US equities post back-to-back gains

General market commentary

U.S. equity markets closed higher on Monday as investors remained optimistic ahead of the Federal Reserve’s monetary policy decision. The S&P 500 gained 0.6%, the Nasdaq Composite rose 0.3%, and the Dow Jones Industrial Average advanced 0.9%, with most sectors posting gains. U.S. Treasury yields were mixed, while oil prices edged higher. Economic data showed weaker-than-expected retail sales and a decline in homebuilder confidence, reflecting ongoing concerns over inflation and tariffs. In corporate news, Intel and Blackstone saw strong gains, while Tesla shares fell following news of a free trial for its Full Self-Driving service in China.

All eyes are now on the Federal Reserve’s meeting this week, where policymakers are expected to keep interest rates steady. Investors will closely watch the updated "dot plot" for signals on future rate cuts and economic growth forecasts. With markets still adjusting to recent volatility and uncertainties surrounding tariffs and government policy, diversification remains key. Defensive and cyclical equities, bond markets, and international shares have shown resilience, highlighting the importance of a balanced investment approach in navigating ongoing economic challenges.

Latest market and economic update

Asian markets mostly rose on Tuesday, with Hong Kong's Hang Seng up nearly 2%, driven by tech gains amid growing AI optimism and China stimulus hopes. Japan’s Nikkei 225 jumped 1.6% as Warren Buffett’s Berkshire Hathaway boosted stakes in top trading houses, while broader regional markets tracked Wall Street’s strength despite geopolitical concerns, economic uncertainty, and Federal Reserve caution.

US equity futures held firm overnight after two days of gains, offering a brief respite from recent market declines. Investors remain focused on the Federal Reserve’s policy decision on Wednesday, with expectations of unchanged interest rates amid speculation over potential cuts later this year.

European shares closed higher on Monday, with the pan-European STOXX 600 rising 0.8%, extending Friday’s gains, while Germany's fiscal reforms and the energy sector supported the rally. The STOXX 600's energy sector rose 1.5%, healthcare equities gained 1.4%, and Germany's DAX climbed 0.7%, while luxury shares like L’Oréal and Burberry fell.

The US dollar index hovered around 103.5 on Tuesday, near five-month lows, as economic uncertainties and trade tensions weighed on sentiment. The euro held firm at $1.0910, with markets focused on the Federal Reserve’s policy decision, where rates are expected to remain unchanged amid growing expectations of cuts later this year.

Oil prices extended gains in Asian trading this morning as geopolitical tensions escalated, with Israel resuming airstrikes in Gaza and Red Sea conflicts raising supply concerns. Brent crude rose 0.4% to $71.32 per barrel, supported by optimism over China’s stimulus measures, while investors awaited the Federal Reserve’s policy decision for further economic guidance.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

BYD shares hit record highs on Tuesday after unveiling a 1,000-volt "super e-platform" that enables EVs to gain 400 km of range in just five minutes. The company also announced plans to install over 4,000 ultra-fast charging units across China, boosting investor confidence.

Alphabet is in advanced talks to acquire Israeli cybersecurity company Wiz for over $30 billion, marking its largest potential acquisition. The deal would strengthen Alphabet’s cloud infrastructure and cybersecurity capabilities, though it could face antitrust scrutiny despite expected policy changes under the Trump administration.

Chevron has acquired nearly 5% of Hess Corp.'s shares, worth approximately $2.3 billion, as part of its planned $53 billion all-stock acquisition of the company. Despite ongoing legal challenges from Hess' partners in Guyana, Chevron is confident the deal will go through, with the purchase also providing a valuable indirect stake in the Stabroek field.

Robinhood's shares rose 8.7% on Monday after the company announced the launch of a prediction markets hub within its app, allowing users to trade on the outcomes of events like federal funds rate targets and sports tournaments. This expansion into prediction markets marks a significant shift for Robinhood, aiming to enhance liquidity, transparency, and price discovery, although regulatory challenges, particularly in sports predictions, may arise.

Tesla's shares fell 5% on Monday, contrasting with a 27.5% surge in LiDAR maker Luminar Technologies, following a YouTube video by Mark Rober that compared Tesla's autopilot to LiDAR technology. In a series of tests, Tesla's autopilot failed to stop for obstacles, while LiDAR performed better, raising concerns ahead of Tesla's planned Robotaxi rollout in 2025.

Banco Santander is expanding its U.S. operations through a partnership with Verizon, allowing customers to earn bill credits by opening high-yield savings accounts on Santander's new digital banking platform. The Spanish bank aims to become a full-service digital bank in the U.S. and is also considering other partnerships, alongside a $2 billion investment in Mexico.

Stada Arzneimittel AG's initial public offering has been delayed until September due to recent market fluctuations, according to sources familiar with the matter. The pharmaceutical company had been expected to achieve a €10 billion valuation and raise €1.5 billion in new capital, but the private equity owners, Bain Capital and Cinven, have postponed the share sale.

Sunac China expects a wider loss for the year ending December 2024, forecasting a net loss between 25.5 billion yuan and 26 billion yuan, mainly due to the absence of gains from last year’s offshore debt restructuring. The company has struggled with the downturn in China’s property sector and decreased project deliveries, while efforts to reduce its debt burden continue amidst a broader industry crisis.

MoffettNathanson upgraded Netflix to Buy and raised its price target to $1,100, citing the company's ability to better monetise engagement and unlock new revenue streams, particularly through its ad-supported tier. The firm expects Netflix to generate significant ad revenue by 2027 and 2030, with strong margin expansion leading to further growth, and believes Netflix is still under-earning relative to its engagement potential.

JPMorgan upgraded Norwegian Cruise Line to Overweight, citing strong demand, steady booking trends, and resilience in discretionary spending despite economic concerns. Norwegian benefits from a favourable "Value Gap" compared to land-based vacations and an "Experience Gap" with premium offerings, attracting high-income customers and driving onboard spending.

Redburn Atlantic initiated coverage on Reddit Inc with a Sell rating and a price target of $75 per share, citing concerns over the platform's reliance on Google Search for user growth and its uncertain advertising potential. The firm believes Reddit’s shares are overvalued compared to peers like Pinterest, with long-term monetisation challenges and the risk of a slowdown in user growth as Google refines its search algorithm.

Morgan Stanley maintains an Overweight rating on Chewy, viewing its recent 15% share price pullback as an attractive buying opportunity, driven by strong fundamentals and a loyal customer base. Despite elevated investor expectations for FY25 guidance, the firm expects solid Q4 results and believes Chewy could outperform eCommerce peers if consumer conditions weaken, making it a compelling investment in the small- and mid-cap eCommerce sector.

BCA Research warns that the rapid rally in European defence equities, which have surged over 100% since March 2023, is unsustainable. While the long-term outlook remains positive, fiscal constraints, supply chain challenges, and market risks suggest that further upside could be limited.

Upcoming data and events

Today's economic data includes the ZEW Survey Expectations for March, which are expected to be 24.2, alongside the ZEW Survey Current Situation, forecasted at -88.5, both for Germany. In the US, industrial production for February is anticipated to increase by 0.5%, with capacity utilisation expected to be 77.8%.

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