The Nasdaq 100, which gained over 50% last year, fell by 3.1%, while the S&P500 dropped 1.5% for the week. So, what happened? Friday’s eurozone’s inflation data climbed to 2.9% year-on-year, while nonfarm payrolls in the US exceeded expectations, which cooled down investors’ hopes of early rate cuts. However, the US services data, also published on Friday, was unexpectedly weak, which sent a contradictory signal. 

Until recently, the market had taken a very optimistic approach, imagining that moderating inflation would allow central banks to cut rates many times this year, starting as early as March. Let's remember that rate cuts reduce the cost of money, which has positive effects on economic activity. In recent days, no doubt due to New Year's resolutions, forecasts have become more measured. And closer, too, to what the central banks have been announcing for several weeks: there will probably be rate cuts, but at a slower pace and less than the market expects. Nevertheless, after a few fluctuations last week, the probability of the Fed cutting rates for the first time at the March meeting remains in the majority, at around 64%. Obviously, this is down on the euphoric 90% figures circulating in mid-December, but the underlying trend remains unchanged.

But there are other reasons for caution at the moment, partly because financiers are still in the process of quantifying a number of risks specific to 2024. At the top of the pile are two well-known issues. First, the US presidential election of 2024, with tension already building between the Democratic and Republican camps. Donald Trump stands a good chance of again facing an unpopular Joe Biden, despite the strength of the US economy. The second cautionary factor is the situation in China, and more specifically relations with Taiwan, the world's technological workshop. Next weekend, Taiwan will be the scene of presidential and legislative elections, with much at stake.

In the end, 2024 won't be all that different from 2023: financial news will continue to be dominated by the United States and China.

China's stock market is hampered by geopolitical tensions ahead of Taiwanese elections: the week gets off to a sharp start for several leading indices, which are back on their November 2022 lows. Others, such as Shanghai's STAR50, packed with technology stocks, are trading at 5-year lows. Moreover (or not), Beijing has lifted the ban on short selling introduced last year, with the success we all know.

In the United States, parliamentarians took the initiative to avoid a new budgetary mess: a bipartisan agreement was reached on future US spending, several weeks before the next deadline.

Boeing thought it had turned the page on its industrial woes, but an in-flight accident (a bulkhead ripped off, causing cabin depressurization) on a brand-new B737MAX 9 for Alaska Airlines forced the FAA to ground the aircraft, which has been one calamity after another.

Tensions in the Red Sea and Libya did little to help oil rebound, as the black gold was dragged down by lower official sales prices from Saudi Arabia, while demand is falling.

The week's macroeconomic highlight is scheduled for Thursday, with December's inflation figures in the USA, which will put a piece back into the machine speculating on the date of the Fed's first rate cut.

Friday's session, usually rather quiet, will (already!) see the first earnings releases from major companies: UnitedHealth, JPMorgan, Bank of America, BlackRock and Citigroup will already be on deck.

In the Asia-Pacific region, Japan is closed for a public holiday. China is down, by 1.3% for the CSI300 and 2.3% for the Hang Seng. South Korea and India are down around 0.4%, while Australia is down 0.5%. European leading indicators are slightly down. The Dow Jones was down 0.5% this morning, while the Nasdaq gained 0.9% and the S&P 500 0.2%.

Economic highlights of the day:

German factory orders and European retail sales are the only major data expected today. The full agenda is here. 

The dollar is worth EUR 0.9126 and GBP 0.7859. The ounce of gold retreats slightly to USD 2022. Oil remains firm, with North Sea Brent at USD 75.46 a barrel and US light crude WTI at USD 70.35. The yield on 10-year US debt rises to 4.05%. Bitcoin is trading at USD 44,845.

