The ECB hopes that this rate cut, which was widely expected, will help stimulate growth in the eurozone. It comes despite Friday's higher-than-expected inflation data. However, the central bank left investors wanting more, since it did not commit to further cuts in the near future. Perhaps Mrs Lagarde will say more in her upcoming speech later today.

Over the past few days, I've been a little surprised to see the US indices moving sideways, despite indicators pointing to a Fed rate cut this year. All we had to do was wait a little! The Nasdaq 100 soared by 2% yesterday, clearing the 19,000-point mark and setting a new high, electrified by the renewed acceleration of artificial intelligence stocks.

Nvidia soared 5% to $1224, passing the $3000 billion mark in capitalization in the process. The GPU specialist even beat Apple to become the world's second most valuable listed company. Anecdote: Nvidia once weighed more than Apple, in 2002. At the time, video game companies that had survived the dot-com bubble were recovering, and Apple had not yet invented the iPhone. Is Microsoft's crown under threat? It seems, because Nvidia is just 5% short of the top spot. Microsoft may be a high-quality company that has put AI at the heart of its game, but the craze is on Nvidia's side.

While service companies are looking for a valid business model, Nvidia is flooding the world with hardware, reaping immediate and, my goodness, very high profits. In the company's 1st fiscal quarter (February to April 2024), it posted sales of $26 billion and net income of almost $15 billion. Analysts expect Nvidia to generate $100 billion in net income by 2027, valuing the company at 30 times three-year earnings. It's not cheap, but we've seen far worse, especially if we assume that profits will triple in three years.

Let's close the Nvidia page, even if the AI frenzy has a lot to do with the current market records. Yesterday, investors also reacted positively to another weak data on the US job market and to a marked recovery in the ISM services index. Investors are happy with the cooling job market, because it's one of the two main markers (along with inflation) that could help the Fed cut rates. And they are reassured by the resilience of the service sector, which tends to ward off the risk of a hard landing. The best of both worlds, in short.

Markets were also helped by the rate cut announced by the Bank of Canada yesterday. It said that this cut (from 5 to 4.75%) would be the first of a longer easing cycle. Of course, the Toronto Stock Exchange appreciated, but Wall Street was not immune. This contributed to a surge in the Nasdaq and the 25th time the S&P500 has exceeded a peak since the beginning of the year. It's worth noting that yesterday, the S&P500 rose twice as fast as the S&P500 Equal Weighted (as if all 500 stocks had the same weight in the index), meaning that the biggest stocks again fueled the rise. In Europe, stock markets generally wiped out the previous day's losses to regain altitude.

In Asia Taiwan, South Korea and India gained ended well in the green. Japan and Australia were up by around 0.7%. Things are more sluggish in China, where the Hang Seng and CSI 300 are making fragile gains during the session. Leading indices are bullish in Europe, but futures on Wall Street remain just below zero.

Economic highlights of the day:

German factory orders, eurozone retail sales, the ECB decision, US new jobless claims, productivity excluding agriculture, trade balance and unit labor costs are all on the agenda today.

The dollar is down 0.1% against the euro to EUR 0.9185 and up 0.1% against the pound to GBP 0.7824. The ounce of gold rises to USD 2367. Oil regains a little ground, with North Sea Brent at USD 78.80 a barrel and US light crude WTI at USD 74.39. The yield on 10-year US debt fell to 4.31%. Bitcoin is worth about USD 71,000.

In corporate news:

  • Nvidia shares hit record highs on Wednesday, as the artificial intelligence chipmaker's market valuation passed the $3,000 billion mark, enabling it to outperform APPLE and become the world's second-largest corporation by capitalization. The stock is up 2% in pre-market trading.
  • Lululemon Athletica on Wednesday exceeded expectations on first-quarter earnings and sales, buoyed by buoyant activity in China. The stock gained 8.8% in pre-market trading.
  • Robinhood Markets gains 3.3% in pre-market trading after announcing an agreement to buy crypto-currency exchange BITSTAMP, for around $200 million.
  • Capital One Financial - Jefferies upgrades its recommendation from “hold” to “buy”, citing the group's potential to improve its credit performance and growth opportunities in automotive financing. 

Analyst recommendations:

  • Capital One Financial Corporation: Jefferies upgrades to buy from hold with a price target raised from USD 145 to USD 165.
  • Charles River Laboratories International, Inc.: Goldman Sachs initiates a Buy recommendation with a target price of USD 290.
  • Chord Energy Corporation: Gerdes Energy Research LLC upgrades to buy from neutral with a target price of USD 206.
  • Diamondback Energy, Inc.: Bernstein initiates an Outperform recommendation with a target price of USD 243.
  • Hashicorp, Inc.: JMP Securities downgrades to market perform from market outperform.
  • Heico Corporation: Baptista Research downgrades to underperform from hold with a price target raised from USD 207.90 to USD 232.70.
  • American Airlines Group Inc.: Redburn Atlantic maintains its neutral recommendation and reduces the target price from USD 17 to USD 12.
  • Salesforce.com, Inc.: Baptista Research upgrades to buy from hold with a price target reduced from USD 343 to USD 297.
  • United Airlines Holdings, Inc.: Redburn Atlantic upgrades to buy from neutral with a price target raised from USD 50 to USD 70.
  • Amphenol Corporation: TD Cowen maintains its hold recommendation with a price target raised from USD 90 to USD 115.
  • Brown-Forman: Morgan Stanley maintains its market weight recommendation and reduces the target price from USD 58 to USD 45.
  • Five Below, Inc.: BNP Paribas Exane maintains its outperform recommendation and reduces the target price from USD 221 to USD 160.
  • Mongodb, Inc.: President Capital Management Corp maintains its buy recommendation and reduces the target price from USD 430 to USD 300.
  • Sealed Air Corporation: Mizuho Securities upgrades to buy from neutral with a price target raised from USD 36 to USD 50.
  • Okta, Inc.: Baptista Research upgrades to buy from hold with a price target reduced from USD 120.90 to USD 112.90.
  • Tesla, Inc.: Canaccord Genuity maintains its buy recommendation and raises the target price from USD 222 to USD 267.
  • Intermediate Cap: Peel Hunt maintains its buy recommendation and raises the target price from GBX 2141 to GBX 2700.