Indeed, this week there will be about 20 earnings releases from very large companies, with a capitalization of more than $100 billion. Among them, Microsoft, Johnson & Johnson or Danaher tomorrow. Tesla, ASML and Abbott on Wednesday, then Visa, LVMH, Mastercard and Intel on Thursday. Before Chevron and American Express on Friday. For the record, U.S. companies in the traditional sectors generally publish before the opening of Wall Street, while technology companies are subscribed to the post-close. In addition to ASML and LVMH, the European agenda this week includes a few other iconic companies, such as Diageo, SAP, Atlas Copco, STMicroelectronics, Sartorius Stedim Biotech and Nokia.

Why is this important? Because corporate results and forecasts are the reality on the ground for investors who have been juggling conflicting macroeconomic currents for a few weeks. The quality of the figures will affect the morale and perception of investors. When I talk about the reality on the ground, I am talking about the reality of listed companies, which is not entirely representative of the general economic situation. If they face the same backdrop as small businesses, they have many more levers to present their situation in a favorable light.

Last week, financial markets managed to salvage their weekly performance thanks to a rebound on Friday. This did not allow the S&P500 to post a positive weekly balance, as it ended the week -0.66% lower, despite gains of 1.9% on Friday. For the Nasdaq, on the other hand, the 2.86% surge at the close brought the index back into the green for the week, with a small increase of 0.67%. American technology stocks have thus recorded their third week of growth in 2023.

Investors are relying on their favorite triple driver of the moment: a soft economic landing, a recovery in China and the normalization of monetary policy by the Fed. The appetite for risk returns at a pivotal time for the market. Investors didn't pay much attention to the hard-line fringe of the Fed's central bankers last week, who reiterated that there is still a long way to go to overcome inflation. However, they did listen to several other members of the central bank, who were clearly more relaxed and called for a moderation of monetary tightening. Hence the nice acceleration in risk assets to close the week, before entering the hard part of the corporate earnings season starting tomorrow.

The other important element of the week is the Lunar New Year festivities in Asia. Several major stock markets are closed this morning. Shanghai will not open for the week. Trading will not resume until Wednesday in Seoul and Thursday in Hong Kong. Other markets like Singapore and Taiwan are also closed for varying lengths of time.

 

Economic highlights of the day:

Few appointments on the agenda today, apart from the index of leading indicators in the United States, which is not very followed. All the agenda is here. 

The dollar is slightly up to EUR 0.9213 and GBP 0.8106. The ounce of gold fell 0.4% to USD 1918. The North Sea Brent crude rose 1.3% to USD 87.27 per barrel and U.S. light crude WTI 0.9% to USD 81.39. The yield on 10-year US debt bounced back to 3.46%. Bitcoin is trading around its best recent levels, near USD 22,800.

 

In corporate news:

* Salesforce was up nearly 4 percent in pre-market trading after Reuters reports that activist fund Elliott Management has taken a multibillion-dollar stake in the IT group.

* Goldman Sachs asset management arm will significantly reduce its $59 billion in alternative investments that are weighing on the bank's performance, an executive told Reuters.

* Western Digital and Japan's Kioxia Holdings are in advanced discussions for a possible merger that will involve a dual listing, Bloomberg reported Friday. Western Digital shares were up 1.4 percent in premarket trading.

* Apple wants India to account for as much as 25 percent of its production, up from about 5 percent to 7 percent now, India's commerce minister said Monday.

* PayPal Holdings was down 2.1% in premarket trading after the German cartel regulator announced that it was launching proceedings against the group on suspicion of possible antitrust violations.

* Baker Hughes reported a lower-than-expected fourth-quarter profit as the oilfield services company struggled with component shortages, the impact of inflation and disruptions caused by the war in Ukraine.

* Spotify Technology announced plans to cut 6% of its workforce, or about 600 positions. The stock was up 3.5% in pre-market trading.

* Silvergate Capital, a cryptocurrency specialist, assured Friday after-hours that it had limited exposure to Genesis, the latest player in the sector to file for bankruptcy.

* The Abbott Laboratories plant in Michigan, which was at the heart of the 2022 U.S. infant milk shortage due to health problems, is under investigation by the Justice Department, the Wall Street Journal reported Friday.

 

Analyst recommendations:

  • Advanced Micro Devices: Barclays upgraded its recommendation to "overweight" from "equal weight"
  • Applied Materials: Barclays downgrades to underweight from equal-weight. PT down 18% to $90.
  • Associated British Foods: Deutsche Bank upgrades from hold to buy targeting GBp 2180.
  • Close Brothers: Investec upgrades to hold from sell. PT down 1.9% to 955 pence.
  • KLA Corp: Barclays downgrades to underweight from equal-weight. PT down 21% to $325.
  • Pendragon: Jefferies resumes its Buy rating, targeting GBp 25.
  • PTC: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 19% to $155.
  • Qualcomm: Barclays upgraded its recommendation to "overweight" from "equal weight"
  • Skyworks: Barclays upgrades to overweight from equal-weight. PT up 21% to $125.
  • Vodafone: Jefferies remains "Hold" with a price target reduced from GBp 100 to GBp 85.
  • Warner Music: Barclays downgrades to equal-weight from overweight. PT down 1.6% to $35.
  • Western Digital: Exane BNP Paribas upgrades to neutral from underperform. PT up 9.2% to $42.