Dow -0,29%, S&P 500 +0,24%, Nasdaq +0,97%, Russell -0,02%, SOX +2,61%, Eurostoxx +0,88%, SMI +0,55%.
Wall Street continues its path to the summits, imperturbable and well helped yesterday by the tech giants. 54th all-time high of the year for the S&P500 index (SPX), new all-time high for the Nasdaq100 (NDX) in increasingly weak trading volumes. The breadth (the gap between SPX securities closing up compared to those down) is bad (32 – 18 negative), the equally weighted S&P500 index (SPW) fell by 0.27% over the session, two illustrations clear that it is the tech behemoths who save the day, while the army remains at the foot of the hill yesterday. The chief generals of the day Meta and Tesla show the way by progressing by 3.2% and 3.4%, the indices end their day close to their highs of the day, we appreciate the macro of this Monday on the trading floors , especially the ISM manufacturing index for November which came out clearly above expectations while its component of prices paid fell sharply, a waking dream for the bulls, especially since Christopher Waller, member of the board of governors of the Fed and reputed rather hawk, says it is in favor of monetary easing on December 18, the Fed Funds now predict a 72% probability of a 25 basis point cut by the Federal Reserve on this occasion, the day before we were at less than 60%. Add to that the SPX and NDX indices which are not overbought, a very favorable seasonality (over the last 96 years the SPX has increased 70 times in December) and the utter absence of alternatives (Europe? well…) and you get this long quiet river of rise that a journalist from FT described as “the mother of all bubbles”, rightly or wrongly I don’t know, but this wave remains strong, the wise investor can surf it while wearing a vest (for example by placing stop-loss orders or buying a put option).
In this regard, the volatility of the SPX is falling further, dropping 1.2% yesterday and closing at 13.34, a realistic technical target of 10.62.
The bond market has been in demand again for some time, the rather dizzying rise in the US 10-year yield has been stopped at 4.50%, a level which de facto plays the role of main resistance now. The 10-year is currently trading at 4.21% and is in the middle of a street fight with its 200-day moving average, which is moving at 4.2053%. A golden cross is in sight in two or three days, things are starting to heat up and we will look at the next support at 4.15%, this is where the 50 days is currently located. The dollar attempted a breakthrough against the euro yesterday and fell back below 1.0500 (1.0461 at its lowest) yesterday, to be back this morning at 1.0525. The 1.0500 – 1.0497 support zone seems difficult to break, watch closely.
In Europe the slump remains. The political mess in France continues to capture attention, Marine Le Pen overturns the table, the Barnier government will not survive and should fall tomorrow or Thursday, little consolation for the boss of the French extreme right. The spread between the 10-year OAT and the 10-year Bund remains wide, this morning at 85 basis points, the CAC40 is attempting a timid rise today, it all seems so fragile, France seems doomed to not having an operational government in fact at least until July 2025 (new legislative elections cannot be held at the earliest until one year after the last ones on June 30 and July 7, 2024) and could work well on instruments until then, with no guarantee that the dust will then settle on this debacle fermented since 2017 by Emmanuel Macron and his party, under the tender and sleeping eye of many voters.
In the macroeconomic chapter of this Monday, the ISM manufacturing for November reached a record, new orders being expanded again for the first time in eight months, while employment recorded its strongest increase since August-23 and that the price index fell to its second lowest level since the start of the year. October construction spending also saw a surprise increase.
Bloomberg reports that Chinese leaders will discuss 2025 growth targets and recovery plans next week.
Donald Trump chooses investment banker Warren Stephens to be US ambassador to the United Kingdom. Furthermore, the president-elect indicates that he would block the takeover of US Steel by Nippon Steel.
On today’s macroeconomic menu, in the United States the JOLTS survey on monthly job openings (4 p.m.).
Stellantis and Samsung secure $7.5 billion in funding from the Department of Energy for a battery factory in the United States. Furthermore, the press confirms the rumors of Monde according to which two “internals”, Antonio Filosa and Maxime Picat, would be in the running to succeed Carlos Tavares. ASML is assessing the effects of new U.S. export restrictions on its sales of chipmaking technology to China. Salvatore Ferragamo confirms its forecasts after the latest sales figures, but writes down assets. Swiss Life sets new medium-term objectives. Super Micro Computer reassures on its accounts and takes off again on Wall Street, after having landed its financial director. Intel CEO Pat Gelsinger unexpectedly retired, leading to the appointment of interim co-CEOs. American justice once again rejects Elon Musk’s compensation at Tesla.
This night and this morning in Asia, the indices are trading higher. Tokyo is up 1.91% at the bell, Hong Kong is up 1%, Shanghai is up 0.44%, Seoul is up 1.86% and the Nifty50 is up 0.76%. The SPX futures trade around break even and Europe opens up over 1%.