In corporate news:

  • Boeing fell by 8.3% before the opening after Friday's incident involving one of its 737 MAX 9 models.
  • Chesapeake Energy and Southwestern Energy are about to merge to create a natural gas company worth nearly $17 billion, a person familiar with the matter told Reuters on Friday.
  • Apple - iPhone sales in China fell 30% in the first week of 2024, write Jefferies analysts in a note.
  • BlackRock will reduce its global workforce by around 3%, according to Fox Business.
  • Nvidia plans to start production of its artificial intelligence chip for the Chinese market in the second quarter of 2024, two sources familiar with the matter said on Monday.
  • Boston Scientific announced Monday that it had acquired AXONICS for $3.7 billion.
  • Moderna on Monday reported preliminary 2023 sales of $6.7 billion for its COVID-19 vaccine, above the lower end of its full-year guidance.
  • Regeneron Pharmaceuticals said Monday that its ophthalmic treatment Eylea had recorded preliminary U.S. fourth-quarter sales of $1.34 billion.
  • Berkshire Hathaway and Pilot said Sunday they had reached an agreement to settle a Delaware lawsuit over the valuation of the truck stop chain.
  • Allison Transmission - The United Auto Workers (UAW) union reached agreement with the auto parts manufacturer on a tentative deal covering 1,500 workers in Indianapolis, the labor organization said Friday.
  • Harpoon Therapeutics doubles its share price to $21.10 before the open, as MERCK is in advanced talks to buy the group for around $700 million, or $23 per share, Bloomberg News reports.
  • Vinfast appointed its founder and main backer, Pham Nhat Vuong, as CEO on Saturday, as the company plans overseas expansion and increased sales through dealerships.
  • Ligand Pharmaceuticals rises 5.2% ahead of opening after its topical treatment for viral skin infection receives FDA approval.
  • Cellectar Biosciences said Monday that its treatment for a type of blood cancer had met its primary endpoint in a clinical trial.
  • Metagenomi Technologies, a genetic drug company backed by Bayer Healthcare and Moderna, filed for an initial public offering in the US on Friday.

Analyst recommendations:

