Wall Street's three main indices just scored a sixth consecutive week of gains, something that hadn't happened since 2019. In five sessions, the S&P500 gained 0.21% and the Nasdaq 0.54%. The Dow Jones contented itself with +0.01%, the bare minimum to avoid breaking its current streak. Since January 1, the Nasdaq 100 gained 47%, the S&P500 nearly 20% and the Dow Jones, which has less tech stocks than its peers, 9.4%. Investors continue to see the positive in everything: they're enthusiastic about falling inflation and weakening macroeconomic data, because it's all good for the Fed to start cutting rates. But they were also relatively pleased to see on Friday that US employment figures and consumer sentiment remain solid, because that fits in quite well with a controlled economic slowdown. In short, it's hard to shake them out of their incorrigible optimism.
Europe also did well, with a weekly balance sheet even better than that of the United States. The Stoxx Europe 600 finished up +1.3%. The French CAC40 recovered 2.5%, flirting with its all-time high of 7581 points. It has to be said that a major turnaround in sentiment took place a few days ago concerning the ECB's monetary policy. Until recently, the market did not envisage a return to rate cuts in Europe in the short term. But the accumulation of weaker-than-expected inflation figures has completely altered this perception, to the point where the central scenario for financial markets is monetary easing in the spring. This should give a boost to European equity markets, even if the ECB, and indeed the Fed, are likely to crush these hopes.
This is particularly timely, as the two central banks have set a date this week for their last monetary policy decision of the year. On Wednesday, the Fed will in all likelihood leave rates unchanged, and will use hawkish language to calm investor ardor in order to maintain its grip on the markets. It will also publish its new economic forecasts, which will allow us to compare the institution's projections with the expectations of financiers. The ECB will do the same on Thursday. Christine Lagarde will also try to regain control of the narrative to prevent the market from giving free rein to its fantasies about rates. On Thursday, the Bank of England, the Swiss National Bank and Norges Bank will also release their decisions.
What happens next for the equity markets will probably revolve around whether the Fed's speech matches investors' expectations. As I mentioned earlier, investors are in a phase where they see the positive in everything. It will surely take a lot to convince them that the US central bank will not cut rates between now and the end of June.
Meanwhile China's deflation is worsening. Last week, the country announced some encouraging statistics, but those published on Saturday were far less so. Consumer prices fell by -0.5% year-on-year in November, their sharpest contraction since 2020. Producer prices continued to fall, by 3% year-on-year. Both indicators are below expectations, and are still ill-suited to an economic recovery. At the same time, commentators judged the statements made by the important Economic Politburo meeting held on Friday to be rather disappointing. Hopes of a major stimulus package are fading.
There are plenty of statistics to come before the holiday break this week: US inflation and producer prices in November, for example, and the first PMI indicators for December.
There are still a few corporate results on the agenda: Oracle, Adobe and Costco in the United States, and Inditex in Europe.
In the Asia-Pacific region, Japan finally rebounded after losing more than 3% over the past week. The Nikkei 225 recovered 1.5%. China continues to be depressed, with a 1% drop in Hong Kong in the wake of the latest economic indicators. Shanghai gained 0.4% after opening lower, but I have no explanation. South Korea, India, Taiwan and Australia posted slight gains to start the week. European leading indicators are hesitant after recent gains. On Wall Street, in premarket trading, futures on the main three indices were slightly down.
Today's economic highlights:
The dollar is stable at EUR 0.9297 and GBP 0.7955. The ounce of gold is back below USD 2000. Oil rises slightly, with North Sea Brent at USD 75.73 a barrel and US light crude WTI at USD 71.10. The yield on 10-year US debt has risen to 4.24%. Bitcoin retreats to USD 41,800.
In corporate news:
- Occidental Petroleum announced on Monday that it had acquired energy producer CrownRock in a cash and stock deal valued at $12 billion, enabling it to expand in the oil-rich Permian Basin.
- Cigna jumps 12.4% in pre-market trading. The health insurer cancelled its planned takeover of Humana, the Wall Street Journal reported on Sunday. Cigna also announced on Sunday its intention to buy back $10 billion worth of its own shares, bringing its total announced share buybacks to $11.3 billion. Jefferies also raised its recommendation on Cigna from "hold" to "buy".
