The bulls are hanging on!

Investors regained their appetite last week, betting that the worst of the escalating trade war between the United States and the rest of the world may be behind them. While they recognize that turmoil persists and that underlying damage is likely ongoing, confidence remains high that the US Federal Reserve will intervene if needed. This optimism was reflected in the strong performance of equity indexes, the decline in gold prices, and the relative stability of the US bond market.

To illustrate the renewed appetite for risk, here is how it has translated into key Western indexes:

• The Nasdaq 100 gained 6.4%, driven by US technology stocks.

• Germany’s DAX rose 4.9%, maintaining its recent strong momentum.

• The S&P 500 advanced 4.6%.

• Other major European indices also performed well: Italy’s FTSE MIB rose 3.8%, France’s CAC 40 increased 3.4%, and Switzerland’s SMI gained 2.4%.

• The week’s underperformer was Denmark’s OMX Copenhagen, down 1.2%, still impacted by the fall of Novo Nordisk and broader market uncertainty.

While geopolitical and economic tensions around China and Ukraine persist, corporate earnings continue to provide a stabilizing influence. Investors, typically quick to react to signs of weakness during periods of tension, are instead finding reasons for relief. First-quarter 2025 earnings have shown resilience, with some companies even benefiting from precautionary measures ahead of potential new tariffs. Although fewer US companies beat expectations compared to the historical average (73% vs. 77% over the past five years), the earnings surprises have been slightly larger than usual (10% vs. an 8.8% five-year average), according to FactSet. Importantly, projections for the full year remain stable, suggesting companies do not foresee a major economic downturn. As of now, 36% of S&P 500 companies have reported, with the number expected to double by the end of the week. A similar trend is observed in Europe, although reporting is slightly behind.

Key areas to monitor remain largely unchanged: US-China trade relations, potential progress between Ukraine and Russia, and indicators of the US economy such as PCE inflation and employment data. Corporate earnings, particularly those from major players like Apple—which is heavily exposed to China—will also be closely watched.

Key news highlights for the week:

• The meeting between Zelensky and Trump in Rome was described as "very productive," though details remain vague.

• The US and Iran agreed to continue nuclear negotiations this week in Oman.

• Donald Trump called for free passage for US ships through the Panama and Suez Canals.

• Elon Musk’s xAI Holdings is reportedly in talks to raise $20 billion from investors, according to Bloomberg.

• China’s planning agency expressed full confidence in achieving its 5% GDP growth target for 2025.

• India has threatened to cut Pakistan’s water supply following the attack in Kashmir.

On the economic calendar:

• Wednesday: Preliminary Q1 growth figures for France, Germany, and the eurozone; Germany’s April flash inflation estimate; and the US March PCE inflation index.

• Thursday: Bank of Japan monetary policy decision (no change expected).

• Friday: US monthly employment report.

On the corporate calendar:

• In the United States: Visa, Microsoft, Meta, Apple, Amazon, and Eli Lilly.

• In Europe: Schneider Electric, Novartis, Airbus, TotalEnergies, and UBS.

In Asia-Pacific, the session began sluggishly but later saw moderate gains. Increases were below 0.5% in Japan, Hong Kong, and Australia, while Taiwan and India posted stronger gains between 0.7% and 1%. South Korea remained stable. Leading indicators point to a slightly bearish open in the United States and a stable trend in Europe.

Today's economics highlights:

On today's agenda: Dallas Fed manufacturing index (2:30 p.m.) and Canadian legislative elections. See the full agenda here.

• GBP / USD: 0.7489 USD
• Bund/OAT spread: 72 points (stable)
• VIX: 24.8 (-1.6%)
• Gold: $3,300
• Brent: $65.63
• WTI: $62.94
• 10-year US: 4.243%
• BITCOIN: USD 95,400

In corporate news:

• Domino's Pizza reported an unexpected decline in U.S. same-store sales in the first quarter on Monday, as consumers cut back on restaurant spending amid high inflation and macroeconomic uncertainty; the stock is down about 3% in pre-market trading.
• Exxon Mobil - Aster Chemicals and Energy is considering making a bid for Exxon Mobil's service stations in Singapore, according to five people familiar with the matter.
• Kenvue - Billionaire investor Daniel Loeb’s hedge fund Third Point is taking a stake in Kenvue, sources familiar with the matter said on Friday, as some investors push for strategic changes within the healthcare company.
• Revvity posted first-quarter results on Monday that exceeded Wall Street estimates and maintained its full-year earnings guidance, supported by strong demand from biotech clients for its medical equipment used in drug research; the stock is up 8.2% in pre-market trading.
• Spirit Aerosystems, Boeing - European aircraft manufacturer Airbus said on Monday it had finalized a previously announced deal to acquire certain assets of Spirit Aerosystems, as part of Spirit's acquisition by Boeing, which is facing significant difficulties.
• Springworks Therapeutics - German group Merck KGaA announced on Monday it had reached an agreement to acquire U.S. biotech company Springworks Therapeutics for $3.9 billion (€3.44 billion) to strengthen its cancer treatment portfolio.
• Starbucks - Union delegates involved in contract negotiations rejected the coffee chain’s latest proposal, which offered guaranteed annual raises of at least 2%, Workers United said Friday.

Analyst Recommendations:

• Avantor: Bernstein maintains its market perform rating and lowers the price target from $18 to $15.
• Comcast: Barclays maintains its equal weight rating and lowers the price target from $37 to $35.
• Dow: Morgan Stanley maintains its market weight rating and lowers the price target from $43 to $35.
• Eastman Chemical: JP Morgan downgrades from overweight to neutral with a price target cut from $112 to $76. Morgan Stanley maintains its overweight rating and lowers the price target from $125 to $115.
• Enphase Energy: Baptista Research downgrades from buy to hold with a price target cut from $91.60 to $53.50.
• Kinsale Capital Group: Jefferies maintains its hold rating and lowers the price target from $466 to $455.
• LyondellBasell Industries: Morgan Stanley maintains its overweight rating and lowers the price target from $85 to $70.
• Mohawk Industries: Raymond James maintains its strong buy rating and lowers the price target from $165 to $130.
• Netflix: Baptista Research downgrades from hold to underperform with a price target raised from $1,090 to $1,118.70.
• Omnicom Group: Baptista Research maintains its buy rating and lowers the price target from $118.80 to $102.50.
• PepsiCo: Redburn Atlantic maintains its sell rating and lowers the price target from $124 to $110.
• Philip Morris International: Baptista Research upgrades from underperform to hold with a price target raised from $141.60 to $181.
• Pinterest: Roth Capital Partners maintains a neutral rating with a price target cut from $39 to $29.
• Qorvo: Morgan Stanley maintains its overweight rating and lowers the price target from $106 to $86...
• Qualcomm: Bernstein maintains its outperform rating and lowers the price target from $215 to $185.
• Reddit: Roth Capital Partners maintains a neutral rating and lowers the price target from $195 to $120.
• RenaissanceRe Holdings: Jefferies maintains its hold rating and lowers the price target from $265 to $250.
• Skyworks Solutions: Morgan Stanley maintains its market weight rating and lowers the price target from $72 to $67.
• UnitedHealth Group: Wolfe Research maintains its outperform rating and lowers the price target from $621 to $501.