Since we have just closed a quarter, an index review is in order. The vast majority of equity markets have performed well. Gains ranged from 2.78% for the Nasdaq to 7.77% for the Dow Jones. In Asia, India and Japan recovered 6-7% but Hong Kong's Hang Seng limited its gains to 4.5% and Australia's ASX to 3%. The most prominent sectors at the beginning of the year are energy, with the rebound in oil.  Banking, with the rise in bond yields and investor appetite for discounted stocks. And industry, which benefited from the presence of cyclicals in its ranks. 

The most visible losers were the stars of the past few years, who needed a break: Apple, Amazon.com and Tesla have fallen by 5 to 10% since January 1, which partly explains the Nasdaq's underperformance against the more general indices. It was also a quarter of GameStop and WallStreetBets, SPACs and exuberant IPOs. Except of course for the underwriters of the Deliveroo IPO in London yesterday.

Given the evolution of the health situation, the second quarter will indeed be the quarter of vaccines, as economists predicted, with a certain lead from the U.S. It will also be the quarter of increased spending, as demonstrated by the plan unveiled yesterday by Joe Biden. The quarter will also be geopolitical with the rise in tensions with China. Pressure has been ratcheted up around Taiwan and Western capitals have hardened their tone towards Beijing in several areas. This has created complicated situations for companies, which find themselves having to manage their dependence on the Chinese consumer eldorado, the position of their supervisory governments and their ethical commitments or pseudo-commitments. The recent cases with Nike, Burberry and Hennes & Mauritz illustrate this very well.

We have another example with the interview given by Ericsson's boss, Börje Ekholm, to the Wall Street Journal. The Swedish company has become the main supporter of his great rival Huawei, banned from several markets after the bans imposed by the United States. Ericsson fears that it will also be driven out of China. Ekholm stresses that his group depends on free trade and that it is therefore in its interest to be able to access all the markets it wants. While this position is surprising, it is not difficult to understand why. Dilemmas of this type are likely to flourish in the months to come and I think that this is a risk to be integrated into investment strategies.

Today's economic highlights

March PMI indicators return in their manufacturing and final versions throughout the day, notably for the Eurozone and the US. Investors will also follow the Challenger employment survey for March, weekly jobless claims and ISM manufacturing.

The euro remains under pressure at USD 1.17258. The ounce of gold is up to USD 17134. Oil is losing some ground at USD 63.5 per barrel of Brent and USD 60.0 per barrel of WTI. The U.S. 10-year yields up to 1.73%. Bitcoin has broken back through the USD 59,000 mark. 

On markets:

*The U.S. Navy on Wednesday awarded Boeing a $1.6 billion contract to produce 11 P-8A Poseidon aircraft. Nine aircraft will join the U.S. Navy fleet and two will be destined for the Royal Australian Air Force (RAAF).

*Johnson & Johnson acknowledged  that a batch of its Covid-19 vaccine, produced by one of its subcontractors, did not meet safety standards. 

*Computer memory maker Micron generated net income of $603 million, or 53 cents per share, in the second fiscal quarter ended March, compared with $405 million and 36 cents, respectively, a year earlier. Adjusted earnings per share were 98 cents, above the consensus of 95 cents. Sales rose 30% to $6.4 billion, compared with market expectations of $6.21 billion. 
*Pfizer and its German partner BioNTech reported that their Covid-19 vaccine was about 91% effective. According to the latest trials conducted by the two companies, the vaccine is effective against the South African variant.

*Stellantis plans to nearly triple its global sales of electrified vehicles this year.

*Micron Technology and Western Digital are considering a buyout of Kioxia Holdings, which could value the Japanese computer memory company at about $30 billion, according to people close to the matter cited by the Wall Street Journal.