While Western markets are no longer falling, Chinese authorities are upset that their markets are no longer rising. If that’s the case for five years, it’s never too late to act, right? Obviously, Beijing will buy large-scale shares to strengthen the structure. I wonder how long it will take for investors to realize that they would rather take vigorous economic action up front than shaky scaffolding down the line.
European equity indices were in line with their American counterparts yesterday, returning to their best levels. But Wall Street seized the opportunity to move forward. A bit like a jogging partner who slows down to wait for you, before giving a little boost when you finally join him, sweating like a pig, just to show who’s going the fastest. Wall Street apparently likes to exceed symbolic milestones, because after the Nasdaq 100’s 17,000 points, it’s the Dow Jones’ 38,000 points that have been erased. Both indices are moving into terra incognita, as is the S&P500, which has reached 4850 points. New York traders are 3% lower making the 5000 flocked cap. A bit of history: The 4000 version is from April 2021. 3000 from October 2019. 2000 from September 2014 and 1000 from February 1998.
However, US gains from a day earlier were modest and the three major indexes were not far off their intraday lows. Investors are not overly concerned about the prospect of a Fed rate cut below 50% in March. This slight disillusionment has been replaced by a feeling that the pace of rate cuts ultimately matters little as long as the economy continues to show signs of strength. To use a financial professional’s expression that I read this morning without remembering where, the market believes that the American economy is invincible. It must be Marvel superhero syndrome, mixed with artificial intelligence. AI is everywhere and reinforces bullish calls. No one knows why or where it is going, but there are many who smell money. So there are two types of people in markets, those who know (or pretend) and those who don’t.
Let’s take the case of two ordinary people who invest. Bernard knows, Micheline doesn’t, poor thing.
- “Why does it go up?
- Well, you see, Michelin, soon, all difficult tasks will be handled by artificial intelligence. Increase productivity, efficiency, speed, quality. And we’ll get angrier.
- Yes, but why is it increasing?
- I will explain, it is simple. Tell me something painful in your daily life that you would like to see disappear?
- Go to the toilet.
- Another thing.
- I don’t feel cold in winter when I go outside.
- Another thing.
- work
- Ah well, you see, there, artificial intelligence will probably take your job, so you won’t have to go to work anymore.
- Yes, but why is it increasing?
- Because to organize all that, you need a processor to look for things that will allow you to do more work.
- Will it make me richer to work more?
- Michelin is progress you can get behind. Buy some Nvidia!”
There you go, if you are asked why AI boosts the stock market, you have a good argument.
While waiting for AI, Chinese authorities have pulled out the defibrillator to try to revive their moribund stock market. Apparently, Beijing will inject more public funds into the capital market, Premier Li Qiang said. Bloomberg understands that 2,000 billion yuan (about $278.5 billion) could be raised from the offshore accounts of Chinese state-owned companies to create the stabilization fund. As volatile as the setup may seem, the authorities now don’t really know what to do to stop the stock market hemorrhaging. The Hang Seng appreciated this morning and rebounded by 3.3%. The CSI300 is more reserved, even as it rises 0.5%. After all, it’s about siphoning off corporate coffers to buy shares.
In Japan, central bank decisions, as is often the case, gave birth to rats. The BOJ kept its monetary policy unchanged, surprisingly, and avoided comment on its future intentions. The impact is relatively neutral on the Japanese market, which still benefits from a good reputation in the region compared to Hong Kong’s ugly duckling.
Today’s session will be marked by the first big burst of corporate results of the week on both sides of the Atlantic. Ericsson, Logitech and Swatch got the ball rolling in Europe this morning. They will be joined later today by heavyweights in the United States: Johnson & Johnson, Procter & Gamble Co., Netflix, Verizon Communications, Texas Instruments and most notably General Electric.
In Asia Pacific this morning, Tokyo ended slightly down 0.08%. India was also down (-0.4%) before the end of the session. On the other hand, Taiwan, South Korea and Australia saw an increase of around 0.5%. After heavy losses yesterday, China is recovering by 0.5% for the CSI300 and 3.3% for the Hang Seng after news of support measures. Leading indices in Europe are very slightly bullish around 7:30 am.
Today’s economic affairs
Besides the Bank of Japan, the Richmond Fed Manufacturing Index (4:00 pm) will be followed by investors. Full agenda here.
The Euro is trading at 1.0895 USD. An ounce of gold is stable at 2027 USD. Oil is rising with North Sea Brent at USD 79.90 a barrel and American WTI light crude at USD 74.66. The yield on 10-year US debt fell to 4.09%. Bitcoin falls to USD 40,040.
Major changes in recommendations
- Accor: HSBC maintains its buy recommendation with a price target of 42.50 to 45 EUR.
- Adyen: BMO Capital Markets maintains an Outperform recommendation with a price target of 1400 EUR.
- Alcon Inc.: Bernstein initiates tracking on outperform with price target of 82 CHF.
- Asm International: ING Bank maintains its buy recommendation and raises the price target from 500 to 650 EUR.
- AstraZeneca: Morgan Stanley initiates Overweight watch with price target of 85 USD.
