As the Federal Reserve gears up for its latest interest rate decision, US indices are playing it cool, opening in the green. The Federal Open Market Committee kicks off its two-day meeting on Tuesday, with the much-anticipated rate announcement slated for 2 pm ET on Wednesday. Investors have their eyes on economic data: today saw a modest 0.2% rise in US retail sales for February, a rebound from January's 1.2% decline, yet falling short of the expected 0.6% increase. Meanwhile, the Empire State Manufacturing Index took a nosedive, plummeting to minus 20.0 in March from February's 5.7, defying forecasts of minus 1.9.

Last week, global stock markets took a nosedive, despite a sharp rebound on Friday. In the United States, the S&P 500 and Nasdaq 100 both marked their fourth consecutive weekly declines, dropping 2.27% and 2.46%, respectively. While Wall Street has seen similar streaks in 2024—between late March and mid-April, and again in July—this latest slump is testing investors' nerves. Even the most optimistic on Wall Street are starting to worry about a deeper correction or a potential bear market. When Donald Trump and his team assure us, "Don't be afraid, it may be painful at first, but our policies will create a new golden age for the United States," financiers hear, "It could work, but if it doesn't, we're in for a big mess."

The narrative driving financial markets has become more complex recently. Take, for instance, the story of artificial intelligence. Once a powerful driver of stock performance, the narrative has shifted. The idea that a select few American companies would dominate the AI revolution is fading. Instead, Chinese competitors are emerging as the new beneficiaries. Another example is the defense sector. There was an expectation that progress towards a ceasefire in Ukraine would lead to a shift away from defense stocks. However, the opposite has occurred. The U.S. disengagement from European defense has fueled a rearmament push, leading to a significant shift in German budgetary policy. In short, the market's storyline is evolving, and investors are left to navigate these shifting sands with caution.

In the financial markets, reduced visibility is like a fog rolling in, causing investors to swap their reckless wagers for more cautious strategies. The stock markets are particularly jittery. With a growing list of potential game-changers—or at least what investors perceive as game-changers—volatility is on the rise.

This week promises more plot twists than a soap opera. On Tuesday, Vladimir Putin and Donald Trump are set to discuss the Russian-Ukrainian conflict, a meeting that could send ripples through the markets. Wednesday, we have the Fed's decision, and let's not forget the ongoing saga of trade tariffs and Trump's unpredictable tweets, which continue to keep investors on their toes. Meanwhile, over in China, the authorities have unveiled a plan to boost domestic consumption, targeting eight key areas to bolster consumer confidence and spending. Recent statistics from Beijing paint a mostly rosy picture: industrial production and investment are solid, retail sales are steady, though employment figures are a tad underwhelming. Add to this the buzz around new artificial intelligence developments—Baidu's latest innovations are making waves—and it's clear that China's economic narrative is gaining momentum.

Essential Updates to Start Your Week Informed:

  • U.S. Influence on Lebanon's Central Bank: The United States is applying pressure regarding the appointment of the next governor of Lebanon's central bank, signaling its vested interest in the financial stability of the region.
  • Recession Concerns: Bessent has voiced concerns that a recession in the United States is a possibility, with no absolute assurances against the economic downturn.
  • Potential U.S. Entry Ban: The Trump administration is reportedly considering a prohibition on entry for citizens from 41 countries, as detailed in a recent memo.
  • Canadian Diplomacy: Prime Minister Mark Carney of Canada is set to visit Paris and London, marking the beginning of his diplomatic engagements this week.
  • Cognac Lobby's Push Against EU Surtax: The Cognac industry lobby is pushing for the European Union to drop its plans to slap a surtax on Bourbon, in a bid to protect its interests.
  • China-EU Summit: Chinese President Xi has turned down an invitation to the EU-China anniversary summit, reports the Financial Times.
  • Central Banks in Focus: This week's macroeconomic agenda is headlined by the Federal Reserve, with the market nearly certain that U.S. interest rates will remain unchanged come Wednesday. However, there is a collective hope that Jerome Powell's speech will provide enough reassurance to quell the crisis of confidence among the business community following President Trump's intensified political and trade initiatives. The Bank of Japan, the Bank of England, the Swiss National Bank, and the Bank of Brazil are also on the week's watchlist.
  • Corporate Earnings Spotlight: As we delve into company earnings, several firms with offset fiscal years stand out, including Nike, Micron, Fedex, and Accenture, along with late reporters Swatch and Hapag-Lloyd.

In the Asia Pacific region, the week kicked off with a flourish of green. Japan, Hong Kong, and South Korea all enjoyed gains exceeding 1%. Meanwhile, Australia, Taiwan, and India saw their markets rise between 0.5% and 1%. The slight dip in mainland China remains a bit of a mystery, especially since it coincides with the release of positive macroeconomic data—a curious pattern we've seen before. European indices are mostly bullish, with the Stoxx Europe 600 up 0.4%.

