Shadow of a Doubt – 03/11/2024

On Friday, American stocks initially appeared to be continuing to do what they do best at the moment: advance in the wake of technology stars. And then something broke, bringing chip-mania to an abrupt halt. Nvidia fell 5.5%, Broadcom 7% and Intel 5%. The market was so opposite at the end of the day on Friday that it caused the current ugly ducklings, Apple and Alphabet, to gain 1%. So, everyone makes their little pontificating comments.”Yes, we told you, the market was heating up“. It’s hard to say if it’s sustainable or if it’s just a gap. In any case, three Wall Street indexes show negative weekly balance sheets, while Europe behaves better. The broad STOXX Europe 600 index rose 1.1%, Helped by it. The health sector with the inevitable Novo Nordisk. Last week, the capitalization of the Danish group exceeded that of Tesla. Investors who love crazy confusions and Caramba jokes are now able to answer the question “Is it better to have an electric car or a slim one?“

While corporate results releases slow down considerably this week, the macro economy will take over the field. Its effects are being felt in Asia this morning. In Japan, the Nikkei 225 took a small hit, opening the week down 2.2%. A surge in the yen is hurting. The Japanese currency is recovering against the backdrop of speculation about the BOJ’s key rate hike at its March 19 meeting. As of March 11, futures contracts indicated a 53% probability that the Japanese negative rate would return to zero next week. The Tokyo Stock Exchange is highly enslaved to exchange rate movements, as the Japanese economy is largely export-oriented: a weak currency boosts the competitiveness of domestic companies on the international scene. The Nikkei 225 is also penalized by profit-taking moves in stocks linked to semiconductors. Tokyo Electron, the star of chip production machines (one of ASML’s competitors), for example, lost 3% this morning. Overall, other Asia-Pacific markets linked to Wall Street volatility suffered this morning: South Korea lost 0.7% and Taiwan lost 0.5%. Australia is further affected (-1.8%), driven by its banking and mining sectors. Profit taking has started to materialize there too.

China is going it alone as usual. On the continent, the CSI300 rose 0.7% while the Hang Seng rose 1.3% in Hong Kong. Over the weekend, authorities announced that inflation had reached 0.7% in February. Economists had expected growth, but not as pronounced. The surge did not come from food prices, but from tourism, whose prices rose for the Lunar New Year. “This is a relatively encouraging reading for inflation and concerns about deflation should temporarily ease, although inflation will remain low in the first half of 2024.“, commented ING this morning. The rise in Chinese stocks is also fueled by two other driving forces. First, another rumor about pressure by the regulator on banks to help developers in difficulties. Then for the photovoltaic industry through the recovery of linked companies, which solar Taking advantage of another rumor related to more favorable regulatory conditions for the development of installations.

News to know to start the week:

• Negotiations are ongoing to achieve a ceasefire in Gaza.
• In France, Emmanuel Macron promised a bill on “assisted dying” introduced in April.
• Oppenheimer’s win at the American Oscar.
• In Portugal, the center-right wins but breaks with the far-right.
• On the macro agenda, several indicators this week in the United States, especially February inflation (Tuesday) and indicators on consumer health (especially the retail sales and consumer confidence index from the University of Michigan).
• On the agenda of companies, the source of results publications is drying up, but we still have to count on Porsche, Generali, Volkswagen, Inditex, Adidas, Geberit or Adobe.

Investors have become more cautious since Friday. European leading indices are bearish to start the week.

Today’s economic affairs

No major indicators are expected today. Full agenda here.

Euro is steady at 1.094 USD. An ounce of gold is stable at 2181 USD. Oil is falling with North Sea Brent at USD 81.28 a barrel and American WTI light crude at USD 77.09. The yield on 10-year American debt is 4.07%. Bitcoin is trading at $68,700.

