three main indices ended yesterday’s session with gains ranging from 1.06% for the Dow Jones to 2.32% for the Nasdaq100. The S&P 500 recovered 1.68%. As you might expect, the banking sector dominated the gains with impressive rebounds for some banks such as First Republic Bank (+27%) and Charles Schwab (+9%). However, these rebounds are still insufficient to erase the losses accumulated since last Thursday. For example, the price of First Republic Bank is still down by more than 60% since the failure of Silicon Valley Bank. Oil has fallen by almost 4% due to recession fears, which are a serious drag on demand, while OPEC has been more optimistic about Chinese consumption.

But things changed today after the shares of Credit Suisse tumbled on Wednesday, dropping by as much as 30%, after it revealed in its annual report for 2022 that it has weaknesses in internal controls. In addition, the chairman of the Swiss bank’s largest shareholder, Saudi National Bank, ruled out further support in an interview on Bloomberg TV. Asked if a financial injection was on the cards, Ammar Al Khudairy said "it's clearly not for several reasons, among which are regulatory and statutory reasons". This comes as the bank is still reeling from a series of scandals that have seriously undermined the confidence of investors and clients.

The fall of Credit Suisse renewed worries about the European banking sector and took down the shares of its peers across Europe and then the US. JPMorgan Chase & Co, Citigroup and Bank of America Corp fell between 1% and 6%.

Wall Street main indexes were down between 1.2% for the Nasdaq 100 and 1.8% for the Dow Jones this morning.

But let’s return to yesterday’s US CPI data. Inflation continued its slow decline to 6% in February on an annual basis. That's still high, especially as the base effect helps and prices continue to rise in the services segment. But optimists will tell you that this is the lowest level seen since November 2021. So investors are expecting moderate action from the Fed, which is expected to raise rates by 25 basis points at the end of the month. The market has even opened the door to a status quo. The probability of such a scenario is not so low (around 20% at the time of writing). I remind you that as recently as last week, the norm was to raise rates by 50 basis points on March 22, before further scheduled hikes over the next few months. Things are moving very fast on the market.

And new data today confirmed the easing of price pressures. U.S. producer prices unexpectedly fell in February and the rise in prices in January was not as important as initially thought.

The producer price index inched down 0.1% last month, the Labor Department said this morning. Data for January was revised down to show the PPI gaining 0.3% instead of 0.7% as previously reported. In the 12 months through February, the PPI climbed 4.6% after rising 5.7% in January.

China also released important statistics. The country's industrial production rose by 2.4% in the first two months of the year according to official statistics published last night, after a 1.3% growth in December. Exceptionally, these statistics are backed by two months to eliminate distortions caused by the Lunar New Year festivities. Finally, specialists noted this morning that consumption was quite solid. Retail sales rose 3.5% over the same period, after falling 1.8% in December.

 

Economic highlights of the day:

February producer prices, the Empire Manufacturing index and February retail sales, as well as business inventories and the NAHB house price index are due today, along weekly oil inventories. All the macro agenda is here. 

The dollar is up 1.7% to against the euro to EUR 0.9485 and 0.8% against the pound to GBP 0.9216. The ounce of gold is stabilizing at 1924 dollars. Oil tumbles with North Sea Brent at USD 74.36 per barrel and US WTI light crude at USD 68.31. U.S. debt has a 10-year yield at 3.42%. Bitcoin is trading at 24770 dollars.

 

In corporate news:

* Lennar, a real estate construction group, reported a better-than-expected quarterly profit as high real estate prices helped offset supply shortages due to rising material costs and a labor shortage.

* Boeing declined 1.64% in pre-market trading as the aircraft manufacturer reported 28 aircraft deliveries in February compared to 38 the previous month.

* Tesla became Europe's top electric vehicle maker by sales in the fourth quarter, dethroning Mercedes Benz, according to Counterpoint Research data.

 

Analysts recommendations:

  • AstraZeneca: Berenberg remains long but slightly downgrades its target from GBp 12600 to 12400.
  • Charles Schwab: Credit Suisse upgrades to outperform from neutral.
  • Elevance: Baptista Research initiated coverage with a recommendation of hold. PT set to $531.90.
  • Future Plc: Jefferies starts tracking with a Hold recommendation and a GBp 1300 target.
  • Harley-Davidson: Jefferies upgrades to hold from underperform. PT down 0.9% to $39.
  • Intuit: Daiwa Securities initiated coverage with a recommendation of outperform. PT up 8.7% to $444.
  • Meta Platforms: Evercore remains Buy with a price target raised from USD 275 to USD 305.
  • NextEra Energy: HSBC initiated coverage with a recommendation of buy. PT set to $90.
  • Seagen: Morgan Stanley downgrades to equal-weight from overweight. PT up 15% to $229.
  • Spirent Communications: Berenberg upgrades from hold to buy with a GBp 250 target.