The American markets progressed yesterday, but the jump was not enough to bring the S&P500 to 5000 points, a symbolic level for the market. In Europe, the results of L’Oréal and Hermès will shape the course of French stocks today, while company publications have led to exuberant variations in recent days, like the double-digit shifts on Disney , Ralph Lauren, PayPal, ARM or Adyen yesterday.
The 5000 points slipped again at the close for the S&P500 yesterday. The American index gained 0.06% to fall to 4,998 points. Traders obviously tried a last minute move, but it failed. Literally last minute since the index was trading at 5000.40 points at 9:59 p.m. Paris time, before falling slightly when the bell rang. In Europe, stock markets have evolved according to publications, and not always in the same direction. Amsterdam took advantage of Adyen’s surge to gain 1.6%. In Paris, Kering’s mediocre but promising figures benefited LVMH, which pulled up the CAC40 with the support of TotalEnergies (oil rebounded) and Schneider Electric. I make a parenthesis on this last file, which became the 3e most influential on the Parisian coast in complete discretion. Schneider is now the 4e floating capitalization of the CAC40 and the 4e most traded value of the index. The company thus surpasses Sanofi and L’Oréal in cumulative floating/exchanges. Closed parenthesis. In Switzerland, on the other hand, yesterday, the SMI lost 0.6% due to poor health sector performance, particularly at Novartis (-3%). Health which also weighed down London with the fall of more than 6% in AstraZeneca after mediocre results.
For the rest, the American markets are still rising and China is falling again. Like everyday life. Hong Kong is on half a session before the Lunar New Year break. The Hang Seng lost 0.8%, weighed down by the return of fears about the real estate sector. It’s endless. As I explained yesterday, the market in the former City-State will be closed until Wednesday. Shanghai did not open today and will remain closed all next week, again for the New Year festivities. On Wall Street, technology is still performing well, but it was the results of Ralph Lauren (+17%) and Walt Disney (+11%) which provided relief, as well as those of PayPal (-11%) in another direction. The 2024 Investor clearly has a slight penchant for fiery reactions to posts. It must be the need for drama of the time that wants this.
Here I would like to take this opportunity to introduce a short interesting article published yesterday by a local newspaper, the Wall Street Journal or something like that. It reminds us, for all intents and purposes, that investors are pretty bad at predicting what the US central bank plans to do. For example, during the 2008 financial crisis, they were pretty much constantly upside down. Rebelotte between 2009 and 2016, when they expected rates above 2% most of the time, while the level never exceeded 0.25%. Not really better at the end of the 2017 hike cycle, when they miscalibrated the scale of the rate increases. Same story in 2022. Ah, and in 2020, they misjudged the importance of the rate cuts. Morality, when the market is counting on six rate cuts this year, there is perhaps reason to be cautious.
A market that is always chasing the next goose that lays the golden eggs of artificial intelligence. But since the thing is a little more diffuse than a social media platform or a search engine, finding certified winners is about as difficult as filling ministerial posts in a French government. After Nvidia, the barometer of the specialty with an MOAT which guarantees it several quarters of impunity, after Super Micro Computer, the low-end technology that has become indispensable to the big names in Silicon Valley, perhaps the time has come for ARM Holdings. The British chip designer, which went public on Wall Street last year without making too much of a splash, has just received its little “AI” label, after surprisingly robust results propelled, you guessed it, to intelligence artificial. Overall, +48% on yesterday’s session alone. FOMO has found a new beast to mow and everyone is jumping into the breach. It is justified to a certain point of course, but we are clearly in a bubbly phase in the making.
Today in Europe, investors still have some results to get their teeth into, including those of L’Oréal and Hermès. In the United States, it is PepsiCo which will occupy the field (the Americans rarely publish on Fridays). The only macroeconomic statistic of interest is German inflation for January, as a second estimate. If the initial reading (+0.2% between December and January) is confirmed, not much will happen. If it is revised, the box for speculating on the evolution of ECB rates could return to service.
