Dow -0,20%, S&P 500 inchangé, Nasdaq +0,12%, Russell -0,60%, SOX +3,36%, Eurostoxx +0,05%, SMI -0,18%.
Fortunately, Santa Claus exists, the financial news of this end of year is so busy that taking care of our Christmas presents ourselves seems like a real pipe dream. On the disjointed menu of this second part of December, France which is being tackled by Moody’s, the Chinese consumer still hounded by Jacques Pradel, the increasingly weakened German executive, the South Korean vaudeville, the shadow of Donald in approach of Downtown Manhattan, American macroeconomic statistics a tad inflationary, Broadcom which puts a coin back in the artificial intelligence jukebox, Tesla which did well to vote for Trump and the announcement of the Fed’s decision on its rates this Wednesday.
Last week’s performance on Wall Street clearly illustrates the current state of mind of market participants. The S&P500 index (SPX) fell by 0.64%, the Nasdaq100 (NDX) gained 0.73%, bond yields rose sharply, the street fight between the dollar and the euro did not weaken, we focused on a specific point in the trading rooms, the Fed and what it will announce Wednesday evening. Doubt has set in in people’s minds, except for December 18, the market is convinced that Jerome Powell and his colleagues will reduce their rate by 25 basis points (97.1% probability) on this occasion. Then it’s the most total vagueness, it must be said that January 20 is approaching, the date on which Donald Trump will officially be president of the United States and should begin to apply his policy, considered very inflationary. This is the main reason for the rebound in bond rates, the US 10-year was still trading at 3.59% on September 17, it is moving this morning to 4.38% and sees its main resistance at 4.50%. The market is questioning the Fed’s ability to continue easing its monetary policy in 2025, but we know that interest rates are by far the main source of inspiration for stock indices, with a downside for the tech sector, which is currently evolving on the AI planet.
In this regard, Friday’s session was marked by the takeoff of Broadcom shares, which soared 18% after the company declared that growing demand for its artificial intelligence chips was behind a boom in its activities. The company reports fourth-quarter profit that beat analysts’ estimates and says its AI revenue rose 220% during the year to $12.2 billion. Broadcom CEO Hock Tan says the AI boom is expected to continue for the company, which is developing custom AI chips for hyperscaler cloud companies. “We see an opportunity for the next three years in the AI space,” Mr. Tan said during his company’s earnings conference call. Clearly, Broadcom has just put a 5-franc coin into the AI jukebox, which was starting to slow down, with everyone wondering when and how the “crazy money” invested in AI was going to start. to make babies. So we’ll see this later, everything is fine, it’s Broadcom who says it, we can continue to buy everything that has anything to do with tech, with our financial soul at peace. At the same time and logically, Tesla’s stock is no longer stopping, since November 5 it has increased by 74%, with the Trump effect in the foreground, so that leaves one wondering…
Note that the equally weighted S&P500 index (SPW) fell 0.38% on Friday and that the NDX reached a new historic record at the bell, without however entering overbought territory. On the small cap front, it’s a little less “fun” last week, the Russell2000 (RTY) lost 2.6%, it seems so much less glamorous than tech these days and bond yields on the rise, coupled with Much less convinced expectations of numerous rate cuts by the Fed next year, keep him at bay. Volatility fell a bit, the VIX lost 1%, while the MOVE increased by 3.6%, things were tightening slightly in the bond market. In terms of currencies, the EUR/USD pair is trading this morning at 1.0518, the dollar has recently tried several times to knock out the euro but the support zone 1.0500 – 1.0497 still holds, we are arriving slowly but probably in the “no prisoners” phase, if this zone is broken we will then look at 1.0448.
It is no great surprise that the Moody’s agency lowered France’s long-term issuer ratings from Aa2 to Aa3 on Friday evening, now with a stable outlook. Moody’s says: “The country’s public finances will be significantly weakened over the coming years. Indeed, political fragmentation is more likely to prevent meaningful fiscal consolidation, which deviates from the base case… the likelihood that the next government will sustainably reduce the scale of budget deficits beyond next year is now very weak. Therefore, we expect France’s public finances to be significantly weaker over the next three years compared to our base case scenario.” An affectionate welcome message to the attention of François Bayrou therefore, and the OAT-Bund spread to deviate to 80 basis points, Liz Truss must be giggling…
In China the situation is not much better, macro statistics published last night show lower than expected retail sales and are dragging Asian stocks down. The CSI 300 index fell for the second consecutive day and the yield on 10-year sovereign bonds reached a new low. China’s retail sales growth unexpectedly slowed to 3% in November, underscoring the urgency for Beijing to encourage more residents to spend. Industrial production is progressing in line with estimates. Continued weakness in activity underscores the need for increased policy support, according to Bloomberg Economics.
In Germany Olaf Scholz will submit today to a parliamentary vote of confidence which should trigger early elections on February 23. The German economy is collapsing just when Europe needs it most.
Hello, there it is again! Oil rebounds this week (+3.8%) despite persistent headwinds (downward revision of global demand growth forecasts by OPEC, the international energy agency forecasts an increase in supply higher than that of demand next year). On the other hand, the new sanctions envisaged by the Biden administration against Russia support it. A barrel of WTI Light Crude at 71 dollars this morning.
Gold fell slightly last week, making it difficult for the barbaric relic to progress alongside a strong dollar and rising bond yields, current price 2656 dollars, the 50 day is currently moving at 2670 dollars, to be continued.
On today’s macroeconomic menu, the leading PMI indicators of the major economies for the month of December will be published throughout the day. We will also follow the Empire State index in the United States at 2:30 p.m.
Unicredit officially submits its offer for Banco BPM. Banco BPM is reportedly considering raising its financial targets or joining forces with Banca Monte dei Paschi to fend off a takeover attempt. The British government has approved Czech billionaire Daniel Křetínský’s acquisition of International Distribution Services, the parent company of Royal Mail, for £5.3 billion. Kudelski hit by a multi-million franc scam. Palantir, MicroStrategy and Axon will join the Nasdaq 100. Illumina, Super Micro Computer and Moderna are paying the price. Meta is asking the California attorney general to prevent OpenAI from becoming a for-profit company, according to the WSJ. Apple CEO Tim Cook will meet with Donald Trump on Friday. Tesla increases the prices of its Model S by 5,000 USD in the United States.
This night and this morning in Asia, the indices are trading lower. Tokyo lost 0.03% at the bell, Hong Kong lost 0.88%, Shanghai lost 0.16%, Seoul fell 0.22% and the Nifty50 fell 0.49%. The future SPX is trading very slightly higher and Europe is opening around balance.
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