January saw a big rally and February didn’t suffer from its usual sluggishness (statistically, it's one of the worst month on the stock market). As a result, 2024 is off to a really solid start. Japan's Nikkei 225 is confirming its status as the darling of investors, with a gain of 17% in two months. In Europe, OMX Copenhagen comes on top (+11% thanks to Novo Nordisk), followed by Greece (+10.7%). The Dutch AEX, with ASML, also performed well (+7.8%).

In the United States, the balance sheet was also solid, with indices remaining in contact with their recent records. Tech continues to sweep all before it, with Nvidia, the star of graphics processors crucial to artificial intelligence, as its symbol. The stock gained 1.9% yesterday to close at USD 791.10, a new closing record (it climbed to USD 824 on February 23). Such is the hype surrounding the company that financiers are wondering whether the group might be able to overtake Apple and Microsoft in terms of capitalization. There's still a margin of $850 billion for the former and $1,100 billion for the latter, but Nvidia, currently worth just under $2,000 billion, is the superlative case, so why not? I would add that all chip-related stocks are currently weightless, like Advanced Micro Devices, which took 9% yesterday, and Marvell (+6%). However, yesterday's plunges by Aixtron and AMS-Osram are a reminder that you can't win every time.

This whirlwind start to 2024 follows two months of increases at the end of 2023. That makes four consecutive months of gains for the stock markets.

The final session of the week includes a flurry of macroeconomic statistics, in particular the final PMI manufacturing activity indicators for February. Those for Japan and China were released overnight. Japan's industrial sector is still struggling (the indicator stands at 47.2 points, below the 50-point mark that signals expansion). But this hasn't stopped the Nikkei 225 from soaring 1.9% this morning, thanks to the yen's decline. The currency retreated after Bank of Japan Governor Kazuo Ueda commented that the central bank's price target was not yet in sight. Financiers have concluded that the BoJ's first rate hike in 17 years may not be as imminent as the market thought. That's right, while we're harping on about rate cuts in the West, Japan is still debating whether it's a good idea to exit negative rates. In any case, these hesitations are a boon for investors in local equities, who always react well to a weakening yen because the country is a major exporter. Japanese companies are benefiting from results boosted by yen-denominated cost structures, while sales are made in other currencies.

In China, PMI indicators once again blew hot and cold. The official manufacturing PMI remained in contraction territory, while that compiled by Caixin was above the 50-point mark. On the other hand, the official services PMI was stronger than expected, which economists put down to the upturn in travel and tourism during the Lunar New Year.

In Europe, PMIs in France exceeded expectation with a rise to 47.1, while Germany and the UK were just slightly above expectations at 42.5 and 47.5, respectively. They all remain in contraction territory, however.

In the U.S., yesterday's release of PCE inflation was in line with expectations, when the market had been fearing a nasty surprise on the upside. This reset the stress counters to zero. Comments from central bankers throughout the day did not provoke any further reaction. San Francisco Fed President Mary Daly explained that a rate cut was being considered, but that there was no urgency to do so. Atlanta Fed's Raphael Bostic spoke of summer as a likely target for the first rate cut, while Cleveland Fed's Loretta Mester felt that there's still some work to be done to bend prices, but that three rate cuts in 2024 remains a reasonable forecast. If we take all these statements, mix them up and shake, we get a first Fed rate cut in July followed by two more by December, if the plan goes off without a hitch of course. This is more or less in line with what Wall Street forecasts, even if financiers are incorrigibly more optimistic than the Fed: two-thirds hope that the first rate cut will come at the end of the June 11-12 meeting. But the important thing to remember is that as long as the Fed's expectations and those of the market are relatively convergent, monetary policy isn't really an issue for investors, who prefer to binge on AI.

In Europe, inflation figures are also moving in the right direction, even if the ECB is unlikely to change its policy at next week's meeting. As in the United States, the market is expecting the first rate cut in the eurozone in June.

In the Asia-Pacific region, the Japanese market surged, while China gained a little ground after the PMI figures. India (+1.3%) and Australia (+0.6%) are in good shape. South Korea is closed for a public holiday. European leading indicators are bullish, with the Euro Stoxx 600 up 0.4%, while the FTSE 100 rose 0.6%. Futures on Wall Street are hovering near zero.

Today's economic highlights:

S&P publishes final manufacturing PMIs for major economies throughout the day, including the Eurozone and the US . Other highlights include EU inflation for February, US construction spending, ISM Manufacturing and the University of Michigan consumer sentiment index. The full agenda is here. 

The dollar is slightly down to EUR 0.9242 and GBP 0.7911. The ounce of gold rises to USD 2,054. Oil is firm, with North Sea Brent at USD 83.02 a barrel and US light crude WTI at USD 79.13 USD. The yield on 10-year US debt has fallen to 4.25%. Bitcoin is trading at USD 62,500.

