2024-01-15 07:00:00
This first column of the week is, as often, a bit of a catch-all. We talk regarding rate cuts, musical chairs at Atos, primaries in Iowa, lèse-pomme crime, elections in Taiwan and banking rumors in Europe. All while Wall Street will be closed for a public holiday.
The second stock market week of the year ended with an increase for the majority of global stock indices, erasing all or part of the poor start to 2024. The two drivers of the good performance of stocks in recent months remain in the spotlight . This is the conviction that Western central banks will reduce their rates significantly this year, while the economy will slow down but should limit the damage. Macroeconomic indicators sometimes cause this scenario to waver, but it is clear that it is regularly gaining the upper hand, like what happened last week in the United States.
US inflation accelerated a little faster than expected in December, which reduced the likelihood of a first rate cut from the Fed as early as March. But producer prices for the same period, revealed on Friday, in some way canceled out the first statistic, since they fell. The market has therefore returned more or less to its initial bet: an 80% probability of a rate cut in March. By the middle of the week, this percentage was approaching 50%, a level which would have jeopardized the sweet euphoria in which investors are bathed. Note that in Europe, the markets are counting on a first easing in April.
In terms of stock indices, this resulted in a positive week. The losses at the start of the year were reduced on most European indices and on the Nasdaq 100, while the S&P500 is now up slightly in 2024. Some places can even be credited with a great start: Japan (+ 6.3% for the Nikkei 225 in 2024) remains investors’ favorite market, as has been the case since the start of last year. In Europe, the Greek and Danish markets are the most prominent, with gains of more than 3%, while Switzerland is doing rather well (+0.8%).
What are the news that are being talked regarding in the financial media at the end of the weekend?
- The presidential election in Taiwan offered a third consecutive mandate to the DPP, which was not very favorable to China. But he backed down in parliament, giving the more China-friendly KMT party a stronger position. Two quotes borrowed this morning from specialists in the matter. “Apart from a few slightly provocative remarks on both sides of the Taiwan Strait, nothing more tangible seems to be emerging for the moment” et “Taiwan markets mixed as election result appears to force compromise“.
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The American market is closed today for Martin Luther King Day. However, important things are happening in the United States with the first Republican primary in Iowa. Donald Trump should win hands down, so second place will be important. It should be played between Nikki Haley and Ron DeSantis.
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We remain in the United States with Microsoft ($2,887 billion) which became the world’s largest capitalization ahead of Apple ($2,875 billion) at the end of Friday’s session. This is the first time that the creator of Windows has surpassed that of the iPhone since 2021. Microsoft gained 62% in one year, while Apple only progressed, if I may say so, by 38%. The difference is essentially due to the leadership of the first in artificial intelligence, while the second struggled to revive sales of iPhones, hampered by a policy of exclusion in China.
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In Switzerland, it is the start of the World Economic Forum in Davos, whose theme is “Rebuilding confidence”.
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Tensions remain high in the Red Sea, which helps to keep oil prices high despite fears regarding global growth.
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In China, the central bank maintained its key rate, while the market expected a reduction. The PBOC also increased its liquidity injections. Not enough to cause scenes of jubilation, nor deep depression. Not enough to shake up the Chinese stock indices either, still at the bottom of the bucket.
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This week, the main expected statistics concern consumer health in the United States: retail sales for December (Wednesday) and the University of Michigan confidence index for January on Friday. China also has to communicate quite a few figures. Corporate results will accelerate slightly with a new series of American banks (Morgan Stanley, Goldman Sachs, etc.), then the first non-financial ones, such as Rio Tinto, Repsol or Compagnie Financière Richemont.
In Asia Pacific this morning, Japan is rising, of course, with a gain of 0.9% for the Nikkei 225. China is down slightly. In South Korea, the KOSPI is up symbolically at the end of the run, but this might be enough to end a bearish streak of eight consecutive sessions. India confirms its good start to the year (+0.6%). Australia finished a few points from balance, while Taiwan gained 0.19% following the election verdict. European leading indicators are slightly bullish.
Today’s economic highlights
The main data expected today is European industrial production for November (11:00 a.m.). The whole agenda here.
The euro is stable at 1.0963 USD. The ounce of gold goes back to 2053 USD. Oil is close to Friday’s levels, with North Sea Brent at USD 78.43 per barrel and US WTI light crude at USD 72.75. The performance of the American debt over 10 years drops to 3.94%. Bitcoin is trading at $42,600.
The main changes in recommendations
- Adyen NV: HSBC moves from hold to buy with a price target raised from 1000 EUR to 1400 EUR. Morgan Stanley maintains its market weighting recommendation with a price target raised from 925 to 1100 EUR.
- Aéroports De Paris: Insight Investment Research LLP maintains its buy recommendation and raises the price target from 225 to 263 EUR.
- Alleima: SEB Bank goes from buy to hold with a price target raised from 70 SEK to 80 SEK.
- Amadeus: HSBC maintains its recommendation to hold with a price target raised from 65 to 70 EUR.
- Asm International: Goldman Sachs maintains its buy recommendation and raises the price target from 500 to 550 EUR.
- Asml Holding: Goldman Sachs maintains its buy recommendation and raises the price target from 785 to 820 EUR.
- Atos: HSBC moves from keep to lighten with a price target reduced from 5 EUR to 4 EUR. Morgan Stanley maintains its recommendation to underweight with a price target reduced from 10 to 4.70 EUR.
- Burberry: Morgan Stanley maintains its market weighting recommendation with a reduced price target of 1600 to 1350 GBX.
- Capgemini: HSBC goes from hold to buy with a price target raised from 185 to 225 EUR. Morgan Stanley maintains its market weighting recommendation with a reduced price target of 221 to 214 EUR.
