Dow -0,12%, S&P 500 -0,41%, Nasdaq -0,71%, Russell +0,46%, SOX +0,94%, Eurostoxx -0,17%, SMI -0,09%.
Wall Street concludes its first half of 2024 with a day of decline, but the S&P500 (SPX) and the Nasdaq (NDX) remain close to their record levels. The Dow Jones rose 3.8% during the first half of the year. The SPX gained 14.5%. The NDX rose 16.98% over the period, we saw worse in the first half of the year, especially after the superb year that was 2023. The markets remained agitated all day Friday, reacting to the latest signs of slowdown in inflation and President Joe Biden’s disastrous presidential debate. The energy and financial sectors are recovering, they vote for Trump but these gains evaporate with most of the market as the day goes on. Volatility rises slightly, the VIX increases by 1.63% to 12.44, the ratio begins to fall again and returns from 0.76 to 0.64, we remain very relaxed on the American trading floors. On the sector front, today’s SPX podium consists of real estate, energy and financials. The tech giants are not out to help on Friday and we note with some satisfaction that the equally weighted S&P500 index (SPX) gains 0.06%, it notably outperforms the SPX and indicates that a small part of the army begins to join the generals on the hill. Today’s breadth is rather neutral, trade volumes on the other hand are taking off significantly, we are ending the quarter/semester on a high. Over the week, the main US indices stood still while the Russell2000 (RTY, small caps) increased by 1.3%.
If we have to remember one name from Friday’s trading day, it can only be Nike, which is falling 20% after announcing that it expects a decline in its turnover next year. On the other side of the Atlantic, at Adidas we dance the samba, the title does not suffer at all from the announcement of its competitor during the day and outperforms it by 93% since February 16 (NKE -38%, ADS +55%).
Over the week, we keep in mind the 30% increase in Rivian, which benefits from Volkswagen’s announcement of a $5 billion investment in the loss-making startup. For its part, FedEx surprises everyone with annual results above expectations and good prospects for the new financial year, the stock taking off by 18.2% over the week. Kering is doing a little better and is up 5.7%, Bank of America is buying the stock, citing signs of improvement for Gucci. On the dark side of the odds, Airbus got stuck in the tarmac and fell 13.7% after reducing its forecasts for the year due to constraints in its supply chain (Boeing seems ready to deliver bolts , she hardly uses it). Finally Micron fell 5.7% over 5 days after issuing a profit warning.
On the bond front, the US 10-year yield rose significantly on Friday, ignoring the good performance of the PCE index which confirms that the Fed’s 2% inflation target is within sight. His rise is rather astonishing, does it have anything to do with Joe Biden’s historically disastrous performance during the debate the day before? In any case, the 10 year is trading this morning at 4.40%, it has returned above its 200 and 100 day moving averages, which are moving at 4.35% and 4.36%. Broken resistances therefore, now it is the 50 days which presents itself at 4.44%, to be continued. The dollar falls, the Dollar Index (DXY) returns to 105.47, it looks at its next support at 105.15. The EUR/USD pair is trading this morning at 1.0762, a big easing on the single European currency after the results of the first round of the legislative elections in France, I’ll come back to that. Gold is going into summer mode, it’s no longer doing much, this morning at 2,325 dollars an ounce. Oil, on the other hand, has started a nice rebound since June 4. A barrel of WTI Light Crude is back at $82.20. Geopolitical tensions are not weakening in the Middle East, where observers fear a spread of the war in Lebanon. These frictions relegate to second place the dynamics of American stocks, which increased by 3.6 million barrels at Cushing, while the consensus was counting on a decline.
We cross the ocean to land on an old continent that has been turned upside down, the good old traditions no longer seem to be respected there. See instead, Italy left the euro through Switzerland while England is an ant’s calf hair away from suffering the same fate before escaping at the last minute. The stock markets are having a sleepless week, especially Paris, where there are a lot of stocks in anticipation of the first round of legislative elections. The CAC40 fell 2% over the week, the Eurostoxx lost 0.3% while the DAX gained 0.4%.
This morning the market begins its week on a note of marked relief. The result of the first round in France indicates projections between 230 and 280 seats for the National Rally in the National Assembly. It takes 289 to obtain an absolute majority. France Inter specifies that the numerous triangulars to come in the second round will especially penalize the RN, the market takes note of this, Marine Le Pen does not seem to be going to control the French National Assembly alone, the market is relieved and already seems to have forgotten Emmanuel Macron, who is taking a rare turn, his party had 250 seats in the Assembly, he should obtain between 70 and maximum 100 next Sunday.
General relaxation this Monday morning on the French trading floors, the gap between the 10-year OAT and its German alter ego the Bund narrows from 80 to 73 basis points, the euro starts to rise again and the CAC40 opens up 2.5%.
Make no mistake, the market is not celebrating the now almost certain arrival of a far-right party in Matignon, it is delighted to note that France is probably not expected to massively widen its budget deficit even further over the next three years. , in the case of a cohabitation that will be described as chilling and which will de facto freeze many projects, the National Assembly being without a clear majority and therefore ungovernable, to be confirmed next Sunday that said.
In the UK, while support for Labour has fallen below 40% in two polls, the Tories remain stuck at around 21%, which would allow Keir Starmer to enter Downing Street with a larger majority than Tony Blair had in 1997.
Joe Biden’s family urges him to keep fighting as they gather at Camp David, according to the New York Times. Those close to Joe Biden spent the weekend publicly rejecting suggestions that the candidate reconsider his candidacy, but a poll of CBS News shows that 72% of voters believe he lacks the mental and cognitive health necessary to perform his duties.
It will be noted in passing that, in these days of joy and good humor for the Union of Europe, the rotating presidency of the Council of the European Union is taken over by… Viktor Orban, great slayer of Brussels and whose motto is is other than “Make Europe great again”.
On today’s macroeconomic menu, the final reading of the manufacturing PMIs will be published throughout the day, in the morning in Europe and in the afternoon in North America. Furthermore, Germany will publish the first estimate of its June inflation. Construction spending in the United States (4:00 p.m.) completes this program.
Boeing buys Spirit AeroSystems for $4.7 billion. BlackRock buys British data group Preqin for $3.23 billion, according to the Financial Times. Italian tax authorities are demanding €1 billion in unpaid taxes from Alphabet’s Google. Johnson & Johnson reports positive results in late-stage myasthenia gravis study. Morgan Stanley increases quarterly dividend and reapproves $20 billion share buyback. Nestlé expects stable sales growth from the second quarter and for the rest of the year, its CEO tells Swiss newspaper Schweiz am Wochenende. Sandoz plans to market a biosimilar for psoriasis in the United States after FDA approval.
And under the heading “this is really too unfair!”, Volkswagen’s top executives must stop using Porsche models as company cars.
Tonight and this morning in Asia, indices are trading higher. Tokyo is up 0.12% at the bell, Hong Kong is closed, Shanghai is up 0.92%, Seoul is up 0.23% and the Nifty50 is up 0.4%. The SPX future is up 17 points, Europe opens up 1.8%, Paris is up 2.5%.
