The world's equity markets mostly gained ground last week, albeit with sometimes considerable variations. Gains reached 2.3% for the S&P 500, 1% for the Stoxx Europe 600 and 5.6% for the Nikkei 225. The Japanese index welcomed the BOJ's first rate hike in 16 years, signaling the end of negative rates and the beginnings of normalization. Above all, investors noted that things will continue to move very slowly on monetary policy in the country, which ultimately suits them quite well: they can continue to carry trade quietly while benefiting from the structural rebound in Japanese equities.

Another lesson from last week: sports suck. Nike's shares lost 7% after a rather dull forecast, while Lululemon's sank 16% for much the same reasons. Quite frankly, in an age of slimming drugs and AI that does the job, why bother sweating it out?

Finally, the third lesson of the week: it won't be long before Western central banks lower their rates, this time for sure. The proof is in the Swiss National Bank's rate cut and the Bank of England's relative optimism on the subject. The Fed hadn't really said anything else on Wednesday. The market is happy. That said, it wasn't particularly depressed either to learn that US central bankers continue to harbor some doubts about the rate's evolution. Optimistic but not overly so.

As I like to take the opposite side of things, here are two divergent opinions. First, I read an interview in the Financial Times with the chief economist at asset management firm Apollo, who thinks the Fed won't cut rates at all this year. Torsten Slok explains that the Fed doesn't need to cut rates for things to go pretty well (well, except for low-wage earners, who don't interest the stock market much and don't weigh much in consumer stats). He also thinks we're in an AI bubble, the side-effect of which is that it's driving up tech stocks and easing financial conditions, which complicates the Fed's job. Atlanta Fed boss Raphael Bostic, for his part, indicated on Friday that he now sees only one rate cut this year, instead of three, because inflation remains high and the economy is strong. This doesn't really come as a surprise, as Bostic is clearly in the hawks' aviary.

The other big news today is that Boeing announced that chief executive Dave Calhoun intends to step down at the end of 2024. He will continue to lead the company through year-end. The group's chair Larry Kellner will also leave the board and be replaced by former Qualcomm chief executive Steve Mollenkopf. These changes come after the incident in January that saw an aircraft door falling mid-flight. The accident is being investigated by the US Department of Justice and the US Federal Aviation Administration.

On the macroeconomic agenda, investors will be keeping a close eye on the major series of US indicators (real estate, confidence, latest GDP estimates, etc.), culminating in February's PCE inflation figures, to be announced on Friday, just before a speech by Jerome Powell to close the week.

In the Asia-Pacific region, Japan lost 1% after soaring the previous week. There's reason to believe in authorized circles that this is a sign that Japan might intervene to support its currency. In China, Hong Kong and Shanghai are up slightly. There's a currency story to be told here too: the central bank has set a higher-than-expected reference rate for the yuan. It doesn't sound like much, and maybe it isn't, but when the PBOC does something unusual, commentators have a field day. It's also worth noting that Premier Li Qiang, who still occasionally has a say, has taken the view that Beijing's policy will help growth and that systemic risks are built in. This incantation has not aroused much enthusiasm. India is closed for the Festival of Colors. South Korea lost 0.3%, while Australia gains 0.5%. European leading indicators are bearish, and so are futures on Wall Street.

Economic highlights of the day:

In the United States, the Chicago Fed index and new home sales are on the agenda. 

The dollar fell to EUR 0.9232 and GBP 0.7909. The ounce of gold is trading at USD 2175. Oil is stable, with North Sea Brent at USD 85.14 a barrel and US light crude WTI at USD 80.03. The yield on 10-year US debt stands at 4.21%. Bitcoin is trading at USD 67,100.

