2023-12-29 21:53:28
(Photo: Getty Images)
MARKET REVIEW. The year 2023 on Wall Street will have been that of a euphoric and unexpected rebound, accelerated in the last two months by the markets’ certainty that inflation is disappearing and that the end of high interest rates is looming in the United States. United.
To (re)consult market news
Stock market indices at closing
In Toronto, the S&P/TSX collected +29.06 points (+0.14%) to 20,958.44 points.
In New York, the S&P 500 dropped -13.52 points (-0.28%) to 4,769.83 points.
The Nasdaq dropped -83.78 points (-0.56%) to 15,011.35 points.
The DOW ended down -20.56 points (-0.05%) at 37,689.54 points.
The loon fell -US$0.0013 (-0.172.8%) to US$0.754.7.
The oil ended down -US$0.52 (-0.72%) at US$71.25.
L’or ended down -US$10.80 (-0.52%) at US$2,072.70.
The bitcoin fell -US$542.18 (-1.27%) to US$41,991.02.
The context
Among the stars of the year, the action Tesla (TSLA) more than doubled from 113 to 248.48 US dollars ($US). Nvidia (NVDA)the darling of the artificial intelligence sector, was multiplied by more than three, concluding at US$495.22.
Another most spectacular rise was that of the deferred payment specialist Affirm (AFRM)five times higher than its January level at US$49.14.
However, the year saw “a rise in interest rates” from the American central bank (Fed), which is generally unfavorable for stocks, because it makes business investments more expensive, but also “a mini-banking crisis, the outbreak of strikes, and a worsening geopolitical situation,” recalled Art Hogan of B. Riley Wealth Management.
The year 2023 began with expectations of a recession supposed to be caused by the tightening of monetary policy “but it never materialized,” recalled Maris Ogg, portfolio manager for Tower Bridge Advisors.
“We started in fear of a recession and ended in complete euphoria with the idea that interest rates will fall. Now that the market has already taken all of this into account, it might be much more dependent on company results in 2024,” she says, believing in a more difficult year ahead for company margins.
However, analysts are counting on average profit growth of 12% in 2024.
Americans not convinced
The brilliant performances of Wall Street, so far in any case, have hardly dazzled the Americans who “continue to complain regarding the economy and who do not feel prosperous,” adds the expert from Tower Bridge Advisors.
Jobs are still plentiful, with only a 3.7% unemployment rate, and Americans’ real estate assets have further increased in value.
But “they find that the economy is not as good as it was a few years ago and that will undoubtedly handicap Joe Biden”, if he is the Democratic candidate for the presidential election the year next time, underlines Maris Ogg.
The octogenarian is at an all-time low in popularity compared to his predecessors in the White House less than a year before the election.
A Gallup poll in December showed that only 39% of Americans approved of his action.
Wall Street’s enthusiasm has accelerated in the last two months with the sharp decline in interest rates on the bond market. They fell from 5% in October to 3.87% for ten years, in anticipation of a reorientation of the Fed’s monetary policy in the face of inflation falling to 3.1% (according to the CPI index in November).
This situation, however, concerns Steve Sosnick of Interactive Brokers.
“If rates have to fall that much”, this means that we must support an economy which is becoming “problematic”, fears the analyst.
At the same time, Steve Sosnick thinks that the six rate cuts (by a quarter of a percentage point) that the market is considering “are not realistic, because the Fed doesn’t like to be too aggressive right before a presidential election.” “The central bank does not want to be seen as supporting one side or the other,” he added.
Art Cashin, director of operations on the trading floor for UBS, believes that in 2024 it will be necessary to “be vigilant regarding the geopolitical situation”.
Industry at the meeting in Europe
The best performances in Europe are the work of industrial companies: in London, Rolls-Royce (RYCEY), in full recovery, saw its price multiply by more than three over the year. In France, it is Stellantis (STLA, +59,34%) which has progressed the most on the flagship index while in Germany, Rheinmetall (RHM.DE, +54,26%) ends at the top of the poster.
Bad year for oil and gas
The prices of oil fell slightly on Friday, and European natural gas ended 2023 in sharp decline.
The price of a barrel of North Sea Brentfor delivery in March, on its first day of use as a reference contract, fell by 0.14% to US$77.04.
Its American equivalent, the barrel of West Texas Intermediate (WTI)for delivery in February, fell 0.16% to US$71.65.
The two global oil benchmarks ended the year down around 10%.
The bitcoin fell 1.19% to US$41,967. Over the year, the price of the flagship cryptocurrency increased 2.5 times. But by 2022, it had fallen by almost two thirds.
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