Major changes in recommendations

• Aperam: Citigroup remains neutral with a price target of 32 to 30 EUR.
• ASML: Citigroup maintains its Outperform recommendation and raises the price target from 890 to 980 EUR.
• AXA: Deutsche Bank maintains its buy recommendation and raises the price target from 34 to 37 EUR.
• Carrefour: JP Morgan maintains its neutral recommendation with a reduced price target from 20 to 19 EUR.
• D’Ieteren Group: Jefferies Buy with a price target of 230 to 235 EUR.
• Edenred: Goldman Sachs maintains its buy recommendation and lowers the price target from 68 to 63 EUR.
• EURAZIO: Goldman Sachs maintains its neutral recommendation with a price target of 75 to 79 EUR.
• Getlink: Goldman Sachs maintains its Buy recommendation and lowers the price target from EUR 20 to EUR 19.50.
• Givaudan: Deutsche Bank maintains its recommendation to hold with a price target raised from 3350 to 3800 CHF.
• HelloFresh: Jefferies cuts Buy to Hold with a price target of EUR 7.50, down from EUR 33.
• Hugo Boss: Baader Helvea upgrades its recommendation to Buy with a price target of 74 EUR.
• International Consolidated Airlines Group: JP Morgan moves from underweight to overweight with a price target of 1.45 EUR to 2.50 EUR.
• Kering: Bernstein maintains its market perform recommendation with a reduced price target of 463 to 456 EUR.
• Marks & Spencer Group: RBC Capital moves from sector perform to outperform with a price target of GBX 285 to GBX 300.
• Munich Re: Keefe Bruyette and Woods downgrade to Market Perform from Outperform with a price target of 435 EUR.
• Teleperformance: HSBC maintains its buy recommendation and lowers the price target from 220 to 150 EUR.
• Tikehau Capital: Goldman Sachs maintains its neutral recommendation with a price target of 22.80 to 23.40 EUR.
• UCB: AlphaValue/Baader Europe maintains its bearish recommendation with a price target of 106 to 123 EUR.
• Unibail-Rodamco-Westfield: Barclays maintains its overweight recommendation and raises the price target from 58 to 80 EUR.
• Zurich Insurance Group: Jefferies Maintain with a price target of 410 to 430 CHF.

in France

Important (and not so important) announcements

• According to the FT, Kering and Aciloluxotica are among the suitors for Italian eyewear maker Marcolin.
• Air Liquide and Vopak will jointly develop ammonia and hydrogen infrastructure in Singapore.
• Sanofi gets positive results in phase IIb with amlitelimumab in atopic dermatitis.
• SFPIM, Caisse des Dépôts and CDPE are increasing their participation in the capital of Euronext through the acquisition of company securities from Euroclear. The trio owns 20.8% of the capital.
• Dassault Aviation reduces its capital by canceling 2.3% of treasury shares.
• Spey signs agreement to acquire ICG Group in Germany.
• Esso is restarting units at its Foss refinery after their maintenance.
• Peugeot Invest will replace its general manager.
• Sensorion announces that the primary endpoint of a Phase II clinical study of SENS-401 in the preservation of residual hearing has been achieved.
• Faxium confirms the withdrawal of its ADSs.
• Key releases of the day: Séché, Abionyx, Immobilière Dassault…

In the big world

Company results (comments are given directly and do not prejudge the evolution of securities, except for post-session exchanges in the United States, which generally reflect trends well)

Important (and not so important) announcements

• FDA authorizes expansion of indication of Vegovi (Novo Nordisk) for cardiovascular risk reduction.
• 3M Co. will finalize the spinoff of its medical equipment subsidiary in early April.
• Bayer is working on developing an alternative to glyphosate.
• Lufthansa is facing new strike threats this time from the crew.
• Allianz is launching a share buyback program for up to €1 billion.
• Taiwan Semiconductor must recover $5 billion in subsidies for its factory in the United States.
• Dutch workers at semiconductor manufacturer NXP go on strike.
• Apple has decided not to ban Epic in Europe after the implementation of the Digital Markets Act.
• JDE Peet’s has appointed Luc Vandevelde (ex-Marks & Spencer, ex-Carrefour) as interim general manager, effective April 1.
• Saudi Telecom has emerged as the highest bidder for Altis Portugal.
• Polymetal completes sale of its activities in Russia.
• A2A acquires distribution network in Lombardy from Enel for €1.2 billion.
• According to Bloomberg, Reddit hopes to raise $748 million in its IPO.
• Key releases of the day: Legend Biotech, Leg Immobilien, Hypoport… The whole agenda is here.

Reading

• Beware of the return of animal spirits (The Macro Compass, in English).
• Rush on copper, raw material for energy transition (Le Monde).
• Skiing: Scandinavia steals market share from the Alps (Bloomberg, in English).
• While the BNF dedicates a retrospective to Beerus (Liberation, with live performances well underway).
• A solution to avoid the Red Sea? Russian train! (Financial Times, in English).
• How the Israel-Hamas conflict is reshaping shipping lanes (The Conversation).
• 16 Companies That Dominate Google Search Results (Detailed)
• TikTok spammers and their AI tools (404 Media, in English, stolen from Alphaville).
• The Kate Middleton photo controversy is the British monarchy rocked by an unimaginable mess (Wired) or a bad Photoshop job (The Verge).