In corporate news:

  • Boeing said on Monday that its CEO Dave Calhoun would step down at the end of 2024. Shares up 2.2% in pre-market trading.
  • Intel and Advanced Micro Devices (AMD) are down more than 2% in premarket trading as China considers a gradual ban on the use of U.S.-manufactured chips in government computers and servers, the Financial Times reported on Sunday.
  • Nvidia is down 1.4% in pre-market trading after Reuters reported that a coalition of technology companies including Qualcomm, Google and Intel is planning to fight the chipmaker's dominance in artificial intelligence (AI).
  • Apple, Alphabet, Meta - The European Union's competition services will investigate all three companies for non-compliance with the Digital Markets Regulation, announced the EU executive announced in a press release.
  • United Airlines lost around 1.5% in pre-market trading, as the FAA, the US federal aviation authority, announced plans to step up its oversight of the airline as part of an investigation into safety compliance after a series of incidents in recent weeks.
  • Apple's Vision Pro mixed reality headset will be released in mainland China this year, the group's CEO Tim Cook said on Sunday, quoted by official Chinese media.
  • Match, owner of dating site Tinder, on Monday appointed Instacart executive Laura Jones and Spencer Rascoff, co-founder of real estate advertising group Zillow, to its board of directors, following discussions with activist investor Elliott Investment Management to improve its performance.
  • Chemours announced on Friday that it had promoted Denise Dignam to Group Managing Director with immediate effect, one month after she was appointed to the post on an interim basis.
  • Masimo - Politan Capital Management, which holds a stake of almost 9% in Masimo, said on Monday that it had appointed two candidates to the group's board of directors, marking the possible start of a second proxy battle at the medical device manufacturer, whose shares are up 13% in pre-market trading.
  • Ingersoll - The air compressor manufacturer announced on Monday that it had acquired ILC Dover from the investment firm New Mountain Capital for approximately $2.33 billion, in order to expand its presence in the life sciences markets.

Analyst recommendations:

  • Cincinnati Financial Corporation: BMO Capital Markets upgrades to outperform from market perform and raises the target price from USD 125 to USD 135.
  • Kinder Morgan, Inc.: Truist Securities downgrades to hold from buy with a price target reduced from USD 22 to USD 20.
  • Lululemon Athletica Inc.: William O'Neil & Co Incorporated drops coverage on the stock.
  • Rivian Automotive, Inc.: Mizuho Securities downgrades to neutral from buy with a price target reduced from USD 24 to USD 12.
  • Walt Disney Company (The): Barclays upgrades to overweight from equalweight with a price target raised from USD 95 to USD 135.
  • Constellation Energy Corporation: Guggenheim maintains its buy recommendation and raises the target price from USD 124 to USD 199.
  • Martin Marietta Materials, Inc.: Redburn Atlantic maintains a neutral recommendation with a price target raised from USD 465 to USD 600.
  • Nvidia Corporation: Guotai Junan Securities Co., Ltd. maintains its overweight recommendation and raises the target price from USD 892 to USD 1116.
  • Vulcan Materials Company: Redburn Atlantic maintains a neutral recommendation with a price target raised from USD 215 to USD 305.
  • Tesla, Inc.: Mizuho Securities downgrades to neutral from buy with a price target reduced from USD 310 to USD 195.
  • Bunzl Plc: JP Morgan upgrades to neutral from rating suspended with a target price of GBP 31.40.
  • Intertek Group Plc: Kepler Cheuvreux downgrades to hold from buy with a target price raised from GBX 5000 to GBX 5100.
  • Sage Group Plc: Societe Generale downgrades to hold from sell with a price target raised from GBX 922 to GBX 1303.
  • Wizz Air Holdings Plc: AlphaValue/Baader Europe upgrades to add from reduce with a price target raised from GBX 2314 to GBX 2352.
  • Canadian Pacific Kansas City Limited: Scotiabank downgrades to sector perform from sector outperform with a price target raised from CAD 120 to CAD 126.
  • Telus Corporation: Scotiabank downgrades to sector perform from sector outperform with a price target reduced from CAD 28 to CAD 26.