- Macy's - An investor group consisting of Arkhouse Management and Brigade Capital made a $5.8 billion offer to delist the department store chain. The stock was up 19.1% in pre-market trading. Competitors Kohl's and Nordstrom advanced by 4.5% and 6.4% respectively.
- Nvidia wants to establish a base in Vietnam to develop the country's semiconductor industry, the Vietnamese government said, citing the chipmaker.
- SouthWest Airlines - Flight crews rejected a tentative wage agreement, with 64% voting against a five-year proposal, their union announced Friday.
- Tesla should respect fundamental labor rights, said Norway's $1.5 trillion sovereign wealth fund, adding that it would retain its stake in the company and seek to influence it over time. Several Nordic pension funds will be sending a letter to the manufacturer this week, asking it to respect the rights of employees in the region.
- Moderna and Merck announced on Monday that they had begun a late-stage trial of their experimental mRNA-based personalized cancer therapy in combination with Merck's blockbuster drug Keytruda.
Analyst recommendations:
- Accenture Plc: Stifel maintains its buy recommendation and raises the target price from USD 343 to USD 363.
- Adobe Inc.: Wells Fargo maintains its overweight rating and raises the target price from USD 650 to USD 690.
- Advanced Micro Devices, Inc.: DZ Bank AG Research maintains its buy recommendation and raises the target price from USD 118 to USD 145.
- Albemarle Corporation: BM Pekao initiates a Buy recommendation with a target price of USD 152.30.
- Analog Devices, Inc.: Baptista Research upgrades to outperform from hold with a price target raised from USD 198 to USD 222.80.
- Apple Inc.: Evercore ISI maintains its outperform rating and raises the target price from USD 210 to USD 220.
- Arista Networks, Inc.: Evercore ISI maintains its outperform rating and raises the target price from USD 230 to USD 240.
- Avalonbay Communities, Inc.: Mizuho Securities maintains a neutral recommendation with a price target reduced from USD 186 to USD 176.
- Best Buy Co., Inc.: Jefferies upgrades to buy from hold with a price target raised from USD 69 to USD 89.
- Chipotle Mexican Grill, Inc.: Citigroup maintains its outperform recommendation and raises the target price from USD 2300 to USD 2650.
- Costco Wholesale Corporation: Bernstein maintains its outperform recommendation and raises the target price from USD 600 to USD 660.
- Crowdstrike Holdings, Inc.: JP Morgan maintains its overweight rating and raises the target price from USD 230 to USD 269.
- Danaher Corporation: Citigroup maintains its buy recommendation with a price target raised from USD 240 to USD 255.
- Darden Restaurants, Inc.: Baird maintains a neutral recommendation with a price target raised from USD 148 to USD 165.
- Deere & Company: Baptista Research maintains its hold recommendation with a price target reduced from USD 450.80 to USD 415.
- Devon Energy Corporation: Morgan Stanley upgrades to overweight from equalwt with a price target raised from USD 48 to USD 52.
- Domino's Pizza Inc.: Piper Sandler & Co downgrades to neutral from overweight with a price target reduced from USD 401 to USD 400.
- Dte Energy Company: Wells Fargo maintains its overweight rating and raises the target price from USD 110 to USD 123.
- Eog Resources, Inc.: Morgan Stanley downgrades to equal weight from overweight with a target price of USD 134.
- Equity Residential: Mizuho Securities downgrades to neutral from buy with a target price reduced from USD 62 to USD 58.
- Essex Property Trust, Inc.: Mizuho Securities maintains a neutral recommendation with a price target raised from USD 219 to USD 232.
- Expedia Group, Inc.: Oppenheimer maintains its outperform rating and raises the target price from USD 135 to USD 175.
- Ford Motor Company: BM Pekao initiates a Hold recommendation with a target price of USD 11.30.
- Hp Inc.: Evercore ISI upgrades to outperform from in-line with a price target raised from USD 33 to USD 40.
- Ibm: Evercore ISI maintains its in-line recommendation and raises the target price from USD 140 to USD 165.
