March saw the S&P500 perform much better, with a gain of 3.5%, and the Nasdaq100 even better (+9.5%). This is the best quarter for the technology index since the April/May/June 2020 session, which immediately followed the pandemic plunge. There were very strong global disparities, as illustrated by the British FTSE 100, which lost -3.6%, and the German Dax, which gained 12.3%.

Over the first quarter of 2023, here are a few notable variations:

  • Nasdaq 100: +20.5
  • CAC40: +13.1
  • DAX: +12.3
  • STOXX Europe 600: +7.8
  • S&P500: +7%.
  • SMI: +3.5
  • Hang Seng: +2.5
  • Nifty50: -4
  • iBovespa: -7

Overall, and even more so for Western equities, the beginning of the year is very buoyant, after a 2022 vintage to forget. This is despite the fact that four banks have collapsed during the quarter, including two mid-sized US banks and one systemically important bank, Credit Suisse. Yet investors only had eyes for the efforts of central banks to contain the fire, and have sworn by a future easing of monetary policy. At least that is the dominant bet at the moment. American investors, in particular, are betting on the start of a key rate cut in the relatively near future. They even seem ready to take a new bullish turn before the price of money starts to fall again. As for the Fed's calls for caution on the persistence of inflationary risk, it is clear that the audience is becoming increasingly sparse.

I'm lucky this morning that I don't have to talk much about monetary policy. This is because the news is momentarily elsewhere since OPEC+ just made an unexpected move. Well, not so much, since OPEC is a cartel, which means a cartel designed to control prices. This is illegal in many areas, but oil is an exception. Fearing for the strength of oil prices despite the recent rebound, OPEC announced a reduction in production of one million barrels per day from May. This naturally caused prices to jump, by more than 5% to USD 84 for Brent for example. Goldman Sachs reminds us in a note released over the weekend that OPEC+ has more pricing power than in the past. The bank adds that the production cut is in line with the cartel's new doctrine, which consists of using its power to steer prices when it believes that this will not penalize its market shares. This is the case in this instance, as demand for oil remains strong, supported by the reopening in China. Oh, and of course, none of this is very good for inflation.

Futures on the S&P 500 and the Nasdaq were down on Monday, as OPEC’s move fueled bets of another interest rate hike by the Federal Reserve in its next meeting.

 

Economic highlights of the day:

Throughout the day, S&P will publish the final manufacturing indicators for the major economies for March. In the US, there will also be the ISM Manufacturing and Construction Spending. All the agenda is here. 

The dollar is down 0.5% to EUR 0.9206 and fell 0.7% against the pound to GBP 0.8078. The ounce of gold is down around 1976 dollars. Oil strengthens, with North Sea Brent at USD 84.44 a barrel and US WTI light crude at USD 79.97. The yield on US 10-year debt stands at 3.55%. Bitcoin is trading around USD 28,100.

 

In corporate news:

  • Tesla announced record vehicle deliveries in the first quarter of 2023 on Sunday, but quarter-on-quarter sales growth was modest due to increasing competition and a weak economic outlook. The stock is down 2.4% in pre-market trading.
  • McDonald’s is temporarily closing its U.S. offices this week to inform employees of planned layoffs as part of a broader restructuring of the group, the Wall Street Journal reported Sunday, citing an internal email sent last week to U.S. and some international employees. The stock is up about 1 percent in premarket trading.
  • Extra Space Storage, Life Storage - The real estate investment trust said Monday it would acquire rival Life Storage Inc for $12.4 billion in an all-stock deal. The latter's shares gained 5.3 percent in premarket trading.
  • Endeavor, WWE - Endeavor, the parent company of the UFC mixed martial arts franchise, announced Monday that it has acquired World Wrestling Entertainment, a wrestling company, in a deal valued at $9.3 billion. WWE shares lost 6.8% in premarket trading while Endeavor gained 4.9%.
  • Ovintiv - The US oil and gas producer said on Monday it had reached an agreement to acquire oil assets in the Permian Basin from three companies controlled by EnCap Investments for about $4.3bn. The stock gained 5.18 percent in premarket trading.
  • Western Digital - The maker of data storage devices said Monday it was investigating a network security incident after a breach in some systems disrupted parts of its business operations.
  • Biogen, Eli Lilly - The U.S. Institute on Aging (NIA) will fund a six-year, $300 million maximum project to create a major database for Alzheimer's research, officials told Reuters.
  • Apellis - The biotech company has drawn interest from major drugmakers for a buyout and is meeting with advisers to explore its options, Bloomberg News reported on Sunday, citing people familiar with the matter. The stock is up 10.7 percent in premarket trading.
  • Bed Bath & Beyond - Mark Tritton, who was ousted as chief executive of the troubled home goods retailer in June, filed a complaint Friday in a New York state court accusing the company of not honoring his $6,765,000 severance agreement.

 

Analyst recommendations:

  • Admiral Group: Berenberg remains Buy with a reduced price target of GBP 2688 to GBP 2543.
  • Anglo American: Barclays moves from Equal-Weight to Overweight targeting GBp 3,250.
  • Entegris: Citi downgrades to neutral from buy. PT up 4.9% to $86.
  • FormFactor: Citi downgrades to neutral from buy.
  • Intel: Bernstein upgrades from selling to neutral. The target price has been lifted and is now set at USD 30 compared to USD 20 before
  • Johnson Matthey: Jefferies remains Buy with a price target reduced from £2400 to £2300.
  • Quanta Services: Baptista Research initiated coverage with a recommendation of hold. PT set to $176.
  • Quest Diagnostics: Citi upgrades to neutral from sell. PT inches up 0.4% to $142.
  • NCC : HSBC passe d'acheter à conserver en visant GBp 117.
  • ResMed: Baptista Research initiated coverage with a recommendation of hold. PT set to $244.
  • Wolfspeed: Citi downgrades to neutral from buy. PT up 1.6% to $66.