Financial Markets Update: The Fed's December 13 Decision and Global Economic Highlights

2023-12-13 06:52:00

December 13 is an important date. Taylor Swift was born on December 13. Horst Tappert, unforgettable (?) interpreter of Inspector Derrick, disappeared on December 13th. The Fed therefore naturally chose December 13 to make its last monetary policy decision of the year. Decision which will condition the “stop or still” of the stock markets towards their records.

Let’s start with a look back. Yesterday, it was consumer prices in the United States which occupied the ground. American inflation in November fell to 3.1% year-on-year, in line with what was expected, thanks in particular to the decline in gasoline prices. Core inflation, which excludes the effects of oil and food, remained at 4%, but this level was expected. There was a slight start of tension because prices increased by 0.1% between October and November instead of stagnating, but it did not really last. Overall, the statistic is where it was expected.

Now for the Fed’s comments this evening before the end-of-year celebrations. The most reasonable segment of the market expects benign communication, that is to say one which would resemble “be careful the battle against inflation is not won, but for the moment we are not that bad so that’s okay“. That said, Powell has some leeway to have fun being a little crueler with the market, by removing his bowl of rate cuts from under its nose. Nothing says that he will do so, because he still remains a bit of a slave, in his narration, to the dot graph that I spoke about yesterday, which offers an impregnable view of the intimate convictions of all the FOMC bankers. In addition, his predecessor, Janet Yellen, gave him a little set the stage yesterday by explaining that the final stretch to bring inflation back to the 2% target would not be particularly difficult to cross. She’s nice, Janet, but she’s talkative.

Investors, for their part, await the meeting with a certain serenity. Wall Street appeared to hesitate a little yesterday, but the session ended up. Gains flirted with 0.5% for the S&P500 and the Dow Jones, while the Nasdaq 100 gained 0.8%. The American technology index is almost at 50% gains since January 1, unheard of since the rebound that followed the financial crisis, i.e. 2009 (+53.5%). It seems that the great leader of the stock market cosmos is doing everything to ensure that the year ends in apotheosis with American indices at the zenith. The Dow Jones is almost there and the other two are getting close. European markets generally lost ground yesterday, with the exception of Zurich and Brussels. Quite honestly, there isn’t much to say about yesterday’s session.

Macroeconomic news will continue to take precedence over corporate news today, even if the results of Inditex and then Adobe will be followed with interest. In Argentina, the country’s new strongman, Javier Milei, instructed his finance minister to announce a 54% devaluation of the peso and cuts in spending, to create a first shock. The executive is targeting a monthly devaluation of the peso by 2% in the future, in an attempt to normalize the economy. It took 366 ARS to get 1 USD before the announcement. It is now 800 ARS for 1 USD.

On the Chinese side, the 79th episode of the saga “The mountain gave birth to a mouse” kept all its promises: the authorities’ big economic raid did not yield much, apart from the confirmation that it There will be no large-scale recovery plan. Enough to shock Western investors who are addicted to piling up billions to infuse their savings. Time will tell whether the austere Chinese approach is healthier. In any case, in the short term, it does not contribute to bringing smiles back to the local stock markets.

In Tokyo, the Nikkei 225 continued its recovery, gaining 0.4%. The Japanese index, a favorite of managers since the start of 2023, experienced a small air gap which brought it back to a one-month low last week. The Chinese market is taking a nosedive, both on the continent (-1.3% for the CSI300) and in Hong Kong (-1.1% for the Hang Seng). South Korea is suffering, with a KOSPI returning 0.9%, pulled down by the largely represented automotive battery sector. India is declining, but in smaller proportions (-0.3%). As for Australia, the ASX200 recorded a fourth consecutive session in the green, with a gain of 0.3%. Sydney is making small leaps but is returning to its best levels since mid-September. European leading indicators are moving around balance. The CAC40 opens down a few points at 7,549 points. Same trend in the other direction for the Swiss SMI, at 11,151 points. The Bel20 stagnates at 3721 points.