- Icon Public Limited Company: Citigroup maintains its buy recommendation with a price target raised from USD 300 to USD 315.
- Illumina, Inc.: Citi downgrades to neutral from sell with a price target raised from USD 85 to USD 120.
- Intermediate Capital Group Plc: Autonomous Research initiates an Outperform recommendation with a target price of GBP 20.05.
- Iqvia Holdings Inc.: Citigroup remains neutral recommendation with a price target raised from USD 190 to USD 225.
- M&T Bank Corporation: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 140 to USD 156.
- Marathon Oil Corporation: Morgan Stanley downgrades to equalwt from overwt with a price target reduced from USD 27 to USD 25.
- Mcdonald's Corporation: Piper Sandler & Co maintains a neutral recommendation with a price target raised from USD 273 to USD 299.
- Merck & Co., Inc.: Baptista Research upgrades to outperform from hold with a price target reduced from USD 124.70 to USD 120.80.
- Mettler-Toledo International, Inc.: Citi downgrades to sell from neutral with a price target reduced from USD 1050 to USD 975.
- Netapp, Inc.: Evercore ISI maintains its in-line recommendation and raises the target price from USD 85 to USD 95.
- Norfolk Southern Corporation: BMO Capital Markets maintains its market perform recommendation and raises the target price from USD 230 to USD 250.
- Nxp Semiconductors N.V.: AlphaValue/Baader Europe upgrades to add from buy with a target price of USD 269.
- Occidental Petroleum Corporation: Morgan Stanley upgrades to overweight from equal weight with a target price of USD 68.
- Okta, Inc.: Baptista Research maintains a hold recommendation with a price target reduced from USD 93.60 to USD 82.
- Old Dominion Freight Line, Inc.: Raymond James maintains its outperform rating and reduces the target price from USD 425 to USD 415.
- Palo Alto Networks, Inc.: JP Morgan maintains its overweight rating and raises the target price from USD 272 to USD 326.
- Parker-Hannifin Corporation: Wolfe Research downgrades to peerperform from outperform.
- Pinterest, Inc.: RBC Capital upgrades to outperform from sector perform with a price target raised from USD 32 to USD 46.
- Quest Diagnostics Incorporated: Citigroup remains neutral recommendation with a price target raised from USD 130 to USD 145.
- Realty Income Corporation: Mizuho Securities upgrades to buy from neutral with a price target raised from USD 48 to USD 58.
- Restaurant Brands International Inc.: Baird maintains a neutral recommendation with a price target raised from USD 68 to USD 78.
- Snap Inc.: Wells Fargo upgrades to overweight from equalweight with a price target raised from USD 8 to USD 22.
- Snowflake Inc.: Baptista Research downgrades to hold from outperform with a price target raised from USD 193.10 to USD 210.
- Spotify Technology S.A.: Raymond James maintains its outperform rating and raises the target price from USD 180 to USD 220.
- Synopsys Inc.: Baptista Research downgrades to hold from underperform with a price target raised from USD 480.20 to USD 595.
- Tesla, Inc.: BM Pekao initiates a Buy recommendation with a target price of USD 281.90.
- The Cigna Group: Jefferies upgrades to buy from hold with a price target raised from USD 335 to USD 341.
- Thermo Fisher Scientific: Citigroup maintains its buy recommendation and raises the target price from USD 530 to USD 575.
- Thomson Reuters Corporation: BMO Capital Markets maintains its outperform rating and raises the target price from CAD 201 to CAD 211.
- Tyler Technologies, Inc.: JP Morgan maintains its overweight rating and raises the target price from USD 490 to USD 500.
- Uber Technologies, Inc.: Wolfe Research maintains its outperform rating and raises the target price from USD 60 to USD 74.
- Unilever Plc: Bernstein downgrades to market perform from underperform with a price target reduced from GBX 3800 to GBX 3600.
- Waste Management, Inc.: BMO Capital Markets maintains its market perform recommendation and raises the target price from USD 163 to USD 174.
- Waters Corporation: Citigroup remains neutral recommendation with a price target raised from USD 265 to USD 300.
- Zscaler, Inc.: Baptista Research maintains its hold recommendation and raises the target price from USD 165 to USD 210.90.