In other news, Volodymir Zelensky fired the general in chief of the Ukrainian army. Dismissed would have been fairer, if you followed the column from the day before. In any case, exit Valeri Zalouzhny. In the United States, it is Joe Biden’s alleged indulgence that is making the headlines. Ultimately, Donald Trump could end up on a boulevard, if he is not caught by the legal-constitutional patrol. Joe Biden, 81, is suffering collateral damage from the investigation opened into his handling of certain classified documents. If the investigations cleared him, special prosecutor Robert Hur threw a wrench in his report by evoking a “old man“and memory”seriously limited” of the current president during the hearings. Joe Biden, furious, responded publicly. But the damage is undoubtedly done and this episode only reinforces his image as an aging politician who is fond of blunders and slips of the tongue due to age.
To return to the financial markets, Japan ends the week with a gain of 0.1% to nearly 37,000 points on the Nikkei 225, a new peak since the 1990s. South Korea continues its rebound of 0.4% , while India and Australia are making modest progress. European leading indicators are hesitant.
For those who don’t have the ref, or who have a bad memory like Joe, the title refers to a Tintin album. The image was generated by my colleague Romain using artificial intelligence to illustrate an article yesterday. I shamelessly steal from him.
The SMI gained 0.1% to 11,151 points at the opening. The Bel20 is also up 0.1%, to 3671 points. The CAC40 had difficulty getting off the ground because of the drop in L’Oréal: it lost 0.2% to 7,653 points.
Today’s economic highlights
Not much to eat today, apart from the second reading of German inflation for January, published at 8:00 a.m. (preliminary reading +0.2%). The whole agenda here.
The euro is moving at 1.077 USD. An ounce of gold is firm at 2032 USD. Oil rebounded, with North Sea Brent at USD 81.42 per barrel and US WTI light crude at USD 76.08. The performance of the American debt over 10 years goes back to 4.15%. Bitcoin is trading at $46,180.
The main changes in recommendations
- Adyen Nv: Berenberg maintains its recommendation to hold with a price target raised from 1095 to 1500 EUR. Cowen goes from market performance to outperformance with a price target raised from 1120 EUR to 1740 EUR. Evercore ISI maintains its recommendation in line and raises the price target from 1026 to 1420 EUR. Jefferies remains a buy with a price target raised from 1396 to 1743 EUR. Keefe Bruyette & Woods moves from market performance to outperformance with a price target raised from 1200 EUR to 1720 EUR.
- Allianz Se: HSBC begins coverage with a buy recommendation and sets a new price target of 290 EUR, compared to 184 EUR previously.
- Astrazeneca Plc: Carnegie Group goes from buy to hold with a reduced price target of 1530 SEK to 1400 SEK.
- Atea Asa: Carnegie Group goes from hold to sell with a price target reduced from NOK 134 to NOK 106.
- Axa: HSBC resumes coverage with a recommendation to hold and raises the price target from 26.10 to 33.70 EUR.
- Boliden Ab: Berenberg downgrades its recommendation from sell to hold with a price target of 250 SEK.
- Cbrain A/S: ABG Sundal Collier goes from buy to hold with a price target raised from 235 DKK to 260 DKK.
- Coor Service Management Holding Ab: Nordea Bank moves from hold to buy with a price target of 54 SEK.
- Equinor Asa: Danske Bank goes from hold to sell with a reduced price target of NOK 325 to NOK 250.
- Essilorluxottica: Societe Generale maintains its purchase recommendation and reduces the price target from 212.70 to 212 EUR.
- Etteplan Oyj: Inderes moves from reducing to accumulating with a price target raised from 13.50 EUR to 15 EUR.
- Eutelsat Communications: Deutsche Bank goes from hold to sell with a price target reduced from 4 EUR to 3 EUR.
- Grafton Group Plc: RBC Capital starts tracking for outperformance with a price target of 1140 GBX.
- Howden Joinery Group Plc: RBC Capital starts tracking at outperformance with a price target of 920 GBX.
- Innofactor Oyj: Inderes goes from accumulating to buying with a price target raised from 1.30 EUR to 1.55 EUR.
- Intrum Ab: SEB Bank moves from buy to hold with an objective of…