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| This week's gainers and losers |
Gainers: OAK Street (+33%): the US pharmacy chain CVS Health is to buy the specialist in care for the elderly for USD 10.6 billion, or USD 39 per share. Catalent (+28%): medical equipment giant Danaher is reportedly interested in acquiring the pharmaceutical manufacturing outsourcer. Catalent chose not to comment on the rumors. Applovin Corporation (+17%): The mobile technology company reports Q4 results that beat guidance. Analysts remain confident and the stock is soaring. New Relic (+15%): The enterprise software company reported better fiscal fourth-quarter results. BP Plc (+15%): The oil sector has been on a roll this week, with rising oil prices and record earnings announcements from several production companies, including France's TotalEnergies. Losers: Capri Holdings (-27%): the parent company of Versace, Jimmy Choo and Mikael Kors reported fiscal Q3 results that fell far short of market expectations, leading to a downward revision of the annual outlook. Coinbase (-23%): The cryptocurrency exchange platform tumbled in the stock market after the U.S. stock market regulator, the SEC, declared various insider sales and purchases. The SEC also blamed rival Kraken for offering buy and sell trades without registering them. Baxter (-15%): the medical device manufacturer also disappointed, while announcing a response with cost savings and headcount reductions. Insufficient, at this stage, to convince the market. Entain (-15%): the American company MGM has withdrawn its takeover bid for the gambling and sports betting operator, which is suddenly losing its speculative premium. |
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| Commodities |
Energy: In response to Western sanctions, Moscow will voluntarily reduce its oil production by about 500,000 barrels per day. This volume represents approximately 5% of Russia's daily production, an adjustment that has obviously caused a bullish reaction on crude prices. The latter are poised to end the week on a high note, with Brent crude up by more than 7% at USD 85.60. For the US benchmark, WTI is trading at USD 79.30 per barrel. The other major news is related to the terrible earthquake that hit Turkey and northern Syria, which has caused disruptions in the flow of oil from Iraq and Azerbaijan. Finally, in the United States, weekly inventories continue to grow, but this increase is for the moment relegated to the background. For natural gas in Europe, the Rotterdam TTF continued to fall to 53 EUR/MWh. Metals: Base metals are beginning a consolidation sequence. Firstly, the disruption at some mining sites in Peru is beginning to subside, indicating a gradual resumption of production. At the same time, the LME reported an increase in aluminum and zinc inventories in its Asian warehouses, which is a downer for financials even though, it should be noted, these inventories are at relatively low levels. In terms of prices, aluminum is trading at around USD 2425, copper at USD 8950 and zinc at USD 3180. In the precious metals register, gold stays at USD 1867. Agricultural products: Grain prices gained some ground this week in Chicago where bushels of wheat and corn traded at 766 and 674 cents respectively. |
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| Macroeconomics |
Atmosphere. The shadow of a doubt. It was not until the sixth trading week of 2023 that many global markets experienced a weekly decline. This moderation in risk appetite, which is slight at this stage, coincides with a return of doubts about the path of US monetary policy. These doubts are beginning to show up in bond yields, with the US 10-year yield rising from 3.50% at the start of the week to 3.7% on Friday. At the risk of repeating ourselves, financiers are currently more concerned about rate hikes than about the economic slowdown. Currencies. The dollar rallied overall this week, as traders raised their level of fear of a restrictive Fed monetary policy. The greenback rallied mostly against emerging market currencies, but it also clawed back a few cents from the European currency, at 1.0730 USD for 1 EUR. The Dollar Index is back to its levels of the first half of January. The big weekly loser is the ruble, which is falling against the major currencies. Finally, the yen rose a bit at the end of the week, pending the appointment of the new governor of the Bank of Japan, which should be Kazuo Ueda, according to the latest rumors. Rates. Despite the publication of a better than expected ISM manufacturing index, the bonds are still digesting the bad news of job creation in the United States. One would have thought that once the initial shock was over, everything would return to normal. But no! If the US 2Y has broken out of its consolidation channel in place since October, the 10-year has also broken out of its torpor zone of 3.35/3.56% thanks to a nice bullish reversal pattern. Translation: rates should continue to rise over the next few days/weeks with a first test around 3.90/3.95%. In this respect, we will be watching for 3.47% to accompany the ongoing recovery movement. Germany is barely better off and should retest a key resistance at 2.55%. Next week, we will keep a close eye on US retail sales on the 15th and the publication of the leading indicator on the 17th. Cryptocurrencies. For the second week in a row, bitcoin is running out of steam after an explosive January. The digital currency is shedding more than 4% since Monday and is back below $22,000 as of this writing. With investor confidence not yet massively back on risky assets, the cryptocurrency market is suffering in the absence of strong positive catalysts. It will surely take some more time to heal the scars of 2022 on this market. Timeline. Prices and more U.S. prices on the agenda next week. Consumer goods prices on Tuesday and producer prices on Thursday. We'll have to sprinkle in retail sales on Wednesday. In Europe, the second estimate of Q4 2022 GDP will be revealed on Tuesday, before January UK inflation and European industrial production on Wednesday. |
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| Things to read this week | ||||
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*The weekly movements of indexes and stocks displayed on the dashboard are related to the period ranging from the open on Monday to the sending time of this newsletter on Friday. The weekly movements of commodities, precious metals and currencies displayed on the dashboard are related to a 7-day rolling period from Friday to Friday, until the sending time of this newsletter. These assets continue to quote on weekends. |
