Exciting week ahead of jittery markets

Shares in the US rebounded strongly on Friday, fuelled by robust labour data, with the S&P 500 rising 1.1%, the Dow Jones surging 318 points, and the Nasdaq gaining 1.2%. However, despite the rally, the Dow Jones marked its worst performance of 2024 for the week. In contrast, the STOXX 50 index closed 1.2% lower, reflecting investor reassessment of Fed rate cut expectations amidst the positive US jobs report. Concerns over escalating Middle East tensions weighed on travel and leisure equities.  

Summary for 08.04.2024 

• Asian equities demonstrated a mixed performance on Monday, as Japanese markets rebounded while Chinese equities fell due to concerns over the property market. Waning confidence in early interest rate cuts impacted sentiment, with anticipation of consumer price index data and Federal Reserve meeting minutes influencing market direction.  
• European equity markets are gearing for a steady start to the week while US futures were marginally lower this morning as investors remain cautious ahead of upcoming inflation readings and the start of the Q1 earnings season, which could impact market sentiment. 
• Oil prices fell in early Asian trade as Israel withdrew troops from parts of Gaza, signalling potential de-escalation in the conflict with Hamas. This move, coupled with renewed ceasefire talks in Egypt, prompted profit-taking after recent highs driven by tensions. Expectations of tighter oil supplies due to OPEC+ production cuts and disruptions in Russia further influenced prices, despite positive economic data from China. 
• The March jobs report exceeded expectations with the addition of 303,000 nonfarm payroll jobs, surpassing economists’ forecasts. The unemployment rate also decreased to 3.8%. While wages increased, the annual gain was the lowest since June 2021. The report signals a strong labour market, potentially delaying Federal Reserve rate cuts. 
• Euro Area retail sales fell by 0.5% in February 2024, disappointing market expectations of a 0.4% drop. Food, drinks, and tobacco sales decreased by 0.4%, while non-food product sales declined by 0.2%. Automotive fuel sales saw the largest decline since August, contributing to a 0.7% annual fall, marking 17 consecutive months of contraction. 
• A Missouri judge reduced Bayer‘s $1.56 billion Roundup verdict to $611 million for three cancer patients, citing excessive punitive damages. Bayer plans to appeal, asserting Roundup’s safety based on decades of studies. The plaintiffs’ lawyer contends the reduced awards align with evidence of Monsanto’s disregard for consumer safety. 
• Tesla cancelled its long-promised inexpensive car, opting for self-driving robotaxis instead, according to sources. Elon Musk’s shift deviated from his goal of making electric cars accessible. Delays and stiff competition, especially from Chinese automakers, influenced the decision. 
• Glass Lewis, a governance adviser, raises concerns over UniCredit‘s ongoing operations in Russia, warning of potential reputational risks. Ahead of the bank’s annual general meeting, Glass Lewis advises shareholders to vote against a proposed increase in CEO Andrea Orcel’s pay, deeming it excessive. 
• Shell disclosed expectations of lower liquefied natural gas (LNG) trading results and higher oil trading results for Q1 2024 versus Q4 2023. Despite projected increased LNG volumes, profits may decline. The chemicals business anticipates a reduced loss with improved profit margins, alongside a $600 million exploration write-off. 
• The Dutch government is leaning towards aligning with the US in restricting ASML equipment maintenance for Chinese clients, driven by national security interests and NATO ties. While evaluations will be on a case-by-case basis, tensions with China persist amid Dutch-Ukrainian solidarity and US influence concerns. 
• Pivotal Research analysts raised Spotify‘s price target to $390 from $330 per share, maintaining a Buy rating. The increase is attributed to higher premium and ad-supported average revenue per user forecasts. They also highlighted the impact of a new CFO hire from Saab AB, expecting accelerated monetization and efficiency improvements. 
• Jefferies analysts raised Uber Technologies price target to $100, a new Street high, noting the company’s expanded mobility offerings, which have grown from two options in 2011 to around 20 currently. This diversification strategy is driving significant growth in bookings and expanding the total addressable market. 
• BTIG analysts raised MicroStrategy‘s equity target to $1,800 from $780, citing optimism fuelled by Bitcoin’s rally and the upcoming halving event. They anticipate further gains for investors, driven by MicroStrategy’s strategic Bitcoin holdings and the potential impact of the halving event on cryptocurrency prices. 
• Pivotal Research Group upgraded Netflix with a new price target of $765, citing higher subscriber and average revenue per user (ARPU) forecasts for 2024 and beyond. They anticipate solid momentum in the core business and see attractive long-term upside potential from current ARPU levels. 
• In the week ahead in the US, investors are eagerly anticipating key economic indicators and events. The spotlight shines on crucial inflation data and the release of the FOMC meeting minutes. Additionally, attention will be on updates regarding consumer confidence, producer prices, and speeches from Federal Reserve officials. In Europe, eyes are on Germany’s foreign trade and industrial production figures, alongside the UK’s GDP reading for February and industrial production data. Focus will also be on the Q1 earnings season, with JPMorgan, Citigroup and Well Fargo & Co. all reporting on Friday. Delta Air Lines and BlackRock will also provide quarterly updates during the week.