Today's economic highlights:

On today's agenda: in the United States, the Empire Manufacturing Index, Advance Retail Sales GM, Business Inventories, and the NAHB Housing Market Index. See the full calendar here.

  • Dollar index: 103,192
  • Gold: $2,987
  • Crude Oil (BRENT): $71.01 (WTI) $67.50
  • US 10-year: 4.3%
  • BITCOIN: $83,400

In corporate news:

  • Intel announced a comprehensive overhaul of its manufacturing, chip design, and AI operations, including plans for annual chip production and potential further cuts.
  • Tesla is initiating a free trial of its Full Self-Driving service in China from March 17 to April 16.
  • Affirm shares fell as Walmart replaced them with Klarna, who partnered with OnePay to become the exclusive buy-now-pay-later provider.
  • DuPont De Nemours is set to spin off its electronics unit into an independent company, appointing Jon Kemp as CEO.
  • PepsiCo has acquired the beverage company Poppi for $1.95 billion.
  • Berkshire Hathaway has increased its stakes in Japanese trading houses.
  • Bayer's finerenone, marketed as Kerendia, has received FDA priority review for heart failure treatment.
  • Volkswagen shares rose after UBS upgraded its recommendation and announced plans to launch 11 new models in China, including 6 electric vehicles.
  • AstraZeneca has been expanding its oncology and cell therapy portfolios through acquisitions and partnerships, including a licensing agreement with Alteogen.
  • Assa Abloy has expanded its security solutions portfolio by acquiring the German company GFS.
  • UBS faces scrutiny as Switzerland's financial regulator FINMA declined to comment on the adverse opinion expressed by its auditors regarding internal controls.
  • Energean Plc's $945 million asset sale to Carlyle International Energy Partners is at risk of collapsing due to missing regulatory approvals.
  • BYD is considering Germany for its third European plant and plans to build over 4,000 ultra-fast charging stations in China by 2025.
  • Freeport Indonesia has been granted a six-month extension on its copper concentrate export permit.
  • National Australia Bank's Nathan Goonan resigned as group CFO and joined Westpac as its new CFO.

Analyst Recommendations:

  • Accenture Plc: Baird upgrades to outperform from neutral with a target price of USD 390.
  • Alexandria Real Estate Equities, Inc.: Jefferies drops coverage and upgrades to hold from dropped coverage with a target price of USD 100.
  • American Tower Corporation: Wells Fargo upgrades to overweight from equalweight with a price target raised from USD 210 to USD 230.
  • Bentley Systems, Incorporated: Baptista Research upgrades to buy from hold with a target price of USD 59.40.
  • Boston Properties, Inc.: Jefferies upgrades to buy from dropped coverage with a target price of USD 78.
  • Crown Castle Inc.: Wells Fargo upgrades to equalweight from underweight with a target price raised from USD 85 to USD 105.
  • Eastgroup Properties, Inc.: Evercore ISI downgrades to in-line from outperform with a target price raised from USD 181 to USD 185.
  • Flowserve Corporation: Baird upgrades to outperform from neutral with a target price of USD 71.
  • Generac Holdings, Inc.: Guggenheim upgrades to neutral from sell.
  • Kilroy Realty Corporation: Jefferies drops coverage and upgrades to hold from dropped coverage with a target price of USD 34.
  • Monday.com Ltd.: D.A. Davidson upgrades to buy from neutral with a target price of USD 350.
  • Netflix, Inc.: MoffettNathanson LLC upgrades to buy from neutral with a price target raised from USD 850 to USD 1100.
  • Norwegian Cruise Line Holdings Ltd.: JP Morgan upgrades to overweight from neutral with a target price of USD 30.
  • Sprouts Farmers Market, Inc.: Deutsche Bank upgrades to buy from hold with a target price raised from USD 163 to USD 190.
  • Adobe Inc.: CITIC Securities Co Ltd maintains its buy recommendation and reduces the target price from USD 641 to USD 496.
  • Block, Inc.: Baptista Research upgrades to buy from hold with a target price reduced from USD 93 to USD 73.90.
  • Dayforce, Inc.: Scotiabank maintains its sector perform recommendation and reduces the target price from 72 to USD 55.
  • Manhattan Associates, Inc.: Baird maintains its outperform rating and reduces the target price from USD 282 to USD 225.
  • The Trade Desk, Inc.: Citigroup maintains its buy recommendation with a price target reduced from USD 108 to USD 70.
  • Williams-Sonoma, Inc.: Telsey Advisory Group maintains its outperform recommendation and raises the target price from USD 190 to USD 230.
  • Xpo, Inc.: Loop Capital Markets maintains its hold recommendation and reduces the target price from 150 to USD 115.