US equities post back-to-back gains

General market commentary

Equity markets closed higher on Monday, driven by reports suggesting that the Trump administration may initially focus on a narrower set of reciprocal tariffs, potentially easing inflationary pressures and helping to calm trade tensions. The Nasdaq, S&P 500, and Dow Jones all posted strong gains, with the consumer discretionary and technology sectors leading the charge. Tesla shares soared 12%, becoming the top performer on the S&P 500, while Nvidia and Amazon also saw solid gains of 3.2% and 3.6%, respectively. These moves came amid positive data showing a surprising acceleration in U.S. private-sector output growth, driven primarily by an uptick in services activity, despite a slight decline in manufacturing. This helped to counterbalance concerns about the impact of tariffs and a potential slowdown in global trade.

The broader market rally was underpinned by optimism that the tariff strategy would be more targeted, reducing its potential to fuel inflation. In particular, the expectation that the administration may offer exemptions to certain countries from the planned tariffs, which are set to take effect on April 2, helped to soothe investor nerves. Meanwhile, energy markets also saw a boost, with WTI crude oil rising 1.3%, supported by OPEC's output plan signalling tighter supply. The U.S. dollar strengthened against major international currencies as investors adjusted their positions ahead of further tariff developments. Overall, the market sentiment was positive, though concerns over longer-term inflationary pressures and the economic impact of the tariff policies remain a key point of focus for traders.

Latest market and economic update

Most Asian markets rose on Tuesday, buoyed by optimism over the U.S. tariff agenda being less severe than expected, with Japan's Nikkei 225 among the top performers. However, Chinese equities, particularly in Hong Kong, faced profit-taking in tech shares, with the Hang Seng dropping 2% due to losses in companies like Xiaomi and Alibaba.

U.S. equity futures were steady overnight, with investors awaiting further developments on the Trump administration's planned tariffs, amid hopes for a more targeted approach. Market participants are also watching for any updates on sector-specific exemptions, which could impact market sentiment throughout the day.

European equities closed mixed on Monday, with the Stoxx 50 and Stoxx 600 hovering around the flatline, as Bayer slumped 7% following a $2.1 billion damages ruling and JD Sports dropped nearly 5% after a downgrade. On the upside, Saab rose 6.3% following an upgrade from UBS, while the travel and leisure sector gained as Heathrow Airport reopened, though optimism over U.S. tariff flexibility waned.

The U.S. dollar strengthened to a three-week high against the yen and hit its strongest level since March 6 against the euro, reaching $1.0781, as strong U.S. services data and cautious optimism on tariffs boosted investor sentiment. Meanwhile, the pound weakened to a two-week low of $1.2883 before stabilising at $1.2918, with market uncertainty over the impact of impending tariffs adding to the complexity of the dollar's next move.

Oil prices held steady in Asian trading this morning after rising more than 1% the previous session, as President Trump's threat of 25% tariffs on countries buying oil from Venezuela sparked concerns over supply disruptions. Meanwhile, OPEC+ is set to proceed with a planned production increase in May, while investors also focused on the potential impact of U.S.-brokered Russia-Ukraine peace talks on global oil supply.

Equities on the move

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

Alibaba Chairman Joe Tsai announced that the company will resume hiring, citing increased confidence following President Xi Jinping's meeting with business leaders, signalling a thaw in Beijing’s stance towards the tech sector after years of regulatory crackdowns. Tsai also expressed concerns over excessive AI infrastructure investments in the U.S., while revealing Alibaba's plans to invest 380 billion yuan in its cloud and AI infrastructure over the next three years.

HSBC is considering outsourcing some of its fixed income trading order flow, including technology, analytics, and order execution, to third-party firms like Citadel Securities or Jane Street Group, although discussions are still in the early stages. This move comes as part of a wider restructuring effort under new CEO Georges Elhedery to streamline operations and cut costs.

Massachusetts' securities regulator is investigating Robinhood's new prediction-markets hub, which allows users to bet on events like March Madness, due to concerns it links gambling to brokerage accounts, particularly among young investors. The probe includes a subpoena requesting marketing materials and user data to examine the platform's practices.

Chinese electric vehicle maker BYD reported a 73.1% surge in fourth-quarter net profit to 15 billion yuan, driven by lower prices and higher sales, with full-year profit rising 34% to a record 40.3 billion yuan. The company overtook Volkswagen to lead China’s car sales in 2024, while expanding internationally with a 71.9% increase in overseas shipments and plans for a potential new plant in Germany.

Boeing is seeking to withdraw a previous agreement to plead guilty to criminal charges related to deceiving regulators before two deadly 737 MAX crashes, after a U.S. judge rejected the deal in December. The company faces criticism from victims' families and regulatory pressure, with the Justice Department negotiating a new agreement amid ongoing safety concerns and scrutiny from the Trump administration.

