On Wednesday, Wall Street rebounded strongly, with the Dow surging 478 points, led by Apple and Intel, while the S&P 500 reached a record high after breaking a three-day decline. Despite Nvidia's losses, the Nasdaq also rose. Top sectors included utilities, real estate, and industrials, with notable gains from Merck and Trump Media & Technology. Meanwhile, in European markets, the Stoxx 50 index closed higher, hitting another 23-year high of 5,080, driven by ongoing momentum and positive economic sentiment in the Eurozone, alongside robust US risk appetite and expectations of accommodative monetary policy.
Summary for 28.03.2024
- Asian equities mostly traded flat to lower this morning, as investors awaited US inflation data and Federal Reserve speeches. Japan's Nikkei 225 dropped over 1% due to ex-dividend trading, while Australia's ASX 200 hit a record high amid a less hawkish Reserve Bank outlook. Chinese indices recovered slightly from earlier losses.
- European equities are poised to test their record high again following late-session gains on Wall Street. Meantime, US equity futures remained steady following a rebound, with investors awaiting key economic data such as the US PCE price index report on Friday, alongside weekly jobless claims, gross domestic product, and consumer sentiment data slated for Thursday.
- Oil prices rose in Asian trade, poised for a strong first quarter in 2024 due to expectations of tighter supplies, notably from reduced Russian production. Brent futures climbed to $86.34 a barrel, while WTI rose to $81.78. JPMorgan analysts anticipate Brent hitting $100 by September, buoyed by Russian production cuts.
- Federal Reserve Governor Christopher Waller stated that there's no urgency to decrease interest rates, highlighting the need to reassess or minimise the rate cuts expected this year, citing disappointing inflation data. Waller emphasized the necessity for improved inflation metrics over a few months before considering cuts, attributing the stance to a buoyant economy and strong employment figures. US Treasury bond yields experienced an increase in Asia this morning.
- The Euro Area's economic sentiment indicator rose to a three-month high of 96.3 in March, surpassing February's figure. Notably, confidence among manufacturers and consumers surged to their highest levels since September 2023 and February 2022 respectively. While sentiment improved overall, there were slight declines in inflation expectations and varied changes among different economies in the bloc.
- Renault announced it intends to sell roughly 2.5% of Nissan's shares to the Japanese automaker, potentially yielding up to €362 million. The shares constitute part of the 24.63% stake in Nissan held by a French trust and will be sold as part of Nissan's share buyback program, as per Renault's statement.
- UBS completed the sale of Credit Suisse's securitised products business to Apollo Global Management for $8 billion in senior secured financing facilities, expecting a $300 million net gain in Q1 2024. This aligns with UBS's strategy to streamline its non-core portfolio, freeing up capital and reducing complexity. Credit Suisse's integration progress has garnered positive feedback, reflected in its rising share price.
- Shares of Robinhood surged yesterday as the company launched a credit card to diversify revenue away from market-sensitive trading. The credit card, targeting premium 'Gold' tier customers, offers no annual fee, no foreign transaction fees, and 3% cashback. Robinhood aims for profitable growth after reporting a surprise quarterly profit. Short interest in the stock is at 5.88%.
- Nio adjusted its Q1 delivery forecast downward due to declining demand and intense pricing competition in China. The company now expects to deliver around 30,000 vehicles, down from its earlier projection of 31,000 to 33,000 units.
- Deutsche Bank's shares surged to their highest level in over six years after being upgraded to "overweight" by Morgan Stanley. The upgrade cited improving investment banking revenue momentum and increased confidence in cost management. Despite already outperforming the sector by 10% in the past year, analysts believe there's further potential for growth beyond consensus estimates.
- Wedbush analysts lowered their price target on Tesla to $300 from $315, citing a challenging first quarter with sluggish deliveries and weak demand in China. Despite concerns, they maintained an "outperform" rating, expressing confidence in Tesla's full self-driving ambitions and urging CEO Elon Musk to address shareholder concerns and outline plans for monetising AI.
- Keefe, Bruyette & Woods downgraded Wells Fargo to Market Perform from Outperform, lowering the target price to $56 from $62. Despite a robust rally, analysts anticipate a consolidation phase due to expectations of net interest income underperformance and the asset cap's potential lift by late 2025, with optimism for future earnings growth.
- HSBC initiated coverage on Spotify with a Buy rating and a $310 price target, highlighting its leadership in music streaming and potential beyond music with podcasts, audiobooks, and other verticals. The bank sees significant growth opportunities, expecting the company to achieve operating profit in 2024 with a strong growth outlook.
- Adyen's equity receives its sixth upgrade in 2024, reflecting a positive sentiment towards the fintech firm, with Morgan Stanley analysts projecting strong growth rates. Other firms like Citi Research also express bullish views, as Adyen's shares climb 35% year-to-date, driven by robust sales growth and exceeded profit expectations for 2023.
- Following Adobe Systems' Summit user conference and Analyst event, KeyBanc maintained an Underweight rating with a $445 price target, emphasising the reiteration of FY24 targets. BMO Capital Markets sees Adobe's focus on enterprise innovation as supporting its leadership in workflow, maintaining an Outperform rating with a $610 price target.
- Citi initiated a 30-day positive catalyst watch on Marvell Technology Inc ahead of its AI Era investor event. Despite recent underperformance, Citi sees potential for a surge, expecting discussions on a $40 billion custom ASIC market and custom ASIC ramps, akin to peers' movements before their AI events.
- Wedbush removed Netflix from its Best Ideas List due to expectations of significant growth already realised. However, they maintained an Outperform rating, noting potential for continued revenue, earnings, and free cash flow expansion. Despite challenges in impressing investors in 2024, analysts see opportunities in ad tier expansion and global content creation.
- Carnival Corp raised its annual profit forecast, anticipating record bookings due to increased demand for cruise vacations. Despite rising costs, the company reported a 22% revenue jump in the first quarter. However, disruptions in the Red Sea and Baltimore's bridge collapse are expected to impact earnings.
- Country Garden, a major Chinese developer, has hired Kroll to conduct a liquidation analysis ahead of a court hearing regarding a $205 million loan default. The analysis aims to assess creditor recovery rates. The move follows a trend in China's property sector, plagued by debt restructuring amid regulatory pressures.