Today’s economic highlights

The day began with Japan’s Tankan Large manufacturing index (00:50), followed later by the UK’s monthly GDP (08:00). Then, industrial production in the euro zone (11:00 a.m.) will precede the producer price index in the United States (2:30 p.m.), DOE crude stocks (4:30 p.m.), and finally, the FOMC decision on its rates (8:00 p.m. ). The whole agenda here.

The euro is trading at 1.0788 USD. The ounce of gold fell to 1979 USD. Oil is falling again, with North Sea Brent at USD 73 per barrel and American WTI light crude at USD 68.44. The performance of the American debt over 10 years reached 4.21%. Bitcoin falls around USD 40,800.

The main changes in recommendations

Adevinta: Barclays moves from overweight to market weight with a price target raised from NOK 107 to NOK 115.
Adidas: JP Morgan maintains its overweight recommendation and raises the price target from 195 to 230 EUR.
Ams-Osram: Bernstein maintains its market performance recommendation and reduces the price target from 4 to 2 CHF.
Anglo American: HSBC goes from buy to hold with a reduced price target of 2500 to 1800 GBX.
Aston Martin Lagonda Global Holdings: HSBC maintains its hold recommendation and reduces the price target from 380 to 255 GBX.
Beiersdorf: Barclays maintains its overweight recommendation and raises the price target from 141 to 152 EUR.
Believe: JP Morgan maintains its neutral recommendation with a price target raised from 11.50 to 11.60 EUR.
Carl Zeiss Meditec: Morningstar moves from hold to sell with a reduced price target of 87 EUR to 84 EUR.
Cgg: Oddo BHF goes from neutral to outperform with a price target reduced from 0.95 EUR to 0.90 EUR.
Compagnie Financiere Richemont: Citigroup maintains its buy recommendation with a price target raised from 136 to 141 CHF. JP Morgan maintains its overweight recommendation with a reduced price target of 170 to 165 CHF.
Dassault Systèmes: Citigroup remains neutral with a price target raised from 40 to 46 EUR.
Dhl Group: Landesbank Baden-Wuerttemberg maintains its buy recommendation and raises the price target from 44 to 51 EUR.
Eni: BNP Paribas Exane maintains its neutral recommendation with a price target reduced from 16.50 to 14.50 EUR.
Ferrari: HSBC goes from buy to hold with a price target raised from 325 EUR to 340 EUR.
Hermes International: JP Morgan maintains its neutral recommendation with a price target raised from 1950 to 2050 EUR.
Kering: JP Morgan maintains its neutral recommendation with a price target reduced from 475 to 430 EUR.
Lonza Group: Société Générale maintains its buy recommendation and reduces the price target from 670 to 544 CHF.
Lvmh: JP Morgan goes from overweight to neutral with a price target reduced from 835 EUR to 790 EUR.
M6 Métropole Télévision: JP Morgan maintains its neutral recommendation with a price target reduced from 19 to 15 EUR.
Nemetschek: Citigroup maintains its buy recommendation and raises the price target from 80 to 92 EUR.
Pandora: JP Morgan maintains its neutral recommendation with a price target raised from 815 to 940 DKK.
Porsche: HSBC goes from hold to buy with a price target reduced from 110 to 100 EUR.
Publicis Groupe: JP Morgan maintains its overweight recommendation and raises the price target from 93 to 95 EUR.
Puma: JP Morgan maintains its neutral recommendation with a price target raised from 56 to 58 EUR.
Rightmove: Panmure Gordon & Co. Limited maintains its buy recommendation and raises the price target from 543 GBX to 667 GBX.
Salvatore Ferragamo: JP Morgan maintains its recommendation to underweight with a price target reduced from 13.50 to 10.50 EUR.
Sap: Citigroup maintains its purchase recommendation with a price target raised from 150 to 170 EUR.
Swatch Group: JP Morgan maintains its neutral recommendation with a price target reduced from 315 to 275 CHF.
Syensqo: Deutsche Bank starts monitoring for purchase with a price target of 115 EUR.
Tf1: JP Morgan maintains its recommendation to overweight with a price target reduced from 13.40 to 12.30 EUR.
Tod’s: JP Morgan maintains its neutral recommendation with a price target reduced from 38 to 35.50 EUR.
Totalenergies: Goldman Sachs maintains its neutral recommendation with a reduced price target of 69 to 68 EUR.
Verbio: Stifel maintains its purchase recommendation and reduces the price target from 54 to 40 EUR.
Vidrala: Citigroup remains neutral with a price target raised from 75 to 89 EUR.
Wolters Kluwer: JP Morgan goes from neutral to overweight with a price target raised from 121 to 145 EUR.
Wpp: JP Morgan goes from overweight to neutral with a price target reduced from 1170 to 850 GBX.

