After posting its second biggest drop of the year, the Nasdaq - the driving force and barometer of investors' appetite for risk - bounced back. Its 0.7% rise enabled the general S&P500 index to recover 0.5%, while the Dow Jones, with its more outdated composition, was content with 0.2%. Western equity markets remain close to, but below, their recent peaks.

In Europe, everyone went green yesterday. Germany's DAX dragged its feet, gaining just 0.1%, but France's CAC40 (+0.3%), the UK's FTSE (+0.4%) and Switzerland's SMI (+0.7%) advanced more.

Investors seem almost surprised that everything is still going up. This sluggishly favorable environment can be explained by financiers' taste for relatively predictable situations, which are unlikely to upset the Fed's "Goldilocks" scenario. In the tale "Goldilocks and the Three Bears", the little girl enters the bears' house and comes across three bowls (of porridge, oatmeal, chocolate or any other mixture, depending on the version). One is too hot, the second too cold, and the last just right. The Fed is looking for just the right bowl. Not an overheated economy, nor a depressed one. So the central bank maneuvers to stay close to the right temperature. The ideal situation is when investors are relatively in tune with the Fed's efforts to keep the bowl at the right temperature. That's what's happening right now. As long as this balance holds, the contract is fulfilled and the environment is relatively benign, despite the minor quibbles and divergences between central bankers and the markets.

Jerome Powell’s testimony before the congress yesterday saw him confirm the "Goldilocks" scenario. He didn’t cause any overheating or disappointment. His speech was tepid and in line with expectations. Powell served up something like "US rates will probably come down this year, but I won't give a precise timetable because we still have to watch inflation a bit, but the economy is performing well". He did not comment on the most recent data, but for the time being everything points to confirmation of the most consensual expectations.

Next, we turn to China, where indices are falling despite the announcement of import and export figures for the January/February period that were well above expectations. This is a sign of recovering domestic and foreign demand. And it's one of the signals that economists are waiting for to declare that the country is emerging from its torpor. But it hasn't sparked any craze in equities. Perhaps investors would have preferred disappointing statistics. Why? Because it would strengthen the case for a big stimulus from Beijing.

While awaiting tomorrow's release of US employment figures for February, investors are focusing on the ECB's monetary policy decision, which was just unveiled. As expected, it decided to maintain its key rates at their current levels. However, it took a first step towards lowering the cost of credit by stating that inflation was slowing down more rapidly than it had anticipated a few months ago.

Jerome Powell will also have a second round of hearings before the US Congress, but it's likely that he won't say the opposite of what was announced the day before.

In the Asia-Pacific region, Japan lost 1.2% at the close due to the rise in the yen, fueled by speculation of a rate hike at the BoJ meeting scheduled for later this month. China ended in the red, for the same reasons.

Economic highlights of the day:

Factory orders in Germany, the ECB's rate decision and conference, the US Challenger layoff data, new jobless claims, non-farm productivity and unit labor costs are on the agenda. 

The dollar is up 0.2% against the euro to EUR 0.9197 and down 0.1% against the pound to GBP 0.7843. The ounce of gold rises to USD 2,159. Oil is little changed, with North Sea Brent at USD 82.31 a barrel and US light crude WTI at USD 78.31. The yield on 10-year US debt stands at 4.12%. Bitcoin is trading at USD 67,000.

In corporate news:

  • Exxon Mobil said on Wednesday it had filed a request for arbitration concerning the sale of HESS's oil assets in Guyana, and hinted that it may oppose CHEVRON, which is in the process of concluding a deal for the assets. The arbitration procedure is designed to preserve Exxon's right to bid for Hess's 30% stake in the giant Stabroek offshore oil block, should Chevron go through with its planned takeover of Hess.
  • Eli Lilly fell back 2% before the opening after the presentation of Novo Nordisk's highly-anticipated treatment for obesity.
  • Chemours said on Wednesday that an internal review had revealed that its senior executives had manipulated certain payments and debt collections in the fourth quarter of 2023, in part to meet free cash flow targets on which their compensation depended. This will not affect preliminary results for 2023, the chemicals company said. The stock gained 4.5% before the opening.
  • General Electric - GE Aerospace, General Electric's aerospace division, on Thursday reaffirmed its outlook for the year and forecast operating profit of $10 billion in 2028, citing strong demand for its products and services.
  • Warner Music confirmed Thursday that it had approached French digital music group Believe in late February to begin talks on a potential tie-up.
  • Apple - European regulators have asked the group to explain why video game maker Epic Games has been banned from launching its own online marketplace for iPhones and iPads in Europe. Apple said it had been granted this right by the European courts.
  • Victoria’s Secret - The company forecasts lower-than-expected quarterly and annual sales, as consumers remain under pressure. JP Morgan lowers its recommendation from "neutral" to "underweight". The share price was down 30.2% before the opening.
  • Tesla - The electric carmaker, which declined for a third consecutive session on Wednesday, is down 0.6% in pre-market trading on Thursday, after less than reassuring analyst reports and after its Berlin gigafactory suffered an arson attack.
  • Nvidia, Micron Technology - The two semiconductor manufacturers gained 1.4% and 3.1% respectively in pre-market trading, extending their gains of the previous session.

Analyst recommendations:

  • Advanced Micro Devices, Inc.: DZ Bank AG Research downgrades to hold from buy with a target price of USD 200.
  • Akamai Technologies, Inc.: Baird upgrades to outperform from neutral with a price target raised from USD 128 to USD 135.
  • Devon Energy Corporation: Baptista Research downgrades to outperform from buy with a price target reduced from USD 55 to USD 51.50.
  • Extra Space Storage Inc.: Morningstar downgrades to hold from buy with a price target reduced from USD 165 to USD 160.
  • Micron Technology, Inc.: Stifel upgrades to buy from hold with a price target raised from USD 80 to USD 120.
  • Public Storage: Morningstar downgrades to hold from buy with a price target reduced from USD 317 to USD 310.
  • Snowflake Inc.: Baptista Research upgrades to outperform from hold with a price target reduced from USD 210 to USD 207.90.
  • Cloudflare, Inc.: KGI Securities Co Ltd maintains its outperform recommendation and raises the target price from USD 95 to USD 125.
  • Crowdstrike Holdings, Inc.: KGI Securities Co Ltd maintains its outperform recommendation and raises the target price from USD 275 to USD 415. DZ Bank AG Research maintains its buy recommendation and raises the target price from USD 317 to USD 430.
  • Hewlett Packard Enterprise Company: Daiwa Securities maintains its outperform rating and raises the target price from USD 17 to USD 21.
  • Zoom Video Communications, Inc.: Baptista Research downgrades to hold from outperform with a price target reduced from USD 83.20 to USD 77.20.
  • Okta, Inc.: KGI Securities Co Ltd maintains a neutral recommendation with a price target raised from USD 80 to USD 125.
  • Salesforce.com, Inc.: Baptista Research maintains its hold recommendation with a price target raised from 271 to USD 343.
  • Domino's Pizza Group Plc: Peel Hunt upgrades to buy from add with a target price of GBX 425.
  • Elementis Plc: Numis upgrades to buy from add with a price target raised from GBX 140 to GBX 170.
  • Londonmetric Property Plc: Berenberg upgrades to buy from hold with a price target raised from GBX 176 to GBX 229.
  • Man Group Plc: Numis upgrades to buy from hold with a price target raised from GBX 260 to GBX 315.
  • Oxford Nanopore Technologies Plc: Stifel downgrades to hold from sell with a target price of GBX 130.
  • Travis Perkins Plc: Liberum downgrades to hold from under review with a price target reduced from GBX 777 to GBX 725.