Fed's rate cuts have been at the center of financial media and investor chatter for months, and suddenly, nobody seems to care anymore. This was the prevailing sentiment yesterday, following the release of slightly more robust than expected US inflation figures for February, which should have pushed down equity markets by reducing the prospect of monetary easing. But the opposite happened: several indices broke through their recent highs, including the STOXX Europe 600 and the Dow Jones... Even the Nasdaq 100, a little battered last Friday, came back within a few points of its record, on the back of a surge by Oracle (+12%) that woke up Nvidia (+7%) and its peers.

February's US inflation still put a (tiny) bit of strain on bond yields, but didn't stress investors at all. Traders still believe that the Fed will start cutting rates in June, with a probability that remains close to 66%. But there's a feeling that if it didn't happen, it wouldn't be a big deal after all.

Perhaps the market thinks that inflation is under control and will continue to decline eventually. Perhaps it has come around to the advice of Jamie Dimon, head of the world's largest bank, JPMorgan Chase. He explained yesterday that the Fed has no reason to rush into cutting rates because the US economy is doing well. He even advocates delaying the first decision until after June.

In other news, Donald Trump and Joe Biden have now officially clinched their nominations, which means we’ll have a rematch of the 2020 election in November. In Asia, Japan is recorded a third consecutive session of declines as bets are placed on the BOJ's monetary policy decision next week. The latest hot topic for forecasters in the Archipelago is the outcome of wage negotiations at major local companies. During the day, Toyota accepted all the demands submitted to it, reinforcing the feeling that the central bank will tighten its monetary policy in the very short term to get out of negative rates. Japan is not so used to dealing with inflation any more, and general wage increases are helping to sustain the return of rising prices.

In China, things are still difficult in the real estate sector. Country Garden, one of the country's leading developers, has defaulted on a yuan bond repayment. And rumors continue to swirl around China Vanke, which is reportedly negotiating with its banks to refinance its debt in order to avoid a first default on its bonds.

Elsewhere in the Asia-Pacific region, India confirmed its sluggish start to the year with a 0.7% decline on the SENSEX this morning, bringing the local market's total rise since January 1 to less than 2%. South Korea benefited from a recovery in the semiconductor sector, gaining 0.5%, while Australia picked up 0.2%, still buoyed by its financial stocks, less than a week before the RBA's next rate decision. European leading indicators are slightly up, with the Stoxx EU 600 up 0.2% and the FTSE 100 just above zero. On Wall Street, futures on all three indexes are hovering around zero, as traders remain cautious ahead of key economic data later in the week, including producer prices and retail sales reports on Thursday.

Economic highlights of the day:

On the agenda today, UK monthly GDP, EU industrial production, and DOE crude inventories. The full agenda is here. 

The dollar is worth EUR 0.9142 and GBP 0.7812. The ounce of gold retreats to USD 2,162. Oil is firm, with North Sea Brent at USD 83.32 a barrel and US light crude WTI at USD 79.06. The yield on 10-year US debt stands at 4.14%. Bitcoin is trading at USD 72,700.

In corporate news:

  • Intel gave up 1.5% in premarket trading, as the Pentagon withdrew from a proposed subsidy of up to $2.5 billion for the American group's chips, Bloomberg reported, citing sources close to the matter.
  • GE Healthcare Technologies was down 6.5% in premarket trading, its parent company GE having decided to further reduce its stake in the medical equipment company through a 14 million share issue.
  • Eli Lilly announced on Wednesday that it had teamed up with AMAZON to deliver medicines via its direct-to-consumer service, LillyDirect. In the wake of this agreement, the Walgreens Boots Alliance pharmacy chain fell by 1.13% in pre-market trading.
  • Beauty Health soared 20% in pre-market trading after the manufacturer of skin treatment devices reported better-than-expected fourth-quarter sales, thanks in particular to strong demand for its HydraFacial.
  • Dollar Tree announced on Wednesday its intention to close 600 Family Dollar Stores in the first half of the year and around 370 additional stores when current leases expire, against the backdrop of a pre-tax net loss of $1.92 billion in the fourth quarter. The share price plunged 8.3% in pre-market trading.
  • Spotify announced the launch of a music video service in a test version reserved for its premium subscribers, which will bring the streaming platform into competition with ALPHABET's YouTube, which has dominated this segment for almost two decades.

Analyst recommendations:

  • Campbell Soup Company: Baptista Research downgrades to hold from buy with a price target reduced from USD 54.50 to USD 44.60.
  • Eqt Corporation: Mizuho Securities downgrades to neutral from buy with a price target reduced from USD 46 to USD 39.
  • Crowdstrike Holdings, Inc.: Baptista Research upgrades to outperform from underperform with a price target raised from USD 230.50 to USD 396.
  • Fidelity National Information Services, Inc.: Baird downgrades to neutral from outperform with a price target raised from USD 76 to USD 78.
  • Nucor Corporation: Citi upgrades to buy from neutral with a price target raised from USD 180 to USD 240.
  • Southwest Airlines Co.: Jefferies upgrades to hold from underperform with a price target raised from USD 20 to USD 28.
  • Stellantis N.v.: Nomura downgrades to neutral from buy with a target price of EUR 27.
  • Target Corporation: Baptista Research downgrades to hold from buy with a price target raised from USD 178.70 to USD 188.10.
  • Tesla, Inc.: Wells Fargo downgrades to underweight from equalweight with a price target reduced from USD 200 to USD 125.
  • The Cooper Companies, Inc.: JP Morgan upgrades to overweight from neutral with a target price raised from USD 100 to USD 120.
  • Broadcom Inc.: Baptista Research maintains its hold recommendation with a price target raised from USD 1198 to USD 1485.
  • Coinbase Global, Inc.: JMP Securities maintains its market outperform recommendation and raises the target price from USD 220 to USD 300.
  • Steel Dynamics, Inc.: Citigroup maintains its buy recommendation and raises the target price from USD 130 to USD 160. Wolfe Research maintains its underperform recommendation and raises the target price from USD 75 to USD 99.
  • Veeva Systems Inc.: JP Morgan maintains a neutral recommendation with a price target raised from USD 183 to USD 222.
  • Walmart Inc.: Stifel maintains its hold recommendation and reduces the target price from USD 185 to USD 65.
  • Advanced Medical Solutions Group Plc: Numis upgrades to add from buy with a target price of GBX 250. Panmure Gordon & Co. Limited upgrades to buy from hold with a target price of GBX 225.
  • Cvs Group Plc: Peel Hunt downgrades to add from buy with a price target reduced from GBX 2750 to GBX 1500.
  • Entain Plc: JP Morgan downgrades to neutral from overweight with a target price reduced from GBP 12.80 to GBP 9.10.
  • Harbour Energy P: Berenberg upgrades to buy from hold with a price target raised from GBX 280 to GBX 360.
  • Intercontinental Hotels Group Plc: Bernstein downgrades to underperform from market perform with a price target raised from GBX 6900 to GBX 7350. Jefferies downgrades to hold from buy with a price target raised from 64 to GBP 84.
  • Johnson Matthey Plc: Morgan Stanley drops coverage on the stock.
  • Victrex Plc: Morgan Stanley drops coverage on the stock.
  • Virgin Money UK: HSBC downgrades to hold from buy with a price target reduced from GBP 2.50 to GBP 2.20.