- Compugroup Medical: Morgan Stanley moves from underweight to market weight with a price target reduced from 41 EUR to 39 EUR.
- Continental Ag: JP Morgan goes from neutral to overweight with a price target raised from 76 to 100 EUR.
- Dassault Aviation: Deutsche Bank moves from buy to hold with a price target reduced from 216 EUR to 199 EUR.
- Dassault Systèmes: HSBC maintains its buy recommendation and raises the price target from 45 to 50 EUR. Morgan Stanley maintains its recommendation to overweight with a price target raised from 44.50 to 47.50 EUR.
- Eurobank Ergasias: Morgan Stanley moves from market weighting to overweight with a price target raised from 2.01 EUR to 2.33 EUR.
- Exclusive Networks: Morgan Stanley maintains its overweight recommendation and raises the price target from 24 EUR to 24.50 EUR.
- Grifols: Jefferies ceases coverage of the action.
- Logitech International: Goldman Sachs maintains its buy recommendation and raises the price target from 87 to 89 CHF.
- Nemetschek: Morgan Stanley maintains its market weighting recommendation with a price target raised from 68.50 to 81.25 EUR.
- Ovh Groupe: Morgan Stanley maintains its market weighting recommendation with a price target raised from 7.10 to 8.30 EUR.
- Partners Group Holding: BNP Paribas Exane maintains its neutral recommendation with a price target reduced from 1260 to 1185 CHF.
- Publicis Groupe: Morgan Stanley maintains its overweight recommendation with a price target raised from 90 to 98 EUR.
- Rémy Cointreau: Goldman Sachs maintains its buy recommendation and reduces the price target from 180 to 133 EUR. Societe Generale maintains its recommendation to hold with a reduced price target of 110 to 105 EUR.
- Sinch: Morgan Stanley moves from market weight to underweight with a reduced price target of 27 SEK to 26 SEK.
- Société Générale: Goldman Sachs maintains its sell recommendation with a price target reduced from 22.25 to 21.90 EUR.
- Softwareone Holding Ag: Morgan Stanley maintains its market weighting recommendation with a price target raised from 15 CHF to 15.50 CHF.
- Sopra Steria Group: HSBC maintains its buy recommendation and raises the price target from 250 to 260 EUR. Morgan Stanley maintains its market weighting recommendation with a price target raised from 200 to 204 EUR.
- Stmicroelectronics NV: Goldman Sachs maintains its sell recommendation and raises the price target from 36.50 to 37 EUR.
- Temenos: Morgan Stanley remains underweight with a price target raised from 47 to 58 CHF.
- Tietoevry Oyj: Morgan Stanley moves from market weighting to overweight with a price target raised from 27 EUR to 27.50 EUR.
- Verallia: Deutsche Bank maintains its buy recommendation and reduces the price target from 52 to 50 EUR.
- Wacker Chemie Ag: HSBC goes from buy to hold with a price target reduced from 160 EUR to 105 EUR.
- Worldline: HSBC goes from buy to hold with a price target reduced from 25 EUR to 16 EUR.
In France
Important (and not so important) announcements
- Delta Air Lines orders up to 40 Airbus A350-1000 wide-body aircraft.
- ArcelorMittal and the French State will invest €1.8 billion to reduce CO2 emissions from the Grande-Synthe site.
- Danone plans to close a factory near Barcelona, 157 jobs will be affected.
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Canal+ (Vivendi) authorized under conditions to buy OCS and Orange Studio from Orange.
- Dassault Aviation delivered 13 Rafale and 26 Falcon in 2023, for 60 and 23 orders respectively.
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The proposed sale of the outsourcing branch of Atos, Tech Foundations, to Daniel Kretinsky, is seriously compromised, according to Les Echos. Atos also announces promotion of its financial director, Paul Saleh, as general manager in place of Yves Bernaert. Atos estimates that its 2023 free cash flow will be slightly below targets but confirms its other forecasts.
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Unsere Grüne Glasfaser and Solutions 30 sign a partnership to provide fiber optic connections to German homes.
- Carmat hopes to significantly accelerate its sales this year and will quickly launch fundraising to meet its financing needs for the year, estimated at €50 million.
- Xilam strikes new broadcast deals for Zig & Sharko and Karate Mouton.
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The main publications of the day: Catana.
In the big world
Important (and not so important) announcements
- The American FAA extends the grounding of the Boeing 737MAX 9 for new safety checks.
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The CEO of Deutsche Bank is talking regarding a merger with another European player to gain size, according to Bloomberg. Compatriot Commerzbank is mentioned, as well as ABN Amro.
- SoftwareOne ultimately declines Bain Capital’s proposal to remain independent.
- AP Moller Maersk will turn to rail to move some goods as reduced Panama Canal crossings due to low water levels have caused bottlenecks.
- UBS and Citigroup open the bitcoin ETF market to certain clients.
- Apple will close its 121-person San Diego AI unit as part of a reorganization, according to Bloomberg.
- Baidu falls 10% in Hong Kong, following the publication of a report linking its artificial intelligence platform Ernie to Chinese military research.
- EQT is among the companies interested in Broadcom’s $5 billion end-user computing unit.
- FedEx has not seen much impact from the Red Sea disruptions, according to its CEO.
- McKesson is reportedly looking for buyers for Canadian pharmacy Rexall.
- Universal Music Group might cut jobs this year.
- Lupine receives FDA green light for blood pressure drug.
- BYD in discussions with Brazilian Sigma Lithium on a supply contract.
- Saipem suspended from public contracts in Brazil for 2 years.
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The main publications of the day: Rio Tinto, Repsol, Ashmore, Pagegroup… The whole agenda here.
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