Weekly market update : Time for a break

The stock market continued to be buoyant this week, as traders welcomed the slowdown in US employment, which reinforced expectations of a rate cut as early as the end of the first quarter of 2024 in the US. Wall Street remained close to its highs, pending central bank decisions next week.

Weekly variations* US 500 4604  +0.21% CARNIVAL CORPORATION +14.91% NORWEGIAN CRUISE LIN... +13.76% WALGREENS BOOTS ALLI... +11.40% OLD DOMINION FREIGHT... -8.94% FIRST SOLAR, INC. -9.30% ALASKA AIR GROUP, IN... -10.37% DOW JONES INDUST... 36247.87  +0.01% NASDAQ 100 16084.69  +0.54% FTSE 100 7554.47  +0.33% GOLD 2003.58$  -5.38% WTI 71.27$  -4.68% EURO / US DOLLAR 1.08$  -1.12%

This week's gainers and losers

Gainers: Cerevel Therapeutics (+ 58%): The US biopharma agrees to be acquired by AbbVie for $8.7 billion. AbbVie is looking to expand its portfolio of treatments for neurological diseases such as schizophrenia and Parkinson's disease. This is not a risk-free operation, since some of Cerevel's flagship treatments are still in mid-stage studies. As a reminder, AbbVie already acquired ImmunoGen a few days ago for around $10 billion.  Smart Metering Systems (+47%): The British energy infrastructure group, specializing in utility connections, smart metering and energy management, has accepted a takeover offer from investment giant KKR, valuing it at around £1.4 billion, a 40% premium to Wednesday's closing price. The deal is expected to close in the first quarter of 2024. Viking Therapeutics (+39%): The US biopharmaceutical company is riding the wave of weight-loss drugs. Its dedicated treatment, VK 2735, showed an average weight reduction of up to 6% in an early-stage study, and could well earn it a nice place in the lucrative market for obesity treatments. The stock gained 91% since January 1. Robinhood Markets (+23%): The trading specialist yesterday launched Robinhood Crypto, a commission-free crypto-currency trading app in the European Union. 25 crypto-assets can be traded on the platform. A few days earlier, as part of its expansion plans, it announced the roll-out of a brokerage service in the UK.  SentinelOne (+18%): The US cybersecurity group reported quarterly sales ahead of Wall Street estimates, up 42% year-on-year, and revised upwards its annual revenue forecasts. The company's growth is being driven by increased cybersecurity spending, growing customer volumes, and the popularity of its Data Lake and Purple AI programs. Following the announcements, several analysts raised their price targets on the stock. Carnival (+14%), Norwegian Cruise (+14%), Royal Caribbean (+8%): Cruise operators are once again on a roll, buoyed by a high booking rate and a very encouraging outlook for 2024. Carnival, the sector's largest, reported record quarterly sales ($6.9 billion), enabling it to post its first quarterly net profit since the start of the pandemic ($1 billion). However: the group is burdened with $24 billion more debt than its pre-Covid levels. Walgreens Boots Alliance (+10%): Shares in the US drugstore chain surged on the back of a favorable court ruling in the Tylenol trial, which could save the company from a series of lawsuits. Kenvue Inc, the company behind the drug, is also clearly on the rise. Walgreens sales and margins are recovering, and the group is expanding its Covid and flu screening services. Losers: Sprinklr, Inc (-32%): The customer experience management software company reported solid quarterly results, with revenues and earnings ahead of expectations, and higher subscription revenues. But the market sanctioned the company's timid forecasts for the coming year, which were revised upwards but fell short of expectations. Analysts also held back management's talk of a deceleration in future growth.  Palantir Technologies (-15%): Two downward vectors for the US data analysis specialist. On the one hand, Japanese company Sompo Holdings sold part of its long-term stake in the group, reaping a gain of $584.2 million in the process. On the other hand, the Group is poised to lose a major contract with the US Army, according to analyst William Blair, who reiterated his bearish opinion on the stock. However, the share has gained 169% over the year, boosted by the AI trend.   Games Workshop (-14%): The manufacturer and retailer of figurines and board games showed signs of slowing down in the past quarter, after a solid first quarter. While the company unveiled interim results and a rather encouraging outlook for the future, the market was disappointed. Analysts pointed in particular to the drop in licensing revenues, expected to come in at just £12 million, compared with £14.3 million a year earlier.  Texas Pacific Land Corp (-13%): The landowner and resource manager's stock folded on insider selling. BlackRock and other institutional investors reduced their positions in the group. Note that the stock has lost 35% since the beginning of the year.

Commodities

Energy: The message is clear: the market is not really concerned with the new OPEC+ production cuts, which are intended to take just over 2 million barrels a day out of circulation. In reality, it seems difficult to achieve this target, as some producers are unwilling or unable to cut production. Against this backdrop, the slowdown in Chinese crude imports has taken its toll. More than half of the growth in demand for oil comes from China, so the slightest sign of a slowdown in demand is significant. The proof is in the barrel price, which has fallen for another week (the seventh in a row), with European Brent at USD 76 and US WTI at USD 71.30. Metals: A sequence of consolidation for industrial metals, which nosedived this week in London, with the exception of tin (up to USD 24400). A tonne of copper is trading at around USD 8,200, aluminum at USD 2,100 and zinc at around USD 2,400. In the week's highlights, Beijing unveiled some rather robust figures on metal imports in November, with copper imports up 10% on October. In precious metals, gold was back to square one, but still held above USD 2,000 an ounce. Agricultural products: Unlike oil and metals, grain prices gained ground this week in Chicago. The price of corn climbed to around 490 cents a bushel, compared with 640 cents for wheat.

Macroeconomics

Atmosphere: Rally or no rally? The US job market remains stubbornly resilient. In any case, with 199,000 jobs created in November, against expectations of 185,000, and the unemployment rate dropping from 3.9% to 3.7%, the Fed has one more reason to keep rates permanently high. In any case, longer than the equity market expects. The US 10-year moved in the wake of the release: after almost touching the 4.10% target, it rallied sharply, although it will have to break through 4.3270 to really consider anything other than a simple rebound in a downtrend. After a flamboyant November for equities, December will depend heavily on the latest indicators scheduled before the Christmas break, and whether they match up with hopes of a rate cut. Meanwhile, Chinese indicators are still blowing hot and cold, with the services PMI slightly higher than expected, but import figures still weak. Beijing is still struggling to get its economy moving again.  Crypto: Bitcoin gets December off to a flying start. Following on from November, BTC has soared by more than 9.70% since Monday, returning to close to $44,000 at the time of writing. A peak last seen at the beginning of 2022. The market leader has taken with him the second most highly-valued cryptocurrency on the market, ether, which is up by almost 8% and is now in contact with 2,400 dollars. Crypto-assets are benefiting from the positive atmosphere on Wall Street and speculation surrounding the imminent approval of a Bitcoin Spot ETF. The entire crypto market is now valued at over $1,500 billion.

Time for a break After five weeks on the up, the market needed a breather. The Fed (Wednesday) and ECB (Thursday) will make their final monetary policy decisions of 2023. These meetings, coupled with the week's expected statistics (inflation and producer prices in the US, PMI indicators, etc.), will enable the market to test its hypothesis of a reduction in key rates as early as the first half of 2024. As for financial results, some of the big names accustomed to delayed releases will be on deck: Oracle, Adobe and Costco in the US and Inditex in Europe. Wishing a very good weekend to all!

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.