The market and the Fed have yet to agree on the pace of the cut. The former would like to see 150 points less, but the US central bank is more in favor of 75 points. The truth will probably be somewhere in between... In any case, it's a positive signal for equity investors, who love these phases, which are historically, and therefore statistically, favorable to rising indices.

The party was a little bit ruined by the arrival of a bunch of killjoys. The ECB and the Bank of England both said that rate cuts weren’t even mentioned during their meeting. Monetary insiders are pointing out this morning that the Fed's obvious "pivot" has probably allowed the ECB and BoE to be a little more orthodox than they had anticipated, giving them a little extra leeway to adapt to future economic realities.

This led European indices to lose altitude. Most of them managed to hold on to gains, but ended far from the highs reached before the BoE and ECB's announcement in the early afternoon. In the US, the mild euphoria faded: the Nasdaq 100 even ended slightly down. On the other hand, the S&P500 (+0.25%) approached its record highs, while the Dow Jones (+0.5%) surpassed the record set the previous day. The marker of current risk appetite, the Russell 2000 index of US small and mid-cap stocks, recovered a further 2.7% after gaining 3.5% the previous day: a sign that investors are playing the card of multiple rate cuts next year to the hilt (SMEs are the main beneficiaries of an easing financing environment).

In other news, US industrial production increased by 0.2% in November, recovering from a previous decline, with a significant boost from the automotive sector.

This morning, China release some macroeconomic data that's was rather good. In November, Beijing reported slightly stronger-than-expected industrial production, while retail sales were up, but below expectations. However, the focus this morning is on a record injection of liquidity from China's central bank, via its medium-term lending facility (MLF). Bloomberg points out that this is the largest monthly support ever released. Following the announcement, Hong Kong gained 2.3%, helped by a slightly less negative property indicator than expected. By contrast, mainland China remained slightly bearish. Elsewhere in the Asia-Pacific region, Japan's Nikkei closed the session up by 0.87%, thus regaining its weekly lead after two weeks of decline. South Korea, India and Australia were up by more than 0.5%, still buoyed by US monetary policy. Futures were rather flat in premarket trading. Leading indicators are bullish on the Old Continent, for the same reasons and despite reservations on the part of the continent's central banks. Note that today is Triple-Witching Day, synonymous with the clearing session, which marks the technical end of the trading quarter. As this is December, it's also the annual clearing. This session is generally a source of volatility, with increased volumes on maturing derivatives, due to expiries, unwinding and new position-taking.

Economic highlights of the day:

Quite a busy agenda today, with Japan's PMIs, data on industrial production and retail sales in China, PMIs for France, Germany, UK and the Eurozone, along with data on labor costs and the trade balance in the euro zone. The afternoon will be devoted to the United States, with Empire Manufacturing, capacity utilization and industrial production, and PMIs. The full agenda is here.

The dollar is up 0.7% to EUR 0.9161 and 0.4% to GBP 0.7862. The ounce of gold is firm at USD 2033. Oil recovers, with North Sea Brent at USD 76.75 a barrel and US light crude WTI at USD 71.70. The yield on 10-year US debt is 3.94%. Bitcoin is trading at USD 42,200.

In corporate news:

  • Costco Wholesale reported above-consensus quarterly sales, as the growing number of customers turning to its stores to buy cheaper food products offset slowing demand for everyday consumer goods. The stock gained 1.7% before the opening.
  • United States Steel said on Thursday that it expected fourth-quarter adjusted net income of between 20 and 25 cents per share, above consensus.
    Lennar, the homebuilder, said on Thursday that its quarterly profits had risen as production shortfalls and supply shortages led to sustained demand for housing.
  • Merck - The US Food and Drug Administration on Thursday approved the group's drug belzutifan for a type of kidney cancer.
  • General Motors announced on Thursday that it would lay off 1,300 employees at two Michigan car plants in early January.
  • Citigroup has decided to end its underwriting and market-making activities for municipal securities, according to a memo seen by Reuters. In addition, the group's Mexican retail bank, Banamex, is expected to split off from its parent company by the second half of 2024, Banamex said on Thursday.
  • Tesla - The Dutch car regulator said on Friday it was not planning a recall of Tesla vehicles in Europe, its US counterpart having decided on a recall this week.
  • Nio - The affordable Firefly electric car produced by the Chinese startup will be launched in Europe in 2024, a year earlier than previously revealed, and a second, cheaper brand could be launched after 2025. The stock gained 1.5% before the opening.
  • Scholastic falls 11% after reporting a 4% year-on-year drop in second-quarter sales to $562.6 million, due to weak demand.

