Powell assomme Wall Street – Zonebourse

Finally, the end of the stock market year could be more rock’n’roll than expected. The American central bank did more or less what was expected yesterday, but this “pretty much” has a sulfurous scent. The Fed therefore reduced its rates by 25 basis points to bring them into the 4.25 to 4.50% range. It was planned. She also suggested that rates will fall less quickly than initially anticipated in the future. This was also expected, at least by the bond market which had pushed up the yield on US government bonds in recent weeks.

However, stocks fell sharply on Wall Street, with the Dow Jones closing at -2.6%, the S&P 500 at -3.95%, the Nasdaq 100 at -3.6% and the Russell 2000 at -4. .4%. I put them in the order of declines, but this order is also that of risk: the components of the Dow Jones (large, well-established companies) are theoretically more solid than those of the Russell 2000 (small stocks).

This fall can be explained by the more cautious tone than expected from the head of the Fed, Jerome Powell, regarding inflation. Commentators speak of a “hawkish rate cut“, that is to say a rate cut accompanied by a warning. On the stock market side, we would have preferred a “neutral rate cut“, that is to say a rate cut without the little hammer behind the head. Powell explained that to see other rate cuts coming, we will need progress on inflation. That is to say – signs of a lull towards the 2% inflation target considered by the central bank to be virtuous for the economy. The Fed has at the same time published a new dot graph on the sentiment of its members regarding. to the rate outlook (unlike what I announced yesterday, there was indeed a prospective document, it is time for me to go on vacation). We see that they are counting on key rates of around 3.9% at the end of December 2025, which implies only two rate cuts next year Not so long ago, investors were wondering if US rates would fall below 3% at some point next year…

In short, the market finds itself facing the scenario it already feared: uncertainty has gone up a notch regarding inflation, which calls into question the trajectory of falling rates. He also perceived that the Fed had lost confidence, especially if we weigh in the balance the doubts generated by the policies that Donald Trump is preparing to apply at the start of his mandate, already considered inflationary. In other words, US stock markets collapsed last night because investors were blinded by reality. The question that arises now is whether this is a free warning or a start to correct the excesses of the year, a sort of indigestion even before having overindulged in turkey.

Because we can still speak of a spectacular movement after these declines. We have to go back to 2001 to find such a negative reaction to a Fed announcement. Statistically, Fed days are indeed favorable to the stock markets. In the same vein, US 10-year yields had not increased so suddenly on a Fed day for 11 years. Naturally, the dollar has gained ascendancy over other currencies, complicating the task of the People’s Bank of China or the Bank of Japan. The latter also announced, as expected, a status quo on its rates this night, which will give it time to focus on the fall of the yen against the greenback.

Since trouble always flies in a squadron, as a former president of the French Republic, a lover of apples and beef bases, liked to remind us, Donald Trump threw a tantrum against the bipartisan federal funding bill, threatening to oust the Republicans who would vote for it. This budgetary text should make it possible to extend credits until March, avoiding paralysis (shutdown) of the administration which would start next Friday evening. This adds an unexpected layer of risk at the end of the year for the financial markets.

In Asia Pacific, markets are generally showing the blow, except in China. South Korea and Australia fell quite heavily, while Japan and India limited their losses to the 0.5 to 1% range. Hong Kong lost 0.3% while mainland China was up slightly. European leading indicators are strongly bearish, since they closed before the Fed’s decision and were therefore not shaken up like Wall Street was.

Today’s economic highlights

The Bank of England’s decision on its rates will precede in the United States the latest reading of Q3 GDP, jobless claims and the Philadelphia Fed index (2:30 p.m.), then the figures for old real estate ( 4:00 p.m.). The whole agenda here.

