American tech stocks surged, particularly those associated with artificial intelligence, as the Nasdaq 100 rose by 1.85%, led by Nvidia, Broadcom, and a notable 6% increase in Tesla’s stock. Meanwhile, the Dow Jones fell 0.2% due to challenges faced by UnitedHealth. The Nasdaq Composite achieved a historic milestone, surpassing 20,000 points with a 33.5% rise in 2024. Globally, European markets showed modest gains, while the U.S. inflation report raised expectations for an imminent interest rate cut.
Tech Stocks on the Rise
Yesterday marked a thrilling day for American tech stocks, particularly those flaunting the term ‘artificial intelligence’ in their marketing. The Nasdaq 100 experienced an impressive gain of 1.85% by the closing bell, largely driven by powerhouses like Nvidia and Broadcom, along with Tesla’s remarkable 6% increase that propelled the stock past its 2021 record. Tesla has become synonymous with the Trump stock phenomenon, largely due to the close ties between its CEO, Elon Musk, and the potential future President of the United States. Recently, Musk achieved a new milestone, becoming the first individual to amass over $400 billion in assets—tallying up to $447 billion, according to Bloomberg’s billionaire listings. This staggering wealth could potentially allow him to distribute a $50 bill to every person on Earth, totaling approximately 8.2 billion individuals. While such generosity would leave him financially bare, it’s likely he would find a way to rebound. Notably, Tesla’s stock has surged by 68% since the election of Donald Trump, all within just over a month.
Market Trends and Economic Indicators
The enthusiasm surrounding tech stocks starkly contrasts with the Dow Jones, which slipped by 0.2% yesterday. This downturn was primarily influenced by UnitedHealth, the index’s most significant component, which faced challenges following a proposed bill that could impact the profitability of health insurers in the U.S. In contrast, large tech firms continue to flourish, leaving major Wall Street bets nearly obsolete. While analysts anticipated a market rebound favoring smaller stocks, they are witnessing the Nasdaq dominate the landscape. Since early December, the Nasdaq has rallied by 3%, whereas the Russell 2000 has dipped by 1.7%. The Nasdaq Composite also crossed the significant threshold of 20,000 points for the first time yesterday, boasting a remarkable 33.5% increase in 2024.
Meanwhile, Europe has been moving at a more measured pace, with the Stoxx Europe 600 reflecting a modest 8.5% rise since January 1. The Paris Stock Exchange lags behind slightly, with the CAC40 down by 1.6% (but showing a 1.1% increase when dividends are included). This can be viewed as a relatively favorable position given the political climate and the heavy reliance of certain key stocks on the unpredictable Chinese consumer market.
Recent macroeconomic developments highlighted a U.S. inflation report that eliminated any concerns regarding the Federal Reserve’s potential decision to lower rates next week. While prices continue to rise in alignment with expectations, the likelihood of a quarter-point rate cut in the U.S. on December 18 has surged from 81% to 98.5%. This afternoon, the European Central Bank is anticipated to announce a rate cut, likely by 25 basis points, which should help eurozone equity markets follow Wall Street’s upward trend, albeit at a distance. On a different note, the Brazilian central bank just raised its benchmark rate from 11.25% to 12.25% and plans to implement similar adjustments in the upcoming meetings, as the country grapples with budget issues, inflation concerns, and a steep decline in the real.
In other news, Donald Trump has extended an invitation to Xi Jinping for his inauguration ceremony. Today, all eyes are on China as the outcomes of the ongoing economic conference are expected to be revealed. The country is implementing measures to counteract the yuan’s decline, responding to speculation regarding a strategy to depreciate its currency to enhance export competitiveness amid rising trade tensions with the U.S. Ironically, safe-haven assets like gold and bitcoin have seen significant price increases, despite the substantial gains in risk assets. Additionally, oil prices have risen following OPEC+’s decision to maintain production restrictions.
In the Asia-Pacific region this morning, markets are predominantly in the green, following the U.S. performance, with the exceptions of India and Australia, which are slightly lower. European leading indicators remain cautious.
In early trading, the CAC40 is up by 0.3% at 7448 points, while the SMI has increased by 0.16% to 11,688 points. The Bel20 has risen by 0.05% to 4246 points.
Key Economic Highlights
The focus today will be on the decisions from the Swiss National Bank (9:30) and the ECB (14:15) regarding their interest rates, followed by U.S. updates at 14:30 on producer prices and the latest weekly employment figures. For your reference, here are some key financial indicators:
- Euro: 1.0510 USD
- Bund/OAT Spread: 76 points (+1.5%)
- Gold ounce: 2713 USD
- Brent: 73.67 USD
- 10-year U.S. Treasury: 4.28%
- Bitcoin: 100,616 USD
**Major Recommendation Changes**
- 74software: TP ICAP Midcap initiates coverage with a buy rating and a price target of 35 EUR.
- ABN Amro: Goldman Sachs downgrades from neutral to sell, with a revised price target from 17.90 EUR to 14.40 EUR.
- About You Holding: Barclays upgrades from underweight to market weight, raising the price target from 3.40 EUR to 6.50 EUR.
- Adyen: Citigroup maintains a buy recommendation, increasing the price target from 1750 EUR to 2000 EUR.
- Amplifon: Equita SIM upgrades from hold to buy, with a price target of 32 EUR.
- Aspo Oyj: Inderes upgrades from reduce to accumulate, raising the price target to 6.20 EUR.
- Biomérieux: RBC Capital initiates coverage with an outperform rating and a price target of 130 EUR.
- BNP Paribas: Goldman Sachs keeps its buy recommendation while lowering the price target from 82.50 EUR to 77 EUR.
- Caixabank: Goldman Sachs downgrades from neutral to sell, with a new price target of 5.20 EUR.
- Crédit Agricole: Goldman Sachs maintains its sell recommendation, reducing the price target from 15.50 EUR to 13.50 EUR.
- D’Ieteren Group: Barclays retains its overweight rating, while lowering the price target from 275 EUR to 215 EUR.
- DiaSorin: RBC Capital begins sector performance coverage with a price target of 110 EUR.
- Erste Group Bank: Goldman Sachs upgrades from neutral to buy, raising the price target from 59 EUR to 69 EUR.
- FD Technologies: Panmure Liberum initiates coverage with a hold rating and a price target of 2200 GBX.
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