Analyst recommendations:

  • Ameren : KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Adobe : CICC maintains a neutral recommendation with a price target raised from USD 428 to USD 545.
  • Aon : Keefe Bruyette & Woods downgrades to underperform from market perform with a target price of USD 328.
  • Arch Capital Group : William O'Neil & Co Incorporated drops coverage on the stock.
  • Arthur J. Gallagher & Co : Keefe Bruyette & Woods downgrades to underperform from market perform with a price target reduced from USD 237 to USD 230.
  • Blackrock : JP Morgan downgrades to neutral from overweight with a target price of USD 708.
  • Block : Wolfe Research maintains its outperform rating and raises the target price from USD 65 to USD 90.
  • Brown & Brown : Keefe Bruyette & Woods downgrades to underperform from market perform with a price target reduced from USD 78 to USD 71.
  • Brown-Forman : Morningstar downgrades to hold from buy with a price target reduced from USD 68 to USD 63.
  • Bunzl : Goodbody downgrades to hold from buy with a target price raised from GBX 3200 to GBX 3400.
  • Cintas : Wells Fargo maintains its equalweight recommendation and raises the target price from USD 500 to USD 615.
  • Crowdstrike Holdings : Mizuho Securities maintains its buy recommendation and raises the target price from USD 225 to USD 275.
  • Devon Energy : Baptista Research downgrades to buy from outperform with a price target reduced from USD 59.40 to USD 55.
  • Equifax : Wells Fargo upgrades to overweight from equalweight with a price target raised from USD 200 to USD 290.
  • Fair Isaac : Wells Fargo maintains its overweight rating and raises the target price from USD 1120 to USD 1350.
  • Halma : Stifel maintains its hold recommendation with a price target raised from GBX 2100 to GBX 2250.
  • Illumina : Bernstein upgrades to market perform from underperform with a price target raised from USD 98 to USD 127.
  • Intuitive Surgical : William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • L3Harris Technologies : Baird maintains its outperform rating and raises the target price from USD 216 to USD 274.
  • Marsh & Mclennan Companies : Keefe Bruyette & Woods downgrades to underperform from market perform with a price target reduced from USD 198 to USD 192.
  • Moody's Corporation : Wells Fargo upgrades to overweight from equalweight with a price target raised from USD 365 to USD 455.
  • Occidental Petroleum : Baptista Research upgrades to outperform from hold with a price target raised from USD 66 to USD 67.30.
  • Prudential : UOB KayHian (Equity) maintains its buy recommendation and reduces the target price from HKD 150 to HKD 140.
  • Progressive : William O'Neil & Co Incorporated drops coverage on the stock.
  • Roblox : Baptista Research downgrades to hold from buy with a price target raised from USD 41.10 to USD 45.50.
  • Sba Communications : BMO Capital Markets upgrades to outperform from market perform and raises the target price from USD 245 to USD 285.
  • Seagen : Cowen drops coverage on the stock.
  • Servicenow : Mizuho Securities maintains its buy recommendation and raises the target price from USD 620 to USD 750.
  • Snap : President Capital Management Corp maintains its buy recommendation and raises the target price from USD 15.10 to USD 22. Jefferies maintains its buy recommendation and raises the target price from USD 16 to USD 22.
  • Solaredge Technologies : Baptista Research downgrades to hold from buy with a price target reduced from USD 232.30 to USD 88.30.
  • The Sherwin-Williams Company : Wells Fargo maintains its equalweight recommendation and raises the target price from USD 245 to USD 297.
  • United Rentals : Citigroup maintains its buy recommendation and raises the target price from USD 490 to USD 650.
  • Us Bancorp : Baird downgrades to neutral from outperform with a target price of USD 52.
  • Vertex Pharmaceuticals : William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • Western Digital : Baptista Research downgrades to underperform from hold with a target price raised from USD 45 to USD 45.50.
  • Zimmer Biomet Holdings : Baptista Research downgrades to hold from buy with a price target reduced from USD 150.50 to USD 135.10.
  • Zoetis : William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • Zscaler : Mizuho Securities maintains its buy recommendation and raises the target price from USD 205 to USD 250.