One of them was the ADP National Employment Report, published this morning, ahead of a key jobs report on Friday. And it came in way higher than expected. The ADP Research Institute said the US added 164,000 jobs in December. Economists polled by Reuters expected private payrolls to have increased by 115,000 in December, from a 103,000 rise the month before. Indices haven’t reacted much to the news initially, as investors await another job report on Friday to get a clearer picture.

Other macro indicators today included the S&P Global survey of purchasing managers (PMI) in Europe. It showed Private sector activity in the eurozone contracted again in December due to the continued slowdown in the services industry.

The strong rally of US indices in November and December seems truly over. Three consecutive sessions of decline for the S&P500, and even four for the Nasdaq 100 including the last two days of 2023. Europe followed the same pattern yesterday, at the end of a bright red session.

This sluggish start to the year in most sectors follows a particularly favorable stock market performance. The MSCI World index gained 9.2% and 4.8% respectively in November and December, which are quite atypical performances.

However, since the end of December, the driving force behind the rise in equity markets - the prospect of a return to more favorable monetary policy - has lost some steam. I'll talk about this in a moment. As for the second engine, the Chinese economic rebound, it is still out of action, despite a few tremors. Last night, for example, the Caixin PMI services index for December was upgraded from 51.6 to 52.9 points. The tertiary sector is recovering, but the manufacturing sector is still in convalescence. At the same time, however, an official report showed the sharpest ever drop in wages offered to Chinese employees in major cities. China's "one step forward, one step back" dynamic continues, making the market uninvestable for many intermediaries. Indeed, indices continued to drop this morning in Hong Kong and Shanghai, despite a decision by China's central bank to weaken its exchange rate at a faster-than-usual pace.

The wait for the first rate cut by a major Western central bank entered a new chapter yesterday with the publication of the minutes of the Fed's last meeting, held in mid-December. The minutes showed that central bankers are less optimistic than the market about the pace of future rate cuts, but that's no surprise. Powell & Co are still suggesting that rates will come down, but that they will still remain higher than the market thinks, and for longer than the street imagines. The probability of a first Fed rate cut at the March 19/20 meeting fell from 90.2% a week ago to 72.6% yesterday. This is substantial enough to explain the slight upturn in tension on equity indices.

On the corporate front, there's still little to report as listed companies prepare for the big annual results session that will kick off shortly. The official kick-off is next Friday, January 12, with figures from UnitedHealth, JPMorgan, Bank of America and BlackRock in the USA. Oil finally rebounded yesterday, against a backdrop of heightened tension in the Middle East following two deadly explosions. The first, in Lebanon, claimed the life of a senior Hamas leader, while the second, in Iran, devastated the outskirts of a mosque and killed nearly 100 people.

In Asia Pacific this morning, it was almost business as usual. China is still struggling (-1.4% for the CSI300 and -0.7% for the Hang Seng). South Korea is still suffering behind the Nasdaq (-0.85%). India stands alone (+0.7%) and Australia loses ground (-0.4%). In Japan, it's the first session of the year and offers little in the way of information. The Nikkei 225 lost ground, but the TOPIX 100 rose slightly. European leading indicators are close to balance, with hopes of a rebound. Futures on the S&P 500 were unchanged this morning, futures on the Nasdaq were down 0.4%, hampered by Apple, which dropped after brokerage Piper Sandler downgraded the iPhone maker to "neutral" from "overweight". Futures on the Dow Jones were up 0.1%.

Today's economic highlights:

The second reading of services PMIs is being published today in the eurozone and the US, along with France and Germany inflation readings. The Challenger survey, the ADP employment report and new jobless claims are also on the agenda. 

The dollar is stable at EUR 0.9144 and GBP 0.7886. The ounce of gold falls to USD 2041. Oil rebounds, with North Sea Brent at USD 78.65 a barrel and US light crude WTI at USD 73.30. The yield on 10-year US debt holds steady at 3.93%. Bitcoin is trading at USD 43,000.

