Dow +0,69%, S&P 500 +0,10%, Nasdaq +0,06%, Russell +1,47%, SOX -2,54%, Eurostoxx +1,07%, SMI +0,89%.
John Maynard Keynes was a little trickster. We know the British economist who upholds the idea that the State must solve short-term problems and not let market forces take care of them. We know less about his speculator side, he who seemed so detached from money accumulated a considerable personal fortune during his life, playing with currencies, buying shares at the sound of cannon and even investing in the art market. It was therefore a connoisseur who one day took up the notion of animal spirits, which refers to irrational psychological impulses and human emotions which influence decisions, particularly on financial markets. Rather than basing their decisions solely on rational calculations or logical analyses, investors are often guided by feelings such as optimism, fear or euphoria. These animal spirits can create collective behaviors such as speculative bubbles or stock market panics. For example, if investors feel strong optimism, they will tend to buy en masse, which pushes up asset prices, sometimes in ways disconnected from economic fundamentals. Conversely, fear can trigger sell-offs, even if the economics do not justify such a reaction. Well guess what, this notion is back in the editorials this morning, I’ll let you guess if it’s optimism, fear or euphoria that prevails in the markets these days.
A few clues all the same: since November 6, the Russell2000 index (RTY, small American stock market capitalizations) has gained 7.7%. at the same time, bitcoin took off by 29% and Tesla by 39%. Everyone calls it the “Trump Trade.” The disgruntled will allow themselves to point out that these movements are not based on anything tangible, we can however understand that the RTY is sought after the election of Donald Trump and in the perspective of future rate cuts from the Fed, but almost 8% in four sessions that leaves you wondering.
At the same time, there is market momentum, notably illustrated by the comparison between buying and selling forces (buying pressure vs selling pressure), which has only turned in favor of buyers over the last four sessions. trading of the S&P500 index (SPX). This argues in favor of a continuation of the current strength of the equity indices, in this context the SPX managed to close above the 6,000 point mark yesterday evening and set a new historical record on its table of hunting, just like the Dow Jones and the Nasdaq, the venerable index rising above 44,000 points, a first. Small caps outperform the stock, the tech giants are behind with 5 of the 7 magnificent ones falling, apart from Tesla which takes off by an additional 9.15%. Semiconductors are subject to profit taking, we rather look for financials, energy, industrials and discretionary consumption.
The volatility of stocks does not change, the VIX is already very low. On the bond side, yesterday was a day off, this morning the yield on the 10-year US bond rose to 4.36%, we do not forget in the trading rooms that the policy about to be put in place by Donald Trump could widen the United States budget deficit even further and cause a return of inflation, which in particular allows the greenback to strengthen, the EUR/USD pair returns to 1.0623, sees significant support at 1.0601 and can target 1.0500 if this level does not hold, knowing that a death cross (the 50-day moving average crosses the 200-day downward) is looming on a horizon of one to two weeks.
Gold remains under pressure as the uncertainty linked to the US presidential election has disappeared. The strong dollar and high bond yields are not helping, the ounce is trading at $2,601, its 100-day moving average is trading at $2,538, probably a support level to consider. Oil is weakening once again, a barrel of WTI Light Crude is trading at $68.12.
China is considering reducing one of the taxes on home purchases in major cities, including Shanghai and Beijing, to 1%, from the current 3%, according to Bloomberg.
Donald Trump should choose Marco Rubio as secretary of state. Mike Waltz, reportedly chosen as national security advisor, both men are considered hostile to China. Lee Zeldin will lead the Environmental Protection Agency (EPA). Kristi Noem will lead the Department of Homeland Security, according to CNN. Donald Trump Jr. is giving up an official position in his father’s administration and will instead join venture capital firm 1789 Capital, according to Bloomberg.
On today’s macroeconomic menu, the second reading of German inflation for October (output right in line and unchanged). The ZEW index of German financial confidence is for 11:00.
Moncler is not in talks to buy Burberry, according to Reuters. Bayer revises its operating profit forecast downwards. Infineon forecasts “moderate” revenue for 2025 after delivering revenue in line with expectations in the fiscal fourth quarter. Siemens Energy wins $1.3 billion order for ScottishPower wind turbines. Temenos unveils its new strategic plan and objectives for 2028. The Italian government has approved Lufthansa’s potential investment in state-owned ITA Airways. AbbVie shares plunge after phase II failure of Emraclidine against schizophrenia. Mattel accidentally put a link to a pornographic site on the packaging of Wicked dolls. Amazon is developing driver glasses for faster deliveries. Alibaba claims to have garnered a record number of buyers during Singles’ Day, which was held last night. Nissan shares jumped more than 20% after activist Effissimo took a stake.
This night and this morning in Asia, the indices are trading lower. Tokyo returned 0.4% at the bell, Hong Kong slipped 2.84%, Shanghai lost 1.39%, Seoul gave up 1.94% and the Nifty50 fell 0.73%. The future SPX returns 6 points and Europe opens down 0.9%.
The animal spirits digest the gargantuan meal begun on November 6.
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