Equity markets yesterday chose to reverse their decline on Monday, helped by the rebound in technology and oil stocks. Basically, I reversed the sentence I had written the day before, since the indices had failed because of the same two sectors. Laurent, the options specialist who works hidden behind his screens in front of me, looks very bored. This week in November is traditionally a bit weird in the markets, because it’s cut off by Thanksgiving in the US. Undoubtedly the most typical American party, which takes place on Thursday and which is therefore synonymous with a big weekend in the United States, even if Wall Street opens for half a session on Friday after having closed on Thursday.
Yesterday, therefore, the European indices rose in proportion to their contingent of oil and mining stocks. Not much in France (+0.2%) and Germany (+0.3%), a little more in London and Milan (+1% approximately) and even more in Madrid (+1.7%), where banking stocks also took part in the celebration. Zurich played the role of ugly duckling by losing 0.1% at the end of the day: in Switzerland, we have health, but we have no oil. On Wall Street, the three main indexes recovered more than 1%. Investors followed the movement of oil on energy-related stocks, as in Europe, but the rise was reinforced by the good behavior of quality technology stocks, i.e. essentially the safe stocks of the compartment . Caution still reigns over the former starlets of the rating fed with easy money but who have no prospect of profitability on a reasonable horizon. I must also point out the outbreaks of the big former Best Buy and Abercrombie & Fitch, after unexpected financial performances which show that consumption still has a bright future ahead of it in the United States.
But since not much concrete is happening in the reputedly serious compartments of finance, which is probably illustrated by the recent maintenance of bond yields in a narrow channel, it tweets on Twitter, it rants on FTX, it gossips on these ESG funds downgraded by major asset managers.
There are still some important deadlines to come today in the macroeconomic sphere. Starting with the PMI indicators, “the most followed statistic in the world“, according to its sponsor, Standards & Poor’s (which acquired IHS Markit, the original provider). It is true that these indicators are very effective in measuring the real-time economic dynamics of major economies. They are published throughout the day, from 9.15 a.m. for France to 3.45 p.m. Finally, a battery of American statistics is scheduled for this afternoon, namely the latest weekly trends on employment and durable goods orders for October at 2:30 p.m., then at 4:00 p.m. the figures for new real estate and the University of Michigan Consumer Confidence Index.
Icing on the cake, the Fed will publish at 8:00 p.m. the minutes of its last monetary policy meeting. I don’t know if the market will find material there to fuel its scenario for the trajectory of key rates. Let’s say that in recent days, members of the US central bank have worked to calm the ardor of investors who thought that monetary austerity would soon end. The Fed is thus perfectly in its role of moderation, which does not necessarily mean that it itself knows where it is going, or at what pace.
I turn it over to ISI Evercore’s experienced macro boss, Krishna Guha, who had a great formula yesterday in a note to clients to sum this up. Guha thinks Fed leadership wants to get out of what he calls “the hamster wheel of 75 basis point hikes” per meeting, even though it’s struggling to do so while keeping financial conditions in check. He adds that the Fed will probably attempt a “hawkish slowdown” and that for investors, it is especially the slowdown part that matters. In other words, Jerome Powell will continue to roll his eyes but release the neck of the turkey to allow him to breathe a little, to use a seasonal metaphor. After the publication of the “minutes”, there will remain two hours at the market, before the closing, to form a more precise opinion before going to polish the decorations and the feasts of Thanksgiving. All two days from the 14e anniversary of the launch of the Fed’s famous quantitative easing program in 2008, which would help pull global finance out of the rut and shape the next decade by flooding the markets with free money. You probably don’t care but it’s also my younger sister’s birthday, who I mention here to verify that she’s as avid reader as she says she is.
More seriously, the Japanese market is closed today for Labor Day. The other places in Asia Pacific are on the rise. Australia gained 0.7%, helped by its large contingent of companies in the energy and raw materials sector. In Korea, it is technologies that allow the Kospi to recover 0.5%. The Indian and Chinese markets are also well oriented at the end of the course. European leading indicators are bullish. The CAC40 gained 0.1% to 6665 points shortly after opening.
Economic highlights of the day
The PMI manufacturing indices are therefore on the program today for the main economies. They will be supplemented in the United States by weekly jobless claims and durable goods orders (2:30 p.m.), then new housing figures and the University of Michigan consumer confidence index (4:00 p.m.), before at 8:00 p.m. the publication of the minutes of the last Fed meeting. The whole macro diary here.