In corporate news:

  • Citi plans to launch its wholly-owned investment banking subsidiary in China by the end of the year and to hire 30 staff, according to a source close to the matter. The Chinese authorities gave their approval last month for the launch of this division, the source added. Citi declined to comment.
  • Microchip Technology - The U.S. Department of Commerce said Thursday it planned to grant the group $162 million in subsidies to increase its U.S.-based production of semiconductors and microcontroller chips, crucial products for the automotive and defense industries.
  • Pepsico - French retailer Carrefour said it would no longer sell the American group's products in its stores in France as of Thursday, in protest against price hikes deemed abusive.
  • Walt Disney and Reliance Industries have appointed corporate lawyers and begun the due diligence process for their proposed merger of their media and entertainment businesses in India, four sources close to the matter have reported.
  • APA - On Thursday, the oil producer announced the acquisition of its competitor CALLON PETROLEUM for $4.5 billion, including debt. Callon was up 6% in pre-market trading, Apa was down 3%.
  • Apple was down 0.6% in pre-market trading after Piper Sandler downgraded its recommendation to "underweight" from "neutral".
  • Micron gained 2% in premarket trading after Piper Sandler raised its recommendation on the stock to "overweight" from "neutral" and its price target to $95 from $70.

Analyst recommendations:

  • Aflac : Evercore ISI downgrades to underperform with a price target raised to USD 78.
  • Advanced Micro Devices : KeyBanc Capital Markets maintains overweight with a target price raised to USD 170.
  • Amazon.com : Mizuho Securities maintains buy with a target price raised to USD 220.
  • American Express : DZ Bank AG Research downgrades to sell with a target price raised to USD 157. JP Morgan upgrades to overweight with a target price raised to USD 205.
  • Ameriprise Financial : Evercore ISI downgrades to in-line with a target price raised to USD 400.
  • Analog Devices : Bernstein downgrades to market perform with a target price of USD 200.
  • Ansys : Barclays maintains underweight with a target price raised to USD 314.
  • Apple : Piper Sandler & Co downgrades to neutral with a target price reduced to USD 205.
  • Autodesk : Barclays maintains overweight with a target price raised to USD 278.
  • Broadcom : Piper Sandler & Co maintains overweight with a target price raised to USD 1250. Daiwa Securities maintains outperform with a target price raised to USD 1200.
  • BP Plc : RBC Capital maintains outperform with a target price reduced to GBX 600.
  • Celanese : Mizuho Securities maintains neutral with a target price raised to USD 161.
  • Capital One Financial : JP Morgan upgrades to neutral with a target price raised to USD 131.
  • Coca-Cola Hellenic : Morningstar downgrades to sell with a target price of GBX 2600.
  • Consolidated Edison : KeyBanc Capital Markets upgrades to sector weight.
  • Corebridge Financial : Evercore ISI maintains outperform with a target price raised to USD 31.
  • Crowdstrike Holdings : Barclays maintains overweight with a target price raised to USD 300.
  • Deere & Company : Morningstar downgrades to sell with a target price reduced to USD 352.
  • Doordash : Bernstein maintains outperform with a target price raised to USD 115.
  • Eli Lilly And Company : William O'Neil & Co Incorporated upgrades to buy.
  • Enphase Energy : KeyBanc Capital Markets downgrades to sector weight.
  • Epam Systems : Piper Sandler & Co maintains overweight with a target price raised to USD 339.
  • Expedia Group : B Riley Securities Inc. maintains buy with a target price raised to USD 200.
  • Fortinet : Barclays maintains equalweight with a target price raised to USD 63.
  • Man Group : Panmure Gordon & Co. Limited upgrades to hold with a target price reduced to GBX 320.
  • Microchip Technology : Piper Sandler & Co downgrades to neutral with a target price of USD 80.
  • Micron Technology : Piper Sandler & Co upgrades to overweight with a target price raised to USD 95.
  • Next : Liberum downgrades to hold with a target price of GBX 8000.
  • Palantir Technologies : William O'Neil & Co Incorporated drops coverage.
  • Palo Alto Networks : Barclays maintains overweight with a target price raised to USD 350.
  • Paypal Holdings : Oppenheimer downgrades to market perform.
  • Principal Financial Group : Evercore ISI upgrades to in-line with a target price raised to USD 83.
  • Rocket Companies : JP Morgan downgrades to underweight with a target price raised to USD 10.50.
  • Shell : RBC Capital maintains outperform with a target price reduced to GBX 3000.
  • Skyworks Solutions : Piper Sandler & Co downgrades to neutral with a target price of USD 90.
  • Telus Corporation : JP Morgan downgrades to neutral with a target price reduced to CAD 26.
  • The Allstate Corporation : Morgan Stanley upgrades to overweight with a target price raised to USD 171.
  • Tullow Oil : Jefferies upgrades to underperform with a target price reduced to GBX 27.
  • Verizon Communications : Wolfe Research upgrades to outperform with a target price of USD 46.
  • Xylem : Raymond James upgrades to market perform.
  • Yum! Brands : Stifel downgrades to hold with a target price of USD 135.