The main changes in recommendations

• Acerinox: Morgan Stanley maintains its overweight recommendation and reduces the price target from 12.70 to 12 EUR.
• Aperam: Morgan Stanley maintains its market weighting recommendation with a reduced price target from 33 to 32 EUR.
• ASML Holding: Cantor Fitzgerald maintains its recommendation to overweight with a price target raised from 750 to 900 EUR.
• Clariant: Goldman Sachs maintains its buy recommendation and reduces the price target from 14 CHF to 12.80 CHF.
• Eurofins Scientific: Goldman Sachs maintains its buy recommendation with a price target raised from 89 to 90 EUR.
• Havas: Oddo BHF starts monitoring at outperformance with a price target of 2.30 EUR.
• Hugo Boss: JP Morgan maintains its neutral recommendation with a price target raised from 42 to 44 EUR.
• Hypoport: Pareto Securities goes from hold to buy with a price target raised from 230 to 240 EUR.
• Nemetschek Se: Baader Helvea goes from reduce to buy with a price target raised from 94 to 118 EUR.
• Netcompany: Carnegie Group goes from buy to hold with a price target reduced from 365 DKK to 350 DKK.
• Pandora: JP Morgan maintains its overweight recommendation with a price target raised from 1300 to 1320 DKK.
• Philips: AlphaValue/Baader Europe maintains its buy recommendation and reduces the price target from 37.60 to 35.40 EUR.
• Siemens AG: BNP Paribas Exane maintains its outperformance recommendation with a price target raised from 215 to 225 EUR.
• Spar Nord Bank: SEB Bank downgrades its buy to hold advice with a price target raised from 140 DKK to 210 DKK.
• Teleperformance: Goldman Sachs maintains its neutral recommendation with a price target reduced from 125 to 109 EUR.
• TotalEnergies: Zacks maintains its neutral recommendation with a reduced price target of 61 to 57 USD.

In France

Important announcements (and less important… I should point out that the information is given immediately before the opening and does not prejudge the color of the shares during the session)

• Renault, Nissan’s largest shareholder, says it is open to talks with Honda.
• Stellantis will advance the launch of a new hybrid version of its best-selling Ram pickup before an electric version, citing slowing demand for EVs.
• Atos “has the resources and flexibility necessary to implement its medium-term strategy“, estimates management after the completion of the capital increases transforming debt into shares.
• Lisi is negotiating the sale of its subsidiary Lisi Automotive Nomel to ZeroBaseInvest, which had already purchased assets in 2020.
• At Viridien, Sophie Zurquiyah temporarily combines the functions of president and general manager due to the arrival of Philippe Salle at the helm of Atos.
• A community in Pennsylvania chooses Waga Energy to produce biomethane.
• WeAccess obtains a subordinated loan of €0.5 million from Banque des Territoires.
• Spineway receives its first orders in Vietnam.
• Gensight is seeking funds to continue its activity beyond the start of January 2025, which should allow it to receive in the meantime enough to continue its operations via the compensation received from its AAC program.
• Metavisio will apply for listing on the Nasdaq OTC.
• The main publications of the day : Plastivaloire, Exel, Geci… The rest here.

In the big world

Important (and not so important) announcements

D’Europe

• New vehicle registrations fell 2% to 1.06 million units in Europe in November, according to ACEA.
• Continental plans to list its automotive business in Frankfurt by the end of 2025 and divest its Original Equipment Solutions business, with the sales process beginning in the first quarter of 2025.
• Volkswagen and unions continue negotiations over factory closures and wage cuts.
• ING Groep is accelerating its expansion in Switzerland.
• The main publications of the day : Douglas, SkiStar…

From North America

• Lennox will replace Catalent in the S&P500.
• Micron plunged 16% outside the session after its quarterly results.
• Lennar plunges 8% outside the session after its quarterly.
• GFL Environmental is in exclusive talks with Apollo Global Management to sell its environmental services division for about C$8 billion (US$5.59 billion), the Globe and Mail reported Wednesday.
• Apple is reportedly in talks with Tencent and ByteDance to roll out AI features in China.
• The FDA classifies the Boston Scientific catheter recall as “most serious.”
• Chevron will pay $400 million to Woodside in an equity swap for energy projects.
• The main publications of the day : Accenture, Nike, Cintas, Fedex, Paychex…

From Asia Pacific and beyond

• CATL, the world’s leading electric vehicle battery maker, is considering a second listing in Hong Kong.
• According to Bloomberg, Eneos plans to IPO up to 70% of JX Advanced Metals.
• Fuji Soft’s founding family supports Bain’s $2 billion hostile takeover bid.
• The main publications of the day : nothing…

The rest of the global publications calendar here.

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