Bayer's shares dropped 7% yesterday after a Georgia jury ordered the company to pay nearly $2.1 billion in damages to a plaintiff who claimed its Roundup weedkiller caused cancer, adding to the company’s growing legal challenges. Despite regulatory agencies defending glyphosate’s safety, Bayer faces over 177,000 similar lawsuits and has set aside $16 billion for settlements, with many more cases pending.

eToro Group Ltd. has filed for an IPO with the SEC, aiming to list its Class A common shares on the Nasdaq under the ticker "ETOR," though details on the number of shares and pricing are yet to be disclosed. The company reported strong financial growth in 2024, with revenues soaring to $12.64 billion and net income rising sharply to $192.4 million, driven by market trends such as increased retail participation and evolving consumer expectations.

Elliott Investment Management has urged German energy company RWE to improve shareholder returns, expressing disappointment over the company's lack of clear commitment to this goal. The activist investor sees RWE's reduced capital expenditure and undervaluation as an opportunity to accelerate and expand its share-buyback programme.

SAP has surpassed Novo Nordisk as Europe’s largest company by market capitalisation, with a market cap of $340 billion, driven by optimism around its cloud business and the potential benefits of generative AI. While SAP's shares have risen 7% in 2025, Novo Nordisk has struggled recently, with disappointing trial data for its experimental obesity drug.

Piper Sandler maintains an Overweight rating on Tesla with a $450 price target, citing supply constraints as the main cause of delivery declines and expecting product launches, including robo-taxis, to offset concerns. Meanwhile, Cathie Wood’s Ark Investment remains bullish, forecasting a $2,600 share price in five years, driven by innovations like robo-taxis and humanoid robots, despite recent struggles.

Guggenheim upgraded Pinterest to Buy from Neutral and raised its price target to $40, citing strong user engagement, monetisation potential, and AI-driven advertising growth. The firm expects above-market monetisation growth from 2025-2027, driven by strong user additions, innovative ad formats, and strategic partnerships, with Pinterest benefiting from its performance-based advertising model.

Wedbush Research added IBM to its Best Ideas List, citing the company's focus on balancing growth investments with improved operating efficiency, which is expected to drive strong free cash flow growth. The firm believes IBM is well-positioned to capitalise on the rising demand for hybrid and AI applications, with its AI-related business reaching over $5 billion and expectations for 5% revenue growth in 2025.

Goldman Sachs downgraded Super Micro Computer to Sell, citing increased competition in AI servers, declining gross margins, and valuation concerns, lowering its 12-month price target to $32. The firm highlighted risks related to margin pressures, the erosion of SMCI's market share in AI servers, and a potential decline in its valuation premium compared to peers like Dell.

Lockheed Martin was downgraded by two analysts, who cited its loss to Boeing in the U.S. Air Force’s Next Generation Air Dominance program and concerns over its export opportunities. Meanwhile, Boeing was upgraded, with analysts highlighting its NGAD victory, strong production momentum, and expectations for significant defence sales and strong order activity.

Jefferies upgraded FedEx to Buy, highlighting the company's cost-cutting initiatives, such as Network 2.0 and the Tri-Color Initiative, which are expected to drive earnings growth despite macroeconomic challenges. The firm believes FedEx is undervalued, with its cost-saving strategies positioning the company for strong performance over the next few years, and set a 12-month price target of $275.

Morgan Stanley initiated coverage of Dutch Bros with an Overweight rating and a price target of $82, citing strong growth potential and the company’s ability to expand further in the U.S. beverage market. The firm is confident in Dutch Bros’ growth strategy, driven by a new management team, strong unit growth, and the potential for margin expansion and food sales, while acknowledging challenges from larger competitors like Starbucks.

BofA Securities has downgraded German construction firm Hochtief to "underperform" from "buy" due to a more uncertain macroeconomic outlook, reduced confidence in its U.S. business, and a closed valuation gap with U.S. peers. Despite slight increases in earnings forecasts, analysts remain cautious about potential impacts from a slowing U.S. economy and reduced stock purchases by majority owner ACS.

UBS Global Research has upgraded Thales and Saab to "buy" in response to growing investor confidence in European defence stocks, driven by increasing military spending due to geopolitical tensions and the war in Ukraine. The analysts project significant growth for both companies, with Thales expected to see a 12.6% annual sales growth and Saab benefiting from Sweden's NATO accession and a larger share of European military contracts.

Bank of America downgraded Vodafone to Neutral from Buy, citing a challenging near-term outlook due to the impact of its merger with Three UK and competitive pressures in Germany. The merger is expected to dilute cash flow by 35% for at least two years, and the company faces market challenges, particularly in Germany, leading to a reduced price target of £91.

Upcoming data and events

Today’s key economic data releases in the US include building permits, new home sales, and consumer confidence, all of which could significantly influence market sentiment and sector performance. Earnings season continues, with GameStop and JBS set to report their financial results, offering insights into the retail and food sectors.

For more information visit https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.