After a spectacular start to the year, the financial markets are slowing down somewhat. The exception is defense companies, which continue to soar, particularly in Europe. Amundi's (new) ETF dedicated to European military companies has gained nearly 14% since the beginning of the year. The US intervention in Venezuela to depose Nicolás Maduro had not caused much of a stir in business circles until now. Things are changing because the US show of force is having repercussions on the interests of China and Russia, Venezuela's natural partners.

Beijing and Moscow have naturally condemned the operation, but the question now is whether this will change the behavior of the two capitals in their interactions with the rest of the world. This applies first and foremost to current issues, such as tariffs and the war in Ukraine, but also to future interactions. The case of Taiwan is obviously a major concern, with one nagging question: if the US believes it has the right to eliminate the problems it has identified in its backyard, isn't it in China's interest to seize the opportunity to do the same around its own backyard?

In this context, the arms sector still seems to have a bright future ahead of it on the stock market. Donald Trump himself announced yesterday that he intends to increase the US defense budget by 50% next year. And not to serve as a shield for the rest of the world, as has been the case since the end of World War II. However, defense companies suffered in the United States yesterday: the US president accompanied his speech on increasing military spending with a stern warning. Manufacturers in the sector would be well advised to make efforts to support countries, and not just on prices. Trump threatened to ban them from paying dividends and buying back their own shares if they prove uncooperative.

On the online betting platform Polymarket, topics related in one way or another to the consequences of the new US policy have sprung up like mushrooms: will the US strike Colombia, Nigeria, or Mexico? Will Israel bomb Iran? Will the US buy Greenland by the end of the year? Will China invade Taiwan in 2026? These scenarios generally have fairly low odds, but that was also the case for Venezuela not so long ago. The main lesson to be learned from the emergence of these bets is that the range of possibilities has increased and that the world is changing. “There are decades when nothing happens, and there are weeks when decades happen,” to quote Lenin, a phrase widely used in early 2025 when Donald Trump announced his first shock measures.

So there was a slight resurgence of tension on the stock markets yesterday, or rather a resurgence of attention to what is happening in terms of interventionism by the White House, both outside and inside the country (in addition to threatening the defense industry, the US president also said he would ban institutional investors from buying single-family homes to prevent prices from overheating).

In Europe, the Stoxx Europe 600 fell 0.05%, while in the US, the S&P 500 dropped 0.34%. Not much, then, but caution has increased a notch.

The yield on 10-year US bonds fell slightly after the publication of mediocre labor market indicators, but bets on the Fed's rate changes at its January and March meetings have not changed much. Investors will likely have a clearer picture in the coming days with the double announcement of monthly employment data (Friday) and December inflation (next Tuesday). On the oil front, Brent remains close to USD 60. Traders are unsure how to react to the US placing Venezuela under sanctions. According to the WSJ, Donald Trump has suggested that he would like to see the price per barrel hover around $50. This rumor has not caused oil prices to falter, at least not at this stage.

In Asia-Pacific, red is the dominant color, as it was yesterday. Japan and Hong Kong are down more than 1%. India and Taiwan are also in the red. South Korea is stable, while Australia saves the day with a 0.3% gain at the bell. We expect declines at the opening in Europe.

Today's economic highlights:

Today: inflation figures will be released in France; in the United States, retail sales and the Philadelphia Fed manufacturing index are expected. See the full calendar here.

  • GBP / USD: US$1.35
  • Gold: US$4,435.5
  • Crude Oil (BRENT): US$60.22
  • United States 10 years: 4.14%
  • BITCOIN: US$89,950.8

In corporate news:

  • BP plc: Norway's sovereign wealth fund reduced its stake from 3.99% to 2.99%.
  • Arm Holdings: Launched Physical AI division to enhance robotics and automotive capabilities.
  • Aptamer Group: Announced cash reserves adequate to support operations until June 2027.
  • Saga: Set to rejoin the FTSE 250 index, replacing Bakkavor Group PLC.
  • Cicor Technologies: Takeover bid collapse for TT Electronics led to Chair Warren Tucker's resignation.
  • Norsk Hydro: Target prices raised by Barclays, Deutsche Bank, and JP Morgan, with Deutsche Bank setting it at 88 NOK.
  • Boliden: Target prices adjusted by Barclays, Deutsche Bank, and JP Morgan, with new targets at 565 SEK, 590 SEK, and 530 SEK respectively.
  • Enel: Launched EUR 2 billion in new hybrid perpetual bonds with strong investor demand.
  • Generali: Raised €650 million through a subordinated bond issuance, attracting orders over €2.6 billion.
  • Snam: Issued EUR 500 million in green convertible bonds, maturing in 2031.
  • Aker Solutions: Secured long-term maintenance and modification contracts with Equinor.
  • Basilea: Announced two new preclinical collaborations for antibacterial and antifungal drugs.
  • SABIC: Agreed to sell Sabic Europe B.V. to Aequita and its ETP business to Mutares.
  • Altus Group: Renewed partnership with JLL to utilize Argus Intelligence for real estate analytics.
  • Eli Lilly: Expanding drug portfolio by acquiring Ventyx Biosciences for $1.2 billion.
  • Vornado Realty Trust: Engaged in several financial activities, including acquiring 3 East 54th Street for $141 million.
  • JPMorgan Chase: Acquired issuance rights for the Apple Card from Goldman Sachs, adding $20 billion in balances.
  • OpenAI: Launched ChatGPT Health for non-EU users and earmarked $50 billion for an employee stock grant pool.
  • Galantas Gold Corp: Acquired the Andacollo Oro project in Chile.
  • Bank of America: SEBI issued a show-cause notice to its India securities unit for alleged insider trading violations.

See more news from UK listed companies here

Analyst Recommendations:

  • Reckitt Benckiser Group Plc: BNP Paribas maintains its outperform rating and raises the target price from USD 18.60 to USD 21.30.
  • Haleon Plc: BNP Paribas maintains its outperform rating and raises the target price from USD 12.20 to USD 12.60.
  • Yellow Cake Plc: Panmure Liberum maintains its buy recommendation and raises the target price from GBX 630 to GBX 680.
  • Glencore Plc: RBC Capital maintains its outperform rating and raises the target price from GBX 430 to GBX 480.
  • Intercontinental Hotels Group Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 96.30 to GBP 128.
  • The British Land Company Plc: Jefferies maintains its underperform recommendation and raises the target price from GBX 308 to GBX 310.
  • Safestore Holdings Plc: Jefferies upgrades to buy from hold with a price target raised from GBX 682 to GBX 875.
  • Derwent London Plc: Jefferies maintains its hold recommendation and raises the target price from GBX 1817 to GBX 1820.
  • Grainger Plc: Jefferies maintains its buy recommendation and raises the target price from GBX 260 to GBX 262.
  • Londonmetric Property Plc: Jefferies maintains its buy recommendation and raises the target price from GBX 224 to GBX 225.
  • Hammerson Plc: Jefferies maintains its underperform recommendation and raises the target price from GBX 245 to GBX 250.
  • Shell Plc: Jefferies maintains its buy recommendation and raises the target price from USD 87 to USD 92.50.