- Carl Zeiss Meditec: Bernstein initiates monitoring of underperformance with a price target of 76 EUR.
- Carrefour: Goldman Sachs maintains its neutral recommendation with a reduced price target from 20.50 to 20 EUR.
- Compass Group plc: HSBC moves to Buy to Hold with a price target of GBP23.45 to GBP23.70.
- Davide Campari-Milano: Citi goes from neutral to buy with a price target cut from 11.50 EUR to 10.50 EUR.
- Allier Group: HSBC maintains its recommendation to hold with a price target of 2.10 to 2.90 EUR.
- Ancavis: Stifel holds to sell with a price target cut from 18.20 EUR to 11.50 EUR.
- Essilorluxottica: Société Générale maintains its buy recommendation and raises the price target slightly from 189.80 to 190 EUR.
- Ferrari: RBC Capital maintains its Outperform recommendation with a price target of 344 to 366 EUR.
- FirstGroup: HSBC moves to Buy to Hold with a price target of GBP 1.55 to GBP 1.80.
- Fortum: AlphaValue/Baader Europe accumulates buy with a price target lowered from EUR 17.50 to EUR 14.70.
- Hellofresh: Morgan Stanley moves from market weight to overweight with a price target cut from EUR 18 to EUR 17.
- Iberdrola: Barclays moves from overweight to market weight with a price target cut from EUR 13.30 to EUR 12.40.
- Kuhn und Nagel International: Bernstein downgrades its recommendation from Outperform to Market Perform with a price target of 300 CHF.
- La Française Des Jeux: AlphaValue/Baader Europe maintains its buy recommendation and raises the price target from 45.90 to 48.20 EUR.
- Nordex: Goldman Sachs moves from Neutral to Buy with a price target of 15 EUR.
- Novo Nordisk: Morgan Stanley initiates Overweight watch with price target of 120 USD.
- Saab: SEB Bank moves from Buy with a price target of SEK 670 to SEK 725.
- Sandoz Group AG: Morningstar maintains its hold recommendation with a price target of 28.50 to 31 CHF. Societe Generale initiates Buy watch with a price target of 38 CHF.
- Smcp: Societe Generale maintains its buy recommendation and lowers the price target from 11.40 to 11 EUR.
- Sodexo: HSBC moves from Hold to Buy with a price target of 100 to 120 EUR.
- Ucb: ING Bank maintains its buy recommendation with a price target of 109 to 114 EUR.
- Zehnder Group Ag: Bank Vontobel AG maintains its buy recommendation and lowers the price target from CHF 85 to CHF 70.
in France
Important (and not so important) announcements
- Sanofi will buy drug candidate INBRX-101 from Inhibrx for up to $2.2 billion.
- Kering buys the building at 5E Avenue in New York for $963 million.
- Fashion resale site Vestiaire Collective (which counts Eurazio and Kering among its shareholders) is launching a crowdfunding campaign and preparing an IPO in 2025.
- Technip Energies announces the appointment of Marco Villa as Chief Business Officer.
- Ipsen presents Phase III data evaluating Cabometyx in combination with immunotherapy at the 2024 ASCO edition on genitourinary cancer.
- Euronext announces that its annual “pre-IPO” show attracted more than 160 companies this year, a record.
- Colas (Boygues) signs €83 million contract at Brest.
- TF1 has filed a complaint with the European Commission for “illegal state aid” from France in favor of France Television.
- The transgene reinforces its orientation.
- Spie Batignolles will file a simple takeover bid for Compagnie Industrielle et Financière d’Entreprises after acquiring a controlling interest.
- Main publications of the day: Oeneo, Compagnie des Alpes, Pierre & Vacances, Bourse Direct, Sidetrade, Nacon…
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)
- Ericsson saw its quarterly profit fall, but beat expectations.
- Logitech improves its results despite falling sales in fiscal Q3.
- Swatch Group reported an increase in its annual turnover of 5.2% (12.6% at constant exchange rates) and sees “excellent growth prospects” for 2024.
- United Airlines rose 6% in the session after its accounts.
Important (and not so important) announcements
- Gilead fell 10% yesterday after its late-stage lung cancer clinical study failed to meet a primary endpoint.
- Zee loses 10% after Sony deal closes.
- Evotec states that its former CEO has not timely disclosed his stock transactions for 3 years.
- Intrum sells most of its investment portfolio to Cerberus for SEK 8.2 billion.
- Genmab loses daratumumab arbitration against Janssen Biotech.
- In France, the CNIL fined Amazon France Logistic €32 million, alleging an “extremely intrusive” surveillance system put in place to monitor staff performance.
- Bridgepoint will buy RoC Skincare from Gryphon investors.
- Juventus buy Djalo from Lille for more than 5 million euros.
- Today’s Key Releases: Johnson & Johnson, Procter & Gamble Company, Netflix, Verizon Communications, Texas Instruments, General Electric Company, RTX Corporation, Lockheed Martin Corporation, Intuitive Surgical, Canadian National Railway Company, 3M Company, Ericsson, Logitech… All agenda here .
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