Corporate results and central banks have equally been the focus during the fifth stock market week of the year. The ECB surprised everyone by adopting a tougher tone on inflation because it fears being overwhelmed like the US central bank was. The financial bookmakers believe that the institution could increase rates at the beginning of the autumn. Rate hikes are not inherently negative for financial markets, but they do change the rules of the game and disrupt stock market strategies. Their impact on the real economy is different and depends on the ability of the central bank to print the right tempo, to fulfill its objective of controlling inflation without derailing the economic equilibrium for businesses and households in particular.

On equity markets, the past week was one of great surges and big splashes for emblematic US stocks. It was a difficult week for PayPal, which dropped by more than 20% after explaining that its strategy of mass growth was doomed to failure, because of the multiplication of inactive accounts. Refocusing will take time and money. Meta Platforms also lost more than 20%, after a cocktail of disappointment on forecasts, the bite of Apple's new policy and the first and very symbolic decline of active users of Facebook, this network of boomers that no longer appeals to younger generations. We must add to this the costly Metaverse project, whose interest is more or less understood but whose economic model has yet to be finalized.

The fall of these stocks has weighed heavily on the US stock market, even if we can consider that they constitute more industrial incidents than a general trend. Moreover, quarterly results are still very good: American companies are still largely beating earnings and revenue expectations, albeit in slightly less favorable proportions than previously. Illustration with Amazon, which unlike PayPal and Meta has seduced investors, which earned the stock its largest increase over a session since 2015 on Friday. And that helped put a hesitant Nasdaq back on track, offering a positive weekly balance sheet. The American technology index still has a 10% liability in 2022, while that of the S&P500 is -5.57%.

This week, the macroeconomic news is quieter, except for the data on U.S. inflation in January, which will be released on Friday. On the other hand, corporate earnings releases continue at a good pace with Pfizer, Toyota, L'Oreal, Walt Disney, GlaxoSmithKline, Unilever and Coca-Cola coming up.

 

Today's economic highlights:

China's Caixin Services PMI fell to 51.4 points in January, but exceeded expectations and still signaled expansion, albeit reduced (an index above 50 is a sign of expansion).

The dollar is trading at EUR 0.8741. The ounce of gold is up to $1812. Oil is down to 90.96 per barrel WTI and USD 92.54 per barrel Brent. The yield on 10-year US debt climbs to 1.91%. Bitcoin is back up to USD 43,305.

 

On markets:

* Alphabet - Swedish price comparison website PriceRunner announced Monday that it is suing Alphabet-owned Google for about 2.1 billion euros, accusing it of anti-competitive practices in online search results.

* Tesla - The automaker announced Monday in a stock exchange notice that it holds $1.99 billion in bitcoins as of December 31, 2021.

* Tyson Foods - The U.S. food company reported better-than-expected quarterly sales thanks to higher product prices.

* Hasbro - The toy and game maker reported better-than-expected fourth-quarter sales and earnings on Monday and announced a 3% increase in its quarterly dividend to shareholders.

* Peloton Interactive - The sports equipment specialist is attracting interest from several potential buyers, including Amazon, a source close to the matter said. The Financial Times reported Friday that Nike was considering a bid for Peloton, which jumped 25 percent in premarket trading.

* GOL, Brazil's largest airline, announced Monday the formalization of a $200 million code-share agreement with American Airlines reached in September. American Airlines shares are up 1.4% in premarket trading and Gol's New York-listed stock is up 3%.

* Bumble - The U.S. dating site announced on Monday the acquisition of the French group Fruitz for an undisclosed amount, in order to strengthen its presence in Europe and better compete with Match Group, the parent company of Tinder and Meetic.

* Alibaba fell 3.6 percent in premarket trading after the Chinese central bank fined MYBank, an online bank backed by Ant Group, a subsidiary of the Chinese e-commerce giant, 22.37 million yuan (3.07 million euros) for alleged violations of transactions with unidentified customers.

* Novavax - The laboratory's stock is down 4% in pre-market trading on Monday after already losing 8% on Friday after the group reported a fourth-quarter net loss. JPMorgan changed its rating on the stock to "neutral" from "overweight".

* Spotify - Spotify CEO Daniel Ek said Sunday that he "strongly condemns" the racist slurs and other comments made by podcast host Joe Rogan, but the group added that it has no plans to remove his shows from its platform.

* Ford Motor - The automaker plans to suspend or reduce production at eight of its plants in the United States, Mexico and Canada this week because of a shortage of semiconductors, a company spokeswoman told Reuters on Friday.

 

Analyst recommendations:

  • Chubb: DA Davidson lifts price target to $230 from $221; buy/add rating kept
  • Cigna: RBC Capital Markets downgrades to sector perform from outperform. PT up 6.2% to $235.
  • ConocoPhillips: Mirae Asset Daewoo downgrades to trading buy from buy. PT up 13% to $104.
  • Continental Resources.: RBC Capital Markets upgrades to outperform from sector perform. PT up 22% to $70.
  • Exelon: Barclays downgrades to equal-weight from suspended coverage. PT up 5.7% to $46.
  • Minerals Technologies: J.P. Morgan upgrades to overweight from neutral. PT up 14% to $75.
  • Plus500: Jefferies remains Buy with a price target raised from GBp 2000 to GBp 2100.
  • Reckitt Benckiser: Bernstein reaffirms its Neutral rating.
  • Snowflake: Morgan Stanley raised the recommendation on Snowflake Inc. to overweight from equal-weight. PT up 41% to $390.
  • Southern Company: Wells Fargo Securities downgrades to equal-weight from overweight. PT up 4.8% to $72.