In corporate news:

  • Tesla on Friday unveiled new initiatives, including insurance subsidies, to attract consumers in China, where the American electric vehicle giant is engaged in a price battle with rivals such as BYD.
  • New York Community Bancorp replaced its CEO, announced a fourth-quarter loss more than ten times greater than previously reported and revealed flaws in its financial reporting in documents filed on Thursday. Piper Sandler also lowered its recommendation from "overweight" to "neutral". NYCB lost 30.5% before the opening. Shares of regional banks KEYCORP, US BANCORP and ZION BANCORP lose more than 1% each before the opening.
  • Dell Technologies beat Wall Street estimates for fourth-quarter sales on Thursday, helped by the artificial intelligence boom and the recovery of the personal computer (PC) market. The stock gained 21.8% before the opening.
  • Hewlett Packard Enterprise on Thursday forecast second-quarter sales below Wall Street estimates, as customers cut back on spending. The stock lost 2.6% before the opening.
  • Netapp raised its annual earnings forecast on Thursday, as companies spend more on cloud-based data management services, sending the stock up 17% before the open.
  • Autodesk - The design software maker is up 8.2% ahead of the open, as the company reported fourth-quarter adjusted earnings per share of $2.09, against consensus expectations of $1.95.
  • Zscaler - The cybersecurity company reported higher operating expenses in the second quarter, as it strives to integrate artificial intelligence into its existing offerings. The stock lost 7.5% before the opening.
  • Mattel said on Thursday that it was unable to file its annual report for fiscal year 2023 on time after identifying "certain deficiencies" in its internal controls. The stock lost 2% after the close.
  • General Motors - The group's Cruise division saw its internal valuation more than halved, as the fallout from an October accident continued to weigh on the autonomous car company.
  • Fisker- The electric vehicle startup's sales came in below market expectations on Thursday, worrying investors about the group's ability to continue as a going concern.

Analyst recommendations :

  • Block, Inc.: Phillip Securities upgrades to accumulate from buy with a price target raised from USD 85 to USD 94.
  • Estee Lauder: Goldman Sachs downgrades to neutral from buy with a price target reduced from USD 146 to USD 145.
  • Hewlett Packard Enterprise Company: Wells Fargo downgrades to equalweight from overweight with a price target reduced from USD 21 to USD 17.
  • International Flavors & Fragrances Inc.: Wolfe Research downgrades to underperform from outperform with a target price of USD 66.
  • Keurig Dr Pepper Inc.: Baptista Research downgrades to outperform from buy with a price target reduced from USD 39.60 to USD 34.20.
  • Kimberly-Clark Corporation: Goldman Sachs upgrades to buy from neutral with a price target reduced from USD 136 to USD 135.
  • Quanta Services, Inc.: Baptista Research downgrades to underperform from hold with a price target raised from USD 199 to USD 249.50.
  • Autodesk, Inc.: Goldman Sachs maintains its sell recommendation and raises the target price from USD 180 to USD 230. Mizuho Securities maintains a neutral recommendation with a price target raised from USD 220 to USD 270. BMO Capital Markets maintains its market perform recommendation with a price target raised from USD 232 to USD 293.
  • Broadcom Inc.: Oppenheimer maintains its outperform recommendation and raises the target price from USD 1100 to USD 1500.
  • Constellation Energy Corporation: Evercore ISI maintains its outperform rating and raises the target price from USD 106 to USD 128.
  • Dell Technologies Inc.: Citigroup maintains its buy recommendation and raises the target price from USD 92 to USD 125.
  • Netflix, Inc.: Redburn Atlantic maintains its buy recommendation and raises the target price from USD 610 to USD 740.
  • Nvidia Corporation: Daiwa Securities maintains its outperform rating and raises the target price from USD 535 to USD 900.
  • Target Corporation: JP Morgan maintains a neutral recommendation with a price target raised from USD 125 to USD 157.
  • Walmart Inc.: Cowen maintains its outperform rating and reduces the target price from USD 205 to USD 68.
  • Hammerson Plc: AlphaValue/Baader Europe downgrades to sell from speculative with a target price raised from GBX 17 to GBX 17.50.
  • Howden Joinery Group Plc: Citi downgrades to neutral from buy with a price target raised from GBP 8 to GBP 8.65.
  • Jupiter Fund Management Plc: Numis upgrades to add from hold with a price target raised from GBX 85 to GBX 94.
  • Polar Capital Holdings Plc: Numis upgrades to add from hold with a price target raised from GBX 455 to GBX 480.
  • Relx Plc: Berenberg downgrades to hold from buy with a price target raised from GBX 3300 to GBX 3500.
  • Whitbread Plc: AlphaValue/Baader Europe upgrades to buy from add with a price target raised from GBX 4440 to GBX 4551.