This morning, U.S. equity futures indicated a positive pre-market trend, as investors navigate geopolitical developments and robust economic data, as well as a more optimistic inflation outlook. Specifically, S&P 500 Index futures gained 0.4%, Dow Jones Industrial Average futures rose by 0.1%, and Nasdaq futures climbed by 0.4%. The Empire State Manufacturing Index reflected a slight recovery in February, with the general business conditions index increasing by 18 points to 5.7, signaling a return to positive territory following a decline in the previous month.
European equity markets took a leisurely stroll upwards yesterday, while Wall Street enjoyed a day off. In Frankfurt, the DAX made a dramatic entrance, climbing 1.3%, thanks to Rheinmetall's impressive 14% surge. Investors are betting on Rheinmetall to grab a significant share of Germany's planned military spending boost. This defense giant has now leapfrogged Beiersdorf and Henkel in market capitalization, inching closer to Deutsche Bank, and securing a spot among Germany's top 20 most valuable companies, with a market cap of 40.5 billion euros. Rheinmetall's stellar performance, up 51% since the start of the year, is a key driver behind the DAX's success. The index has gained 14.5% in 2025, outpacing the American S&P 500 by threefold. In Paris, the CAC40 just tiptoed up by 0.1% to 8189 points.
The audacious resilience of the German stock market serves as a prime example of the challenges in financial forecasting. By the close of 2024, Germany was a nation in turmoil, grappling with sluggish economic growth. Its economic stability was further shaken by U.S. policies, and political upheaval led to the government's collapse, prompting early legislative elections set for February 23, 2025. It's safe to say, this wasn't the most inviting environment for investors...
Meanwhile, Washington and Moscow are gearing up for talks on ending the Ukraine conflict, hosted by Saudi Arabia. The Europeans are scrambling to reclaim their seat at the table. They've been nudged aside by the United States, much to Vladimir Putin's amusement. This sidelining seems to be a classic American maneuver: urging Europe to step up efforts and help finance Ukraine's security. President Trump is employing his familiar tactic: applying pressure to provoke a response. If Europe can muster a united front and the required funds, it's likely the United States will welcome them back into the negotiation fold.
In other news, oil prices made a comeback yesterday, fueled by whispers that OPEC+ might once again delay production hikes. This would be a déjà vu move to keep prices buoyant. However, Russian Deputy Prime Minister Alexander Novak swiftly quashed these rumors, leaving traders to ponder their next move. Meanwhile, oil prices got an unexpected boost from a drone strike on a Russian pumping station, disrupting the flow from the Caspian Sea.
Across the globe, the Australian central bank delivered a predictable twist by trimming its key interest rate by a quarter-point to 4.1%. They hinted, however, that future policy easing might not be as straightforward. Back in the U.S., Federal Reserve Governor Christopher Waller added his voice to the chorus of central bank musings. He suggested that if inflation behaves itself in 2024, a rate cut could be on the cards "at some point in the year." But, he cautioned, if the inflation trend remains murky, he'd rather play it safe and keep rates steady. It seems we're on a steady path, for now.
The day is marked by the return of some important earnings reports, with Arista Networks, Medtronic, Cadence Design and Occidental Petroleum in the United States, and Capgemini, Antofagasta and Edenred in Europe.
In Asia Pacific, Chinese tech stocks are smiling in Hong Kong after Xi Jinping's explicit support for the sector at a conference yesterday. The Hang Seng is up 1.1%, bringing its 2025 gains to almost 14%, which is quite close to the DAX. Japan, South Korea and Taiwan are up 0.3 to 0.6%. It is more complicated in India, where the decline resumed after the first gains in 8 sessions yesterday for the SENSEX. Finally, Australia lost 0.6% after the RBA's hawkish monetary easing. European indices are in the green.
Today's economic highlights:
In the United Kingdom, jobless claims and the ILO unemployment rate over 3 months; in France, the EU-harmonized CPI; in Germany, the ZEW surveys on current conditions and expectations; in the United States, the Empire Manufacturing Index and the NAHB Housing Market Index. See the full calendar here.
- Dollar index: 107.06
- Gold: US$2,912.01
- Crude Oil (BRENT): US$75.4
- Rate United States 10 years: 4.52%
- BITCOIN: US$95,453.1
In corporate news:
- A Delta Air Lines plane overturned on landing in Toronto, causing several injuries, but all passengers and crew were evacuated.
- H&E Equipment Services has accepted a takeover bid of around 5.3 billion dollars from Herc, thus rejecting a previous takeover bid from United Rentals, revealed the FT.
- Southwest Airlines plans to cut 15% of its workforce as part of a cost-cutting strategy.
- The Italian authorities are investigating Amazon, which is alleged to have failed to pay 1.2 billion euros in VAT on behalf of third-party sellers.
- Tesla is launching mass production of its revamped Model Y at its Shanghai plant.
- Boeing's Air Force One program could be delayed until 2029 or even later, according to a senior official.
- Today's top earnings reports: Arista Networks, Medtronic, Cadence Design, Occidental Petroleum, Entergy, Vulcan Materials, CoStar Group, EQT Corporation, Baidu, Devon Energy, International Flavors & Fragrances, Watsco, and more.
Analyst Recommendations:
- Datadog, Inc.: Wolfe Research downgrades to peerperform from outperform.
- First American Financial Corporation: Zacks upgrades to outperform from neutral with a price target raised from USD 65 to USD 73.
- Jones Lang Lasalle Incorporated: Zacks downgrades to neutral from outperform with a price target reduced from USD 324 to USD 297.
- Snowflake Inc.: Wolfe Research upgrades to outperform from peerperform with a target price of USD 235.
- Tapestry, Inc.: Redburn Atlantic upgrades to buy from neutral with a price target raised from USD 45 to USD 110.
- The Middleby Corporation: Zacks upgrades to neutral from underperform with a price target raised from USD 145 to USD 178.
- Wynn Resorts, Limited: Jefferies upgrades to buy from hold with a target price raised from USD 105 to USD 118.
- Doximity, Inc.: Baird maintains its outperform rating and raises the target price from USD 61 to USD 87.
- Draftkings Inc.: Oppenheimer maintains its outperform rating and raises the target price from USD 55 to USD 68.
- Five Below, Inc.: Jefferies maintains its buy recommendation and reduces the target price from USD 138 to USD 110.
- Pbf Energy Inc.: Zacks maintains a neutral recommendation with a price target reduced from USD 32 to USD 25.
- Walmart Inc.: Piper Sandler & Co maintains its overweight recommendation and raises the target price from USD 93 to USD 118.
