Before the bell: US markets no longer see a recession

Easing trade war gives investors wings. Coinbase and Shopify set to join major indices.

Last week, US stock markets rebounded strongly with index gains between 4% and 6%. Wall Street has now fully recovered from a correction of more than 20%, with stocks back near breakeven compared to the start of the year. Following a trade deal between the United Kingdom and the United States, Washington and Beijing agreed to suspend the massive import tariffs of over 100% and reduce them for 90 days. While tariffs remain significantly elevated, the Financial Times also reported a breakthrough in talks between the United States and the European Union. US inflation figures were also better than expected. That said, the real impact of the first round of tariff hikes has yet to materialise—Walmart already announced it will raise store prices by the end of May.

Technology stocks were the clear winners. Nvidia and Tesla gained about 15% last week, followed by Meta and Amazon. The big loser remains UnitedHealth Group, which shed another 30% amid allegations of fraud and the resignation of its newly appointed CEO. On Friday, the healthcare insurer’s stock recovered 6.4%.

In Asia, the new trading week got off to a lukewarm start. The Topix in Tokyo (-0.1%) hovered around breakeven, while Hong Kong’s Hang Seng Index lost half a percent. Li Auto (-2.6%), Geely (-2.9%) and Alibaba (-4.1%) declined further. This week, we’re watching the purchasing managers’ indices (PMIs) for the United States and Eurozone (Thursday). Ryanair reports earnings today, and shareholders of Nationale Bank and Nextensa are gathering for their annual meetings. We’re also curious about the results from Danish insulation specialist Rockwool. In Brussels, Jensen-Group will publish a quarterly update after the bell.

Extra entry opportunity in a Belgian growth stock?

On Friday evening, EVS issued a first-quarter update. Results were slightly below expectations, the company said, as some orders were booked in April instead of March. EVS is sticking to its full-year revenue guidance of 195 to 210 million euro. However, the range for operating profit—between 35 and 43 million euro—suggests more caution than analysts had expected, as many had modelled towards the upper end of that range. EVS reports no impact from current macroeconomic and geopolitical uncertainty and is even increasing its investment in expansion in the United States. The company says it is well-prepared for various tariff scenarios. While today’s share price may come under pressure and analysts may revise estimates downward, that could present a buying opportunity. With 75 million euro in net cash and a price-earnings ratio of just 14 based on projected earnings of 2.69 euro per share, this growth stock remains both financially healthy and attractively priced.

Hammock investors take note!

Some of last week’s biggest winners were stocks set to be included in major indices. E-commerce player Shopify surged 14% after being selected for inclusion in the Nasdaq 100 index. Crypto trading platform Coinbase soared 24% on news it would be added to the S&P 500 today. Good news for index investors? Perhaps eventually—but not yet. Since the stocks haven’t officially been added to the indices, passive investors won’t have benefited from the pre-inclusion rally. On the contrary: index funds will be buying the shares at a higher price. As if on cue, a data breach involving Coinbase customer information triggered a sharp pullback in the stock on Thursday. But on Friday, the share price rebounded 9%.

Did you know…

that more than half of KBC’s profit now comes from Central Europe? Just last week, the Belgian bank acquired Slovak lender 365.bank for 750 million euro.

This article was translated from Dutch and was originally published on Spaarvarkens.be.