Wall Street is showing impressive resilience in 2024, with significant gains in the S&P 500 and Nasdaq 100 despite recent downturns. While the French stock market faces political hurdles, its performance has exceeded expectations. Emmanuel Macron’s recent address indicates plans for a new prime minister and a focus on stability. Meanwhile, lesser-known companies with valuable assets are highlighted, spanning various sectors from retail to food products. Oil prices are declining following OPEC+’s production decisions, while markets in Asia exhibit mixed reactions, particularly in China, where optimism is fueled by anticipated government announcements. Upcoming US employment data is a focal point, with significant implications for monetary policy. Recent stock recommendations reflect a mix of upgrades and downgrades across various firms, indicating a dynamic financial landscape.
Wall Street’s Resilience Amidst Political Turmoil
Despite recent declines, Wall Street continues to demonstrate remarkable strength in 2024, with the S&P 500 and Nasdaq 100 soaring over 27% since the beginning of the year. Although I anticipate that the French stock market may struggle due to ongoing political challenges, I am pleasantly surprised by its recent performance. Just yesterday, I took a bold step by utilizing my 49.3 to back this forecast. Should I be censored for my views, I’ve pledged to take a dip in Lake Annecy this January, a feat that seems achievable given the brave souls who do it year-round.
Market Reactions to Political Developments
The positive performance of the Paris stock market, the euro, and French debt can be attributed to the expectation that France will maintain governability in the near future, with minimal harm to its socio-economic structure. Emmanuel Macron addressed the nation on television last night, expressing his discontent with parliamentarians who censored the Barnier government. He indicated that he would appoint a new prime minister shortly and advocated for a “government of general interest.” While some may romantically envision a successful outcome, the realities of politics suggest a modest chance of that happening. Interestingly, financial circles appear unfazed by the media rise of the far right; Marine Le Pen has begun to dominate the narrative, engaging with various media outlets, including Bloomberg, while promoting stability concerning the budget and Macron’s ongoing mandate. Meanwhile, the left is engulfed in confusion over how to navigate the current political stalemate. The crucial question remains: who will step up in the National Assembly to succeed Michel Barnier?
As the week wraps up, let’s take a moment to spotlight ten listed companies that may not be household names but own some iconic assets:
- The British holding company 3i Group owns Action, a supermarket chain that is challenging other European brands.
- Belgian D’Ieteren controls Belron, widely recognized for its Carglass brand, and also owns the car parts website Oscaro and the famous Moleskine notebooks.
- Spanish giant Inditex is renowned for Zara, a leader in the fashion sector.
- German Beiersdorf is synonymous with Nivea cream and Labello lip balm, but it also produces Tesa adhesives.
- American Yum! Brands operates popular restaurant chains, including KFC, Taco Bell, and Pizza Hut.
- Dutch JDE Peet’s is well-known for its coffee brands like L’Or and Senseo, and it recently acquired the esteemed Les 2 Marmottes from Haute-Savoie.
- British Kingfisher oversees brands like Castorama, Brico Dépôt, and B&Q.
- Axon Enterprise, an American company, is better known for its flagship Taser product.
- Surprisingly, the world’s leading household appliance manufacturer is Chinese Haier, which owns brands like Candy and Hoover.
- Finally, Associated British Foods is famous for brands like Twinings tea, alongside fashion labels Primark and Penney, showcasing an intriguing contrast in its portfolio.
Shifting focus back to current events, oil prices have resumed their downward trend following OPEC+’s announcement of a three-month delay in its production increase plan. In India, the central bank opted to keep its main interest rate steady while reducing the deposit rate. This was accompanied by a downward adjustment of its growth forecast and an increase in its inflation forecast, leading to slight declines in Indian indices following these announcements.
In China, stock indices are experiencing fluctuations. After a dip yesterday fueled by rumors of a lack of stimulus from Beijing, the markets have turned positive today. Hong Kong and Shanghai are rebounding, ignited by optimism surrounding anticipated announcements at next week’s significant Chinese employment summit. An article from Bloomberg speculating on potential rate cuts from the Chinese central bank has further bolstered buying interest in Chinese stocks this morning.
As we approach the end of the week, all eyes will be on the United States this afternoon, where the November employment figures will be released at 2:30 PM. This announcement is expected to be relatively uneventful, with a consensus suggesting that the Fed may reduce rates on December 18. However, market participants should exercise caution, as overly favorable employment data could diminish the likelihood of monetary easing at the start of next year.
In the Asia-Pacific region, the week concludes with declines across most markets, with the exception of China. Tokyo is down 0.8%, while Sydney, Seoul, and Taiwan are each down around 0.5%. European leading indicators are showing a slightly bearish sentiment.
The CAC40 opened up 0.1% at 7337 points, while the SMI decreased by 0.2% to 11,767 points. The Bel20 saw a slight increase of 0.2% to reach 4245 points.
Key Economic Highlights for Today
Today’s major anticipation revolves around the release of the US employment statistics for November at 2:30 PM. Here’s a snapshot of the economic indicators:
- Euro: 1.0571 USD
- Bund/OAT Spread: 78 points (-7%)
- Gold ounce: 2642 USD
- Brent crude: 72.02 USD
- 10-year US yield: 4.17%
- Bitcoin: 97,960 USD
Recent Changes in Recommendations
- AO World Plc: HSBC initiates coverage with a buy rating and a target price of 125 GBX.
- Accor: Barclays maintains an overweight recommendation, raising the target price from 48 to 53 EUR.
- Acerinox: JP Morgan shifts from underweight to neutral, adjusting the target price from 6.90 EUR to 9.60 EUR.
- AJ Bell Plc: Panmure Liberum changes its recommendation from buy to hold, raising the target price from 520 GBX to 540 GBX.
- Aperam: JP Morgan keeps an underweight recommendation with a target price increase from 22.50 to 27.80 EUR.
- Barry Callebaut AG: Bank Vontobel AG maintains its hold recommendation, reducing the target price from 1600 to 1400 CHF.
- Big Yellow Group: Kempen downgrades its recommendation from neutral to sell, lowering the target price from 1300 GBX to 1000 GBX.
- BMW: Jefferies upgrades from hold to buy, raising the target price from 80 to 85 EUR.
- BNP Paribas: JP Morgan continues its neutral stance, with a target price decrease from 76 to 67 EUR.
- Boliden: RBC Capital downgrades from sector performance to underperformance, with a target price