Global Markets Sunday News
Wall Street welcomed the ceasefire between Israel and Hezbollah and reached new highs this week. By contrast, there were renewed signs of weakness on the stock markets in Europe. The economic situation in the eurozone remains worrying and could prompt the European Central Bank to cut interest rates again in December. Market sentiment is nevertheless gloomy, particularly due to the economic difficulties in Germany and the political uncertainty in France. The end of the government is looming there and the budget for the coming year has not yet been passed, which is causing tensions.
Translated with DeepL.com (free version)
Tops of the week
Direct Line Insurance +48.61 %: The British insurer rejected a GBP 3.28 billion takeover bid from competitor Aviva. Although this represented a 60% premium on last week’s share price, it was still considered too low. The British group had already fended off a takeover attempt by Belgium’s Ageas in March of this year.
Renewi +38.33 %: Asset manager Macquarie has made a GBP 700.9 million takeover bid for the British waste management company. The Australian company had already made initial approaches last year.
Dr. Martens +22.34 %: The well-known shoe manufacturer is confident for the fall/winter season. The outlook was confirmed and a new CEO was appointed. In addition, the quarterly results were in line with expectations overall.
Vestas Wind +10.27 %: The renewable energy company received an order for 900 megawatts (equivalent to 60 wind turbines) for an offshore project in Germany.
Ross Stores +6.01%: The second-largest US retailer of discounted apparel and accessories is optimistic: despite a subdued Q3 and a general decline in spending on non-basic consumer goods, it has raised its forecasts for the financial year. In addition, the current CEO will be replaced by the former CEO of Boot Barn.
Flops of the week
Symbotic -30.64 %: The warehouse automation company has postponed the release of its annual report due to significant weaknesses in internal controls over its financial reporting. Walmart holds a 14.5% stake in Symbotic.
Hugo Boss -18.31%: The CEO of the clothing group, Daniel Grieder, is said to have worked out a secret plan with Austrian businessman René Benko to acquire a stake. Bafin is investigating on suspicion of insider trading and illegal disclosure of confidential information.
Grifols -18.72 %: The Canadian fund company Brookfield withdraws from the planned acquisition of the Spanish pharmaceutical company. Both parties disagree on the valuation.
Rockwool -13.68 %: The business figures of the Danish manufacturer of rock wool missed market expectations. Among other things, the margin declined.
Dell -11.52 %: The technology group’s figures fell short of analysts’ estimates. The targets for the current quarter are too conservative and the prospect of a market recovery is once again being postponed to the future.
Autodesk -9.14%: The developer of digital design and development software could not afford to make any mistakes given its capitalization. Q3 results were solid, but did not exceed expectations. Investors had expected better figures.
Valeo -3.8 %: The automotive supplier wants to cut jobs and close two plants to reduce costs. The automotive market is currently in great difficulties.
UniCredit / Banco BPM -4.48 % / +8.43 %: The second largest Italian bank takes over Banco BPM for EUR 10.1 bn. From a strategic point of view, the project appears logical: UniCredit is thus strengthening its presence in northern Italy and creating options for further growth. A subsequent takeover of Commerzbank is also not yet off the table.
Commodities
Energy: The announced ceasefire between Israel and Hezbollah contributed to a fall in oil prices this week. As geopolitical tensions eased, some of the risk premium disappeared. This prompted investors to take a wait-and-see approach ahead of the OPEC+ meeting, which was originally scheduled for this weekend but has now been postponed to December 5. In view of the current low price level, the expansion of production volumes could be postponed at the meeting. Brent crude oil is currently trading at around USD 72 and the US reference grade WTI at around USD 68.90 per barrel.
Metals: Base metal prices remained relatively stable this week. The only exception was zinc, which rose to USD 3,130 (spot price) in London. The upward pressure on industrial metals is also generally noticeable. This is largely due to the uncertainties surrounding US trade policy under the future Trump administration, which intends to increase tariffs on imports into the US. By contrast, the price of gold fell due to the stronger US dollar.
Agricultural products: Following the explosion in cocoa prices, the price of coffee is now rising steeply. This is due to the short supply on the global market and growing concerns about weather conditions in Brazil, the largest coffee producer. Against this backdrop, Arabica coffee has become more expensive.
Market sentiment
Only 25 basis points! In the US, GDP grew by a solid 2.8% in the quarter, confirming the robust state of the American economy. Inflation measured by the core consumer price index (PCE Core) amounted to +2.8% in October and developed as expected. Compared to September, it rose slightly by 0.1 points. Provided there are no major surprises in terms of consumer price inflation and job growth (publications: CPI on December 11, non-farm payrolls on December 6), the base case scenario for the Fed’s next meeting on December 18 is a 25 basis point rate cut.
In Europe, the inflation figures for November were as expected. However, the inflation rate is still too high to expect a significant interest rate cut by the ECB in ten days’ time. The eurozone will also have to make do with a modest easing of 25 basis points.
Crypto currencies
Bitcoin (BTC) remained below the psychologically important USD 100,000 threshold this week. The digital currency has been highly volatile since Monday, having reached a new all-time high of USD 99,700 in the previous week. New narrative in the ecosystem: The underperformance of ether (ETH) against BTC in recent months could be coming to an end. In fact, the second-highest valued cryptocurrency gained over 4% this week to USD 3,600, while BTC dropped 1% to USD 97,000. The same trend was observed for spot ETFs: Exchange-traded products linked to the bitcoin price recorded net outflows of USD 500 million. In contrast, products linked to ether recorded net inflows of USD 130 million. As a reminder, ether has not yet been able to equal its historic high of USD 4,800 reached at the end of 2021, while bitcoin has already pulverized its previous all-time high for several months. Are we now seeing a comeback for ether? The next few months will show.
Central banks in view
November provided confirmation that the stock markets in the US and Europe have decoupled. After the recent focus on corporate results and politics, key interest rates are now likely to be the topic of conversation again. The majority of market participants expect the US Federal Reserve to cut interest rates further at its meeting on December 18. However, it is also quite possible that it will leave interest rates untouched. Two events are likely to set the tone in this respect next week: the Fed Chairman’s speech on Wednesday evening and the US labor market figures for November, which are due on Friday. The quarterly results from Prosus, Salesforce and Marvell will then add some variety to the week.
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