In France

Important (and not so important) announcements

Engie signs a final agreement with the Belgian government on the extension of the Tihange 3 and Doel 4 nuclear reactors.
Renault ultimately recorded a capital loss of €1 billion on the sale of its 5% in Nissan, because the Japanese will cancel the repurchased shares.
Pernod Ricard has launched its The Chuan first malt whiskey in China, the first product from its local distillery located in the Sichuan province.
Orange and MasMovil give up frequencies to respond to Brussels’ fears.
Sodexo has announced the composition of the board of directors of Pluxee, its social benefits management subsidiary (notably restaurant vouchers).
Bic cancels 1.68 million treasury shares (3.8% of capital).
Blackstone will buy SII at 70 EUR per share, after having secured the contribution of 53.1% of the capital.
Solutions 30 aims for a double-digit Ebitda margin in all countries in the long term.
Hoffmann Green Cement has signed an agreement with a living partner for an exclusive licensing contract for several Hoffmann units in Florida, USA.
Lhyfe signs a first syndicated loan of €28 million.
Xilam is launching a capital increase of €3.68 million at EUR 3.75 per share.
Wedia has entered into exclusive negotiations for the sale of its stake in the company Galilée.
Suffren Holding holds more than 88% of the capital of Altur Investissement after the simplified takeover bid, but will request a squeeze-out because there remains less than 10% of shares in circulation taking into account contribution commitments and treasury control.
Louis Bourrousse will take over the presidency of MRM
Mastrad requests its placement in safeguard procedure, after not having obtained new orders from its main customer, Whirlpool.
The little corner of dilution: Pharnext reduces the par value of its shares from 0.001 to 0.0001 EUR.
The main publications of the day: Groupe Partouche, Qwamplify, Entech, Prismaflex, Figeac Aero.

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 normally reflect the trend well)

Inditex reports nine-month EBIT slightly above expectations.

Important (and not so important) announcements

Walgreens Boots Alliance is relaunching talks on the potential sale of Boots in the UK, with a price tag of £7bn mooted.
BAE Systems retains a major ammunition stock management contract in the United States, worth up to $8.8 billion over 10 years.
Amazon seeks dismissal of lawsuit over Kuiper satellite launch contracts.
Pfizer plans to complete acquisition of Seagen
Take-Two will replace Seagen in the Nasdaq 100.
Netflix releases viewing data for the first time.
ASML and Samsung will invest $760 million in a new factory in South Korea.
The Carlyle Group is considering selling Acrotec, which could be valued at CHF4 billion, according to Bloomberg.
Merger between Novozymes and Christian Hansen receives EU green light after proposed asset sale.
Lucid falls on the stock market after the resignation of financial director Sherry House.
L3Harris suspends its mergers and acquisitions program to strengthen its balance sheet.
Shell makes investment decision for staged drilling campaign in Gulf of Mexico.
General Motors and Komatsu are collaborating on a mining truck powered by hydrogen fuel cells.
The valuation of SpaceX would be around $180 billion at the last table, a little more than expected.
The main publications of the day: Adobe, Inditex, Dollarama… The whole agenda here.