‘The four most dangerous words in investing are: this time it's different. Sir John Templeton's aphorism fits quite well with the situation at the beginning of February 2025. A quick look back. Over the weekend, Donald Trump handed out his first bad points by announcing increased customs duties of up to 25% on Mexico and Canada, and 10% on China. Equity markets plunged yesterday because of the return of the trade war and its unpredictable consequences. But during the Wall Street trading session (for Mexico) and a little later (for Canada), the United States announced a one-month moratorium on the said surtaxes, while negotiations took place. Apparently, the bilateral exchanges between Washington-Mexico and Washington-Ottawa have laid the foundations for a discussion. The New York stock market cut its losses sharply after these twists and turns, providing a good basis for a rebound in Asia and Europe this morning. In a sense, this time is no different from the last, since Donald Trump used and abused this strategy during his first term. Yesterday I illustrated this with the well-known image of ‘hit first, talk later’.

However, there is a downside this morning, which has caused Asian equities to start reversing course: Washington and Beijing have not found common ground, so the 10% surtax has come into force for China, which has retaliated with a series of retaliatory measures. China's morning announcements included tariffs of between 10% and 15% on certain products imported from the United States, export controls on tungsten-based products and the addition of new companies to the list of unreliable players, such as the Illumina laboratory and PVH Corp (the parent company of Calvin Klein and Tommy Hilfiger), joining the ranks of banned companies that until now have been mainly in the defense sector. For good measure, Beijing has also opened an antitrust investigation into Google.

The resumption of Sino-American hostilities has not completely derailed yesterday's sigh of relief, but it does call for greater vigilance. In case anyone has forgotten, the main message of Trump's tactics is that ‘everything is negotiable’. But this has not prevented those familiar with American politics from pointing the finger at the organizational chaos of the last few days in Washington, in particular the fact that the President has gone his own way, against the advice of influential members of his cabinet, some of whom were reportedly unaware of last night's about-turn. An article in the Wall Street Journal sums it up quite well.

Today's curtain rose on a scene of subdued U.S. stock index futures. The Dow Jones Industrial Average futures slipped by 0.2%, S&P 500 futures edged down 0.05%, while the Nasdaq futures managed a modest 0.1% uptick. Despite these geopolitical jitters, traders remain cool-headed, with no Federal Reserve interest-rate changes expected until June, and a 62% chance of a rate cut then.

On the economic front, U.S. factory orders are expected to have shrunk by 0.7% in December, while the Labor Department's Job Openings and Labor Turnover Survey is predicted to reveal a slight dip in job openings to 8 million in December from 8.098 million in November. 

Tariffs aside, the news focuses on earnings releases, of which there are many, and on US key rates. In the first category, we were treated to a firework display by Palantir. The consultancy group's shares soared by 22% after the close in the wake of results boosted by AI. Today, as we await Amazon after the close on Wall Street, the markets are treated to Merck & Co, PepsiCo, KKR, Pfizer, Amgen and Apollo Global Management. In Europe, it's more traditional, with figures from UBS, BNP Paribas, Infineon, Diageo, Dassault Systèmes, Intesa and Publicis. On the central bank front, two members of the Fed explained yesterday that it was urgent to wait and see what impact Trumpolitik would have on the economy. Yields on US debt rose again yesterday, despite the moratorium on tariffs with Mexico and Canada.

In the Asia-Pacific region this morning, Hong Kong does not seem to be suffering too much from the latest events, with the Hang Seng holding on to its 2.8% gain in the session. Japan sees the bottle as half full, with the Nikkei 225 up 0.8%. The situation is similar in India (up 0.8%) and South Korea (up 1.1%). Australia, on the other hand, lost all its gains, with the ASX200 closing down 0.06%. Europe indices are mixed, with the Stoxx Europe 600 remaining flat.

Today's economic highlights:

Today in the United States, we'll see the durable goods orders, industrial orders, and JOLTS job openings. See the full calendar here.

  • Dollar: EUR 0.9685 GBP 0.8060
  • Gold: $2,820
  • Crude Oil (BRENT): $74.90 (WTI) 71.32
  • Rate United States 10years: $4.57
  • BITCOIN: US$99,400

In corporate news:

  • Palantir surged 23% after its quarterly results.
  • NXP Semiconductors gained 2.3% after its quarterly results.
  • The Clorox lost 2.7% after its quarterly results.
  • China launches antitrust investigation into Google.
  • Tesla registrations in California down 12% in 2024.
  • Salesforce cuts 1,000 jobs, according to Bloomberg.
  • Electronic Arts to buy Tracab Technologies.
  • Ingersoll Rand acquires SSI Aeration.
  • Dominion Energy raises total cost of Coastal Virginia Offshore Wind Project to $10.7 billion.
  • Molina Healthcare completes acquisition of Connecticare.
  • The Goodyear completes the sale of its off-road tire business.
  • PepsiCo's shares fizzled out by 2.3% after forecasting annual profits below par, citing waning U.S. demand.
  • Merck's shares took an 8.1% hit, pausing Gardasil shipments to China and revising its 2025 revenue outlook.
  • Spotify hit a high note with shares climbing 8.7% on a promising first-quarter profit forecast.

Main earnings reports: Alphabet, Merck & Co, PepsiCo, AMD, KKR, Pfizer, Amgen, Apollo Global Management, Spotify, PayPal, Chipotle Mexican Grill, Regeneron, Mondelez, Ferrari, Super Micro Computer, Estee Lauder...

Analyst Recommendations:

  • Aptiv Plc: HSBC upgrades to buy from hold with a price target raised from USD 63 to USD 77.
  • Columbia Sportswear Company: Zacks upgrades to outperform from neutral with a target price raised from USD 95 to USD 102.
  • Expand Energy Corporation: Raymond James upgrades to strong buy from dropped coverage with a target price of USD 135.
  • Mastercard, Inc.: DZ Bank AG Research upgrades to buy from hold with a price target raised from USD 520 to USD 620.
  • Microsoft Corporation: CTBC Securities Investment Service Co LTD downgrades to neutral from add with a target price reduced from USD 460 to USD 390.
  • Palantir Technologies Inc.: Morgan Stanley upgrades to equalwt from underwt with a price target raised from USD 60 to USD 95.
  • Tyson Foods, Inc.: Piper Sandler & Co upgrades to neutral from underweight with a target price of USD 58. 
  • Meta Platforms, Inc.: CTBC Securities Investment Service Co LTD maintains a neutral recommendation with a price target raised from 550 to USD 675.
  • Olin Corporation: RBC Capital downgrades to sector perform from outperform with a price target reduced from USD 45 to USD 30.
  • Roblox Corporation: Canaccord Genuity maintains its buy recommendation and raises the target price from USD 60 to USD 80.
  • Tc Energy Corporation: US Capital Advisors upgrades to overweight from hold with a price target raised from CAD 73 to CAD 75.