The euro rises to 1.0315 USD. An ounce of gold, on the other hand, lost ground at 1734 USD. Oil is flat, with North Sea Brent at $88.12 a barrel and US WTI light crude at $80.80. The yield on the American debt over 10 years fell to 3.76%. Bitcoin is moving near 16,000 USD.
The main changes in recommendations
- Aedifica: HSBC is starting to track purchases by targeting EUR 106.
- Cofinimmo: HSBC takes over the follow-up to be kept by targeting 98 EUR.
- CTS Eventim: Baader Helvea goes from reducing to accumulating by aiming for 60 EUR.
- Enel: Citigroup goes from neutral to sell, targeting EUR 4.50.
- Eni: Barclays resumes overweight monitoring by targeting EUR 17.50.
- Enskilda: AlphaValue shifts from lightening to accumulating aiming for 151 SEK.
- EQT: Morgan Stanley goes from overweight to weighted online by targeting 296 SEK.
- Esker: Berenberg remains long with a target price reduced from 200 to 180 EUR.
- Glencore: Bernstein goes from market performance to outperformance by targeting 770 GBp.
- Interparfums: Kepler Cheuvreux remains on the buy side with a target raised from 59 to 60 EUR.
- Kardex: Research Partners remains to be kept with a reduced price target of 200 to 180 CHF.
- Kerry: Berenberg remains long with a price target reduced from 128 to 123 EUR.
- Sage: Deutsche Bank goes from selling to holding, aiming for 800 GBp.
- Siemens Healthineers: Jefferies goes from buy to hold targeting EUR50.
- Vallourec: AlphaValue remains long with a reduced target price of 14.20 to 13.20 EUR.
- Vidrala: Oddo BHF goes from outperformance to neutral, targeting EUR 82.
- Voestalpine: Deutsche Bank goes from hold to buy targeting EUR 31.
Important (and less important) announcements
- Gucci (Kering) creative director Alessandro Michele is leaving the brand, according to WWD.
- Nestlé Waters will use an Alstom hydrogen freight train.
- Worldline unions confirm strike call for Black Friday.
- The AMF gives the green light to the State’s takeover bid for the minority interests in Electricité de France.
- Amundi downgrades dozens of ESG funds to the lower category, in anticipation of the SFDR regulation.
- Elior confirms its 2024 financial ambitions on the sidelines of its latest results.
- Voltalia signs an innovative co-development partnership agreement with Uzbekistan.
- Abeo and FIBA extend their successful partnership for 3×3 Basketball.
- Pharnext combines 5000 actions in 1.
- Median Technologies will make three presentations at the RSNA annual conference.
- Eurobio and Acobiom sign an agreement for the exclusive distribution of a predictive diagnostic test for response to pancreatic cancer treatment.
- Other publications: Entech…
In the world
Important (and less important) announcements
- Equinor believes that the gas price cap proposed by the European Commission would not have a substantial impact on its exports to Europe.
- Teva and AbbVie reach legal settlements worth $6.6 billion in the context of the opioid crisis in the United States.
- Dechra Pharmaceuticals and Harbor Energy are set to leave the FTSE 100 index, according to indicative changes from FTSE Russell, replaced by Abrn and The Weir Group.
- Drax claims to be the second biggest carbon emitter in the UK.
- Johnson Matthey’s earnings plummet due to supply chain pressures.
- HP Inc will cut up to 6,000 employees to cut costs.
- Manchester United are “exploring their options” and could be sold.
- Pets At Home’s half-year profit declines due to higher transportation and energy costs.
- Credit Suisse will cut investment banking and research positions in China. The bank anticipates a loss of 1.5 billion CHF in the 4th quarter.
- UBS Group will integrate its French activities into UBS Europe.
- Implenia signs with Deutsche Asset One and Union Investment to develop projects in the German housing market.
- Ems-Chemie lowers its forecast for the current financial year.
- Bavarian Nordic’s monkeypox vaccine shows 78% efficacy in new UK analysis.
- Main publications of the day: Deere, Prosus, Xiaomi, Naspers, Hal Trust, United Utilities, Soitec, Ackermans, Rockwool, Rotork, Britvic… The whole agenda here.