Recent market shifts highlight a change in Donald Trump’s trade policy, leading to a notable rise in the CAC40 index despite his dismissal of the report. Technological advancements, particularly in AI and semiconductors, further fueled market enthusiasm. Global developments include Justin Trudeau’s resignation and increased scrutiny on Chinese firms, impacting Asian markets. Investors are awaiting key economic indicators today, while several stock ratings have been adjusted, reflecting varying expectations across industries.
Market Reactions to Trade Policy Changes
A recent article revealed a shift in Donald Trump’s approach to trade barriers, suggesting a more nuanced strategy that would target only essential imports rather than applying broad tariffs. This news sparked a surge in the CAC40 index, which rose by an impressive 2.2%, marking its strongest performance since late September. However, in a surprising turn of events, Trump dismissed the report, declaring it *fake news*. Despite this retraction, the market chose to focus on the optimistic narrative, demonstrating its resilience. Some speculate that the Trump family may have intentionally leaked this information to gauge its market impact. Investors have become accustomed to Trump’s communication style, which often features bold claims followed by tempered actions. Regardless of the truth, this storyline has contributed to a significant rebound in European stocks.
Technological Advancements Fuel Market Growth
The second wave of market momentum is driven by technological innovation, as companies in this sector continue to attract investor interest. The excitement was palpable following Microsoft’s announcement of substantial investments in AI infrastructure and impressive sales figures from Foxconn, a leading electronics subcontractor. Anticipation is also building for the CES tech show in Las Vegas, which kicks off today and is expected to showcase groundbreaking advancements. Investors are particularly optimistic about Jensen Huang, the charismatic CEO of Nvidia, whose leadership has been pivotal in advancing AI technology. This enthusiasm has bolstered the semiconductor industry, with four European companies—ASML, STMicroelectronics, Soitec, and Infineon—each experiencing gains exceeding 7% in the Stoxx Europe 600. Even before Nvidia’s latest updates, the company’s stock reached new heights, closing in on Apple’s position as the world’s most valuable company. The SOX index, which tracks the U.S. semiconductor sector, has already seen a 6.6% increase since the start of the year.
As for global developments, Justin Trudeau’s resignation after nearly a decade as Canada’s Prime Minister has made headlines, with Mark Carney, the former governor of the Bank of Canada and the Bank of England, being a potential successor. In the United States, pressure on Chinese firms has intensified, with the Department of Defense adding well-known companies like Tencent and CATL to its blacklist. Consequently, these stocks have seen significant drops, further contributing to a somber mood in Chinese markets.
In the Asia-Pacific region, the MSCI China index has declined by over 2%, influenced by the aforementioned issues. However, other markets in the region remain buoyed by the performance of the U.S. Nasdaq, with Tokyo gaining nearly 2% and other cities like Seoul, Bombay, Sydney, and Taipei seeing modest increases.
At the market opening, the CAC40 is slightly up by 0.05% at 7450 points. The SMI remains stable at 11,688 points, while the Bel20 has risen by 0.4% to 4302 points.
Today’s Economic Highlights
Investors will be looking forward to key economic indicators, including European inflation data for December, set to be released at 11:00 AM, followed by the U.S. ISM services index and JOLTS survey at 4:00 PM. Key figures to watch include:
- Euro: 1.0393 USD
- Bund/OAT spread: 81 points (-6%)
- Gold ounce: 2638 USD
- Brent oil: 76.19 USD
- 10-year U.S. Treasury yield: 4.61%
- Bitcoin: 101,800 USD
Recommendations and Changes in Stock Ratings
Several notable changes in stock recommendations have been made, including:
- Adidas: Upgraded by Bernstein from market performance to outperform, with a new price target of 300 EUR.
- Aedifica: Upgraded by Jefferies from hold to buy, with the target raised from 59 to 68 EUR.
- Air France-KLM: ING Bank maintains hold with a target lowered from 9.50 to 8 EUR.
- AJ Bell Plc: Downgraded by Citi from neutral to sell, with a target reduced from 450 to 390 GBX.
- Alstom: Downgraded by Goldman Sachs from neutral to sell, with a target raised from 18 to 18.50 EUR.
- Argan: Jefferies maintains buy with a target reduced from 90 to 86 EUR.
- Athens International Airport: Upgraded by BNP Paribas Exane from neutral to outperform, with a target raised from 8.70 to 9.20 EUR.
- Aéroports De Paris: Maintained outperform recommendation with a target reduced from 149 to 143 EUR.
- Grupo Santander: Downgraded from neutral to underperform with a target lowered from 127 EUR to 118 EUR.
- Belimo Holding: Maintained hold recommendation with a target raised from 410 to 600 CHF.
- BMW: Initiated coverage at hold with a target of 79 EUR.
- BP Plc: Downgraded by Morgan Stanley from market weight to market weight with a target lowered from 445 to 407 GBX.
- Carmila: Jefferies maintains buy with a target raised from 20 to 22 EUR.
- Covivio: Maintained buy with a target raised from 60 to 61 EUR.
- Eni: Downgraded by Morgan Stanley from overweight to market weight with a target reduced from 17.10 to 15 EUR.
- Equinor: Upgraded by Morgan Stanley from market weight to overweight with a target raised from 270 to 340 NOK.
- Flughafen Zürich: Maintained neutral recommendation with a target raised from 210 to 224 CHF.
- Fortnox AB: Downgraded by Jefferies from buy to hold with a target of 80 SEK.
- Gecina: Maintained buy with a target raised from 120 to 125 EUR.
- Grand City Properties: Upgraded by Jefferies from underperform to hold with a target raised from 8.40 to 12 EUR.
- Icade: Maintained hold with a target raised from 23 to 23.50 EUR.
- LDC: Portzamparc maintains buy with a target raised from 78.60 to…