In December, the U.S. Producer Price Index (PPI) tiptoed up by 0.2%, a gentle nudge compared to November's 0.4% climb, as reported by the U.S. Bureau of Labor Statistics. This was below the 0.4% economists had penciled in, according to Bloomberg. Energy prices leaped 3.5%, while food prices took a slight dip of 0.1%. Stripping out food and energy, the core PPI stood its ground, missing the anticipated 0.3% increase. On a year-over-year basis, the PPI picked up speed, reaching 3.3% in December from November's 3.0%. The core PPI held steady at 3.5% year-over-year, though it eased to 3.3% from the previous month's 3.5%.

Despite the lower than expected reading, the Federal Reserve will likely keep interest rates unchanged until at least mid-year, buoyed by a robust labor market. Recent figures showed a surge in nonfarm payrolls and a drop in the unemployment rate, supporting the view that the Fed will hold rates steady through June. Nevertheless, Wall Street opened in the green this morning, buoyed by the PPI data. Monday's Wall Street session was a rollercoaster, teetering on the edge of disaster before pulling off a last-minute recovery. The tech titans—Apple, Nvidia, Microsoft, Alphabet, Amazon, and Meta—stumbled, dragged down by trade tensions and the White House's chip export restrictions.

These six giants, making up a hefty 30% of the S&P 500, couldn't carry the day. Instead, energy, basic materials, healthcare, and financial stocks stepped up, nudging the index up by 0.16%. Meanwhile, the Dow Jones, with its more traditional lineup, climbed 0.86%, while the Nasdaq 100 slipped 0.3% under the weight of its tech-heavy portfolio.

The day could have been far worse for U.S. equities. Inflation fears and high interest rates loomed large, but a rumor from Trump's camp offered a reprieve. The President-elect's team, known for their dramatic flair, floated a plan to gradually increase tariffs as a negotiation tactic. Picture Trump in a food truck, squeezing your hand until you hand over your sandwich for $3 instead of $6. It's a strategy that financiers found reassuring, seeing it as a way to negotiate without sparking a price surge. This rumor helped ease U.S. bond yields and the dollar, both poised for a relentless climb.

Across the pond, Europe took a hit, more rattled by Wall Street's previous week's decline than by Trump's tariff whispers. Semiconductor stocks like STMicroelectronics and ASML mirrored the Nasdaq's woes, while real estate tumbled on fears of a pause in rate cuts. Healthcare couldn't cushion the blow, with Novo Nordisk's shares dropping 3%, possibly due to geopolitical tensions involving Denmark and Greenland.

In China, markets finally showed signs of life after six straight days of losses. While they ignored positive import-export data, they perked up at the local securities regulator's vague promise of a market stabilization mechanism. It might sound like another empty announcement, but it worked wonders this morning. There's also buzz about a meeting between the Chinese central bank and the national foreign exchange administration to discuss "quality economic development."

Japan stumbled after a public holiday, with the Nikkei 225 dropping 1.9% and 40-year bond yields hitting record highs. A Bank of Japan official hinted at a possible rate hike, adding pressure to the market. Meanwhile, China enjoyed a robust rebound, with Hong Kong and mainland markets gaining over 2%. South Korea, India, Australia, and Taiwan also rode the wave of optimism over easing trade tensions. European indices are mostly up, with the Euro Stoxx 600 rising 0.5%.

Today's economic highlights:

The US producer price index is today's main indicator. The full calendar is here.

  • Dollar: EUR 0.9746  GBP 0.8228
  • Ounce of gold: USD 2660
  • Brent crude: USD 79.75 WTI: USD 77.06
  • 10-year US bond: 4.77
  • Bitcoin: USD 97,000

In corporate news:

  • Apple iPhone sales fell by 5% worldwide as the company faced increased competition from Chinese brands.
  • Nvidia shares hit by US policy restricting chip sales.
  • Eli Lilly is asking the US government to suspend the drug price negotiation programme, according to Bloomberg.
  • Jamie Dimon wants to take JPMorgan Chase to Germany in digital retail banking.
  • Honeywell does not rule out the split into two entities (aeronautics and automation) suggested by Elliott.
  • Cleveland-Cliffs and Nucor are working together to make a bid for United States Steel.
  • Pfizer is throwing its weight behind the development of anti-obesity drugs, according to its CEO.
  • Barrick Gold is to suspend its mining operations in Mali following the government's seizure of gold stocks.
  • Patrick Spence, CEO of Sonos, resigns after the disastrous launch of an application.
  • Robinhood to pay $45m to settle SEC charges over accounting and other violations.

Analyst recommendations:

  • Albemarle: Clarksons Securities AS initiates a Buy recommendation with a target price of USD 112.
  • Fortinet: Raymond James downgrades to market perform from outperform.
  • Las Vegas Sands: Morgan Stanley downgrades to equal weight from overweight with a target price reduced from USD 54 to USD 51.
  • Stellantis: Mediobanca downgrades to underperform from neutral with a target price raised from EUR 12 to EUR 12.50.
  • United Rentals: Baird upgrades to neutral from underperform with a target price of USD 658
  • General Dynamics Corp: Baird downgrades to neutral from outperform with a target price reduced from USD 345 to USD 283.
  • Api Group: RBC Capital upgrades to outperform from sector perform with a target price of USD 45.
  • Acuity Brands: Morgan Stanley upgrades to overweight from equal weight with a target price raised from USD 304 to USD 370.
  • Intra-Cellular Therapies: Piper Sandler & Co downgrades to neutral from overweight with a price target raised from USD 107 to USD 132.
  • Air Products & Chemicals: Wells Fargo upgrades to overweight from equalweight with a target price raised from USD 330 to USD 350.
  • First Citizens Bancshares: Keefe Bruyette & Woods upgrades to outperform from market perform with a target price of USD 2500.