Focus is on tomorrow's inflation figures that could provide cues on the fed's rate cuts path, after last week's mixed jobs data boosted expectations that it could start as early as June. However, data for January that showed inflation was resilient in January and signs of a robust US economy are contributing to slowing the AI-led rally.

In the early hours of treading on March 8, it looked like business as usual, with tech stocks rising. But then something snapped, bringing the chip-mania to a screeching halt. Nvidia lost 5.5%, Broadcom 7% and Intel 5%. Things turned upside down, with the ugly ducklings of the moment, Apple and Alphabet, rising 1%. Some of us are wondering if that’s the end of the AI rally. Was the market overheating? It's hard to say whether this is sustainable or just a blip. In any case, all three Wall Street indices posted negative weekly results, while Europe fared better. The broad STOXX Europe 600 index gained 1.1%, helped by its healthcare sector, led by the inevitable Novo Nordisk. Last week, the Danish group's capitalization surpassed that of Tesla.

While corporate earnings releases are slowing this week, macroeconomics will take center stage. Its impact was already visible in Asia this morning. In Japan, the Nikkei 225 took a beating, starting the week down 2.2%. The yen's surge is taking its toll. The Japanese currency rallied on speculation that the BOJ would raise interest rates at its meeting on March 19. Today, futures contracts suggest a 53% probability of Japanese negative rates returning to zero next week. The Tokyo Stock Exchange is very much a slave to currency movements, as the Japanese economy is largely export-oriented: a weaker currency helps local companies to compete on the international stage. The Nikkei 225 is also penalized by profit-taking in semiconductor-related stocks. Tokyo Electron, the star of chip production machines (one of ASML's competitors), lost 3% this morning. Overall, the other Asia-Pacific markets suffered this morning: South Korea lost 0.7% and Taiwan 0.5%. Australia is even harder hit (-1.8%), dragged down by its banking and mining sectors. Profit-taking is also taking shape there.

China is going it alone, as usual. Indices there grew as over the weekend, the authorities announced that inflation had accelerated to 0.7% in February. Economists were expecting a rise, but not quite so pronounced. The surge came not from food prices, but from tourism, whose prices soared for the Lunar New Year. "This is a relatively encouraging reading for inflation and should temporarily calm concerns about deflation, although inflation is likely to remain low for most of the first half of 2024," ING commented this morning. The rise in Chinese equities is also being fueled by two other trends. First, yet another rumor that the regulator is putting pressure on banks to help developers in difficulty. In addition, a recovery in companies linked to the photovoltaic industry, which are benefiting from another rumor concerning more favorable regulatory conditions for the development of solar installations. 

On the macro agenda, many indicators this week in the United States. On top of February inflation (Tuesday), we have consumer health indicators (retail sales and University of Michigan consumer confidence index in particular).

On the corporate front, the supply of earnings releases is drying up, but there are still a few big names due to report this week such as Gitlab, Williams-Sonoma, Adobe and On Holding.

European leading indicators are bearish to start the week, with the Stoxx EU 600 down 0.4% and the FTSE 100 losing 0.3%. Futures on the main three Wall Street indexes are slightly down, between 0.3% and 0.2%.

Today's economic highlights:

No major indicators are expected today.

The dollar is worth EUR 0.9151 and GBP 0.7796. The ounce of gold is firm at USD 2,177. Oil retreats, with North Sea Brent at USD 81.59 a barrel and US light crude WTI at USD 77.34. The yield on 10-year US debt stands at 4.07%. Bitcoin trades at USD 72,260.

In corporate news:

  • Boeing lost 2.1% in pre-market trading as Alaska Airlines announced on Saturday that it was cooperating with the US Department of Justice in an investigation into the Boeing 737 MAX, a fuselage part of which broke off in mid-flight in January. A Boeing 787-9 Dreamliner operated by Latam Airlines also encountered a "technical problem" in flight, injuring at least 50 people.
  • Delta Air Lines expects the delivery of BOEING 737 Max 10s, which it has ordered from the aircraft manufacturer, to be delayed potentially until 2027, Bloomberg reported on Sunday after an interview with the airline's CEO, Ed Bastian.
  • Nvidia loses 0.8% in pre-market trading on Monday, after a 5.5% drop on Friday due to sell-offs in new technologies, particularly artificial intelligence. Its counterparts AMD and Broadcom fell by 1.5% each.
  • EQT will buy out its former Equitrans Midstream division in an all-stock transaction to create an integrated natural gas supplier valued at over $35 billion, the two groups announced on Monday. Midstream gains 8.2% in pre-market trading, while EQT drops 4.3%.
  • Viatris - The US FDA has refused to approve Viatris and Mapi Pharma's monthly injection for the treatment of relapsing forms of multiple sclerosis (MS), the two companies announced on Monday.
  • Microsoft - The European Data Protection Supervisor (EDPS) ruled on Monday that the European Commission's use of the Microsoft 365 software suite had breached EU privacy rules. The watchdog also found that the European executive had not implemented sufficient measures concerning the transfer of personal data to countries outside the bloc.
  • Two leading Republican senators, Ted Cruz and John Thune, introduced a bill on Monday dubbed the "Spectrum Pipeline", which would see certain US government-owned frequencies auctioned off to accelerate the development of 5G wireless networks.
  • Tesla - Elon Musk, the carmaker's CEO, said on Monday that his artificial intelligence company xAI would this week open the source code for "Grok", a conversational robot likely to rival OpenAI's ChatGPT. Meanwhile, Tesla's "gigafactory" near Berlin, which has been without power since March 5 following a fire claimed by a far-left group, could be powered up again this Monday, announced the electricity company in charge of remedying the problem.
  • Comcast- Comcast subsidiary Universal Pictures dominated Sunday's Oscars, with Oppenheimer's triumph including two of the most prestigious statuettes, Best Picture and Best Director.

Analyst recommendations:

  • Dominion Energy, Inc.: BMO Capital Markets downgrades to market perform from outperform with a target price of USD 49.
  • Xcel Energy Inc.: Barclays upgrades to overweight from equalweight with a price target reduced from USD 61 to USD 54. Wolfe Research upgrades to outperform from peerperform with a target price of USD 58.
  • Coinbase Global, Inc.: Jefferies maintains its hold recommendation with a price target raised from USD 160 to USD 245.
  • Kroger Co. (The): BMO Capital Markets maintains its market perform recommendation and raises the target price from USD 46 to USD 58.
  • Lam Research Corporation: Bernstein maintains its market perform recommendation and raises the target price from USD 750 to USD 950.
  • Nvidia Corporation: Aletheia Capital Limited maintains its buy recommendation and raises the target price from USD 1000 to USD 1250.
  • Marks & Spencer Group Plc: RBC Capital upgrades to outperform from sector perform with a price target raised from GBX 285 to GBX 300.
  • Schroders Plc: Numis downgrades to hold from reduce with a target price of GBX 375.
  • Aston Martin Lagonda Global Holdings Plc: Bernstein maintains its outperform rating and reduces the target price from 550 to GBX 385.
  • ROLLS-ROYCE Hold: Bernstein maintains its market perform recommendation and raises the target price from 340 to GBX 420.
  • St. James's Place Plc: HSBC maintains its hold recommendation and reduces the target price from 7.40 to GBP 5.50.