Global Market Update
Canadian Markets
Canada’s main stock index dropped as investors grew increasingly concerned that further interest rate cuts from the Bank of Canada may not occur. This apprehension stemmed from a strong jobs report released on Friday, which revealed the Canadian economy added 91,000 jobs in December, far surpassing the forecasted 25,000. This surprising surge in employment led investors to reassess expectations for monetary easing, as a robust labor market could signal less urgency for the Bank of Canada to lower interest rates in the near future. Canadian athletic apparel giant Lululemon reported strong holiday sales figures, providing a bright spot in an otherwise subdued market. Lululemon’s performance underscored consumer resilience, with shoppers continuing to spend on premium athletic wear, buoying investor confidence in the company’s growth prospects amid a challenging economic environment.
American Markets
U.S. stock indexes traded Monday mixed as the Nasdaq was mired in red, while the S&P 500 was also down, and the DOW was in the green. The mixed performance reflects investor unease over the latest jobs data, which indicated a stronger-than-expected labor market in the United States. This reinforced the Federal Reserve’s cautious approach toward interest rate cuts, as the central bank is closely monitoring labor market conditions before making any further adjustments to its monetary policy. The strong jobs report led to a reassessment of expectations for rate cuts, with traders now predicting a modest 25 basis points reduction in the federal funds rate for the remainder of the year, down from earlier hopes for more aggressive cuts.
European Markets
In Europe, shares also fell, driven by broader market concerns as investors became increasingly wary of the global interest rate outlook. Rising bond yields, particularly in the U.S. and other major economies, contributed to a sense of unease, as market participants feared that central banks around the world might keep rates higher for longer than previously anticipated.
UK markets also faced pressure on Monday as investors analyzed the implications of rising government borrowing costs, which were revealed last week. Additionally, markets were focused on potential future interest rate cuts. The British pound weakened again, approaching the $1.21 level, its lowest point since November 2023, while the yield on 10-year UK gilts remained around 4.88%.
Chinese Markets
Stocks in China were also under pressure, as concerns grew about the widening gap between U.S. and Chinese bond yields. This divergence highlighted growing worries about the strength of the Chinese economy relative to the U.S., as well as the potential impact of monetary policy divergence between the world’s two largest economies. The yield gap, driven by higher U.S. Treasury yields, has created a headwind for Chinese assets, further fueling investor concerns about the broader economic outlook.
Corporate Stock News
- Abercrombie & Fitch Co: ANF raised its annual net sales growth target, expecting a 7%-8% increase in fourth-quarter net sales due to strong holiday demand.
- Apple Inc: Faced a mass lawsuit in the UK for charging developers a 30% commission through its App Store, allegedly costing consumers up to $1.8 billion. Separately, its board recommended voting against a proposal to abolish its diversity, equity, and inclusion programs.
- Atlantic Union Bankshares Corp: Piper Sandler initiated coverage with an overweight rating, expecting above-peer profitability following its merger with SASR.
- Barrick Gold Corp: Recommended that shareholders reject an unsolicited mini-tender offer from TRC Capital to buy 0.29% of its stock at a below-market price of C$21.35.
- Biogen Inc & Sage Therapeutics Inc: Biogen offered to buy all outstanding shares of Sage Therapeutics it doesn’t already own for $7.22 per share, a 30% premium.
- BlackRock Inc: BLK received a new deadline of February 10 from the FDIC to resolve issues over its investments in FDIC-regulated banks.
- Clearwater Analytics Holdings Inc & Enfusion Inc: Clearwater Analytics agreed to acquire Enfusion for $1.5 billion in a cash-and-stock deal, offering a 13% premium to Enfusion’s last close.
- Citigroup Inc: Appointed Jeff Wu as Head of Markets Sales for China to unify its market product sales efforts in the country.
- CVS Health Corp, Elevance Health Inc, Humana Inc & UnitedHealth Group Inc: The U.S. government proposed a 2.2% increase in Medicare Advantage payments for 2026, boosting payments to private insurers, including these companies.
- Eli Lilly & Co: Sued two medical spas for selling unapproved versions of its weight-loss drug, tirzepatide.
- Enfusion Inc & Clearwater Analytics Holdings Inc: Clearwater Analytics agreed to acquire Enfusion in a $1.5 billion cash-and-stock deal.
- Gilead Sciences Inc: Partnered with LEO Pharma to develop treatments for inflammatory diseases, with Gilead making a $250 million upfront payment.
- GSK Plc: GSK Announced a deal to buy IDRx for up to $1.15 billion to expand its portfolio in gastrointestinal cancers.
- Howard Hughes Holdings Inc & Pershing Square Holdings Ltd: Pershing Square, led by Bill Ackman, offered to buy the remaining shares of Howard Hughes for $85 each.
- Illumina Inc & Regeneron Pharmaceuticals Inc: Partnered with Truveta and 17 U.S. health systems to invest in building the world’s largest genetic database, valued at over $1 billion.
- Johnson & Johnson: Announced its $14.6 billion acquisition of Intra-Cellular Therapies to expand its neurological disorder treatments.
- Lululemon Athletica Inc: Raised its fourth-quarter sales and profit targets, driven by strong holiday season demand.
- Moderna Inc: Cut its 2025 sales forecast by $1 billion, citing slow RSV shot launch and weak demand for COVID-19 vaccines.
- Nutrien Ltd: JPMorgan raised its target price to $50 from $40, citing expected improvement in retail segment earnings and a positive agri-market outlook.
- Nvidia Corp: Criticized a new U.S. regulation to control AI chip flows, arguing it could harm U.S. innovation and leadership in AI.
- Nvidia Corp: HSBC lowered its target price on Nvidia to $185 from $195 due to concerns over supply chain issues and weakening momentum.
- Occidental Petroleum Corp: Reported lower oil prices for Q4 but expects natural gas prices to cushion the impact.
- Taiwan Semiconductor Manufacturing Co Ltd: Began producing advanced four-nanometer chips for U.S. customers in Arizona and plans to produce two-nanometer chips by 2028.
- Tidewater Renewables Ltd: RBC raised its target price to C$5.50 from C$5, anticipating a sale of the company’s stake in Rimrock RNG to improve its financial profile.
- UBS Group AG: Was criticized for becoming too big for Switzerland after its takeover of Credit Suisse, with calls for risk-reduction measures.
- US Bancorp: Piper Sandler raised its rating on USB to overweight from neutral, expecting positive operating leverage and capital flexibility to boost earnings.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.