  • American Express : Baird downgrades to underperform from neutral with a target price of USD 190.
  • Aon : JP Morgan upgrades to overweight from neutral with a target price reduced from USD 351 to USD 321.
  • Ansys : RBC Capital maintains its sector perform recommendation and raises the target price from USD 290 to USD 375.
  • Ares Management : Barclays maintains its overweight recommendation and raises the target price from USD 118 to USD 146.
  • Barratt Developments : Barclays downgrades to equalweight from overweight with a target price raised from GBP 4.64 to GBP 5.60.
  • Barrick Gold : Bernstein upgrades to outperform from market perform with a target price raised from CAD 26 to CAD 30.
  • Blackstone : BNP Paribas Exane maintains a neutral recommendation with a price target raised from USD 89 to USD 110. Barclays maintains its equalweight recommendation and raises the target price from USD 101 to USD 126.
  • Block : Bernstein maintains its outperform rating and raises the target price from USD 60 to USD 85. Keefe Bruyette & Woods maintains its market perform recommendation with a price target raised from USD 57 to USD 74.
  • Booking Holdings : Piper Sandler & Co maintains a neutral recommendation with a price target raised from USD 2900 to USD 3600.
  • Brown & Brown : RBC Capital upgrades to outperform from sector perform with a price target raised from USD 77 to USD 81.
  • Capital One Financial : Baird downgrades to neutral from outperform with a price target reduced from USD 150 to USD 145.
  • Chevron : Jefferies upgrades to buy from hold with a target price of USD 184.
  • Citigroup : Societe Generale downgrades to sell from hold with a price target reduced from USD 50 to USD 43.
  • Cme Group : Barclays downgrades to equalweight from overweight with a price target reduced from USD 244 to USD 222.
  • Cloudflare : RBC Capital maintains its outperform rating and raises the target price from USD 65 to USD 95.
  • Coinbase Global : Barclays maintains its underweight recommendation and raises the target price from USD 67 to USD 110. Jefferies maintains its hold recommendation and raises the target price from USD 85 to USD 160. Bernstein maintains its market perform recommendation and raises the target price from USD 50 to USD 80.
  • Conagra Brands : Baptista Research downgrades to underperform from hold with a price target reduced from USD 37 to USD 30.
  • Crowdstrike Holdings : RBC Capital maintains its outperform recommendation and raises the target price from USD 230 to USD 315.
  • Datadog : RBC Capital maintains its outperform recommendation and raises the target price from USD 120 to USD 145.
  • Dell Technologies : JP Morgan upgrades to overweight from neutral with a target price raised from USD 77 to USD 90.
  • Doordash : Jefferies upgrades to buy from hold with a price target raised from USD 90 to USD 130.
  • Dow : On Field Investment Research downgrades to neutral from sell with a price target raised from USD 50 to USD 57.
  • Dr Horton : Citigroup maintains its buy recommendation with a price target raised from USD 140 to USD 173.
  • Epam Systems : HSBC upgrades to buy from hold with a price target raised from USD 245 to USD 350.
  • Expedia Group : Jefferies maintains its hold recommendation with a price target raised from USD 120 to USD 160. Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 135 to USD 180.
  • Ferguson : Raymond James downgrades to market performance from outperformance.
  • Fidelity National Information Services : Baptista Research downgrades to hold from outperform with a price target reduced from USD 70.30 to USD 69.30.
  • First Solar : Wells Fargo downgrades to equalweight from overweight with a price target reduced from USD 215 to USD 187.
  • Fiserv : KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 160.
  • Freeport-Mcmoran : Bernstein upgrades to outperform from market perform and raises the target price from USD 41 to USD 48.50.
  • Hartford Financial Services Group : JP Morgan downgrades to neutral from overweight with a target price reduced from USD 94 to USD 91.
  • Intercontinental Exchange : Barclays upgrades to overweight from equalweight with a target price raised from USD 120 to USD 148.
  • Kkr & Co : BNP Paribas Exane maintains its outperform recommendation and raises the target price from USD 83 to USD 106.
  • Legal & General : Berenberg upgrades to buy from hold with a price target raised from GBX 258 to GBX 289.
  • Lennar Corporation : Citigroup maintains its buy recommendation and raises the target price from USD 139 to USD 170.
  • Markel Group : RBC Capital downgrades to sector perform from outperform with a price target raised from USD 1425 to USD 1475.
  • Mid-America Apartment Community : Zacks upgrades to outperform from neutral with a target price of USD 139.
  • Netapp : JP Morgan downgrades to underweight from neutral with a target price reduced from USD 89 to USD 87.
  • Omnicom Group : Macquarie upgrades to outperform from neutral with a price target raised from USD 80 to USD 100.
  • Palo Alto Networks : RBC Capital maintains its outperform rating and raises the target price from USD 281 to USD 366.
  • Prudential : Daiwa Securities downgrades to hold from buy with a price target reduced from GBP 14 to GBP 9.10.
  • Pultegroup : Citi downgrades to neutral from buy with a price target raised from USD 87 to USD 113.
  • Qualcomm : JP Morgan maintains its overweight recommendation and raises the target price from USD 140 to USD 173.
  • Servicenow : RBC Capital maintains its outperform rating and raises the target price from USD 680 to USD 840.
  • Southwest Airlines : Bernstein downgrades to underperform from market perform with a price target reduced from USD 29 to USD 24.
  • Synchrony Financial : Keefe Bruyette & Woods maintains its market perform recommendation with a price target raised from USD 32 to USD 41.
  • United Rentals : Baptista Research downgrades to underperform from hold with a price target raised from USD 410 to USD 550. Deutsche Bank maintains its hold recommendation and raises the target price from USD 442 to USD 550.
  • Wells Fargo & Company : Baird downgrades to neutral from outperform with a target price of USD 55.
  • W.r. Berkley Corporation : RBC Capital downgrades to sector perform from outperform with a price target raised from USD 72 to USD 73.