Celebrate Christmas Joyfully with Zonebourse

Celebrate Christmas Joyfully with Zonebourse

Market reactions to the Federal Reserve’s rate decisions have influenced Western stock indices, with Wall Street declining 0.4%. Anticipation surrounds a potential 25-basis-point rate cut amid discussions of future policies under Donald Trump II’s leadership. The upcoming December Fed meeting lacks forward-looking documents, while crucial reports are expected in early 2024. Global markets display mixed results, with political tensions between the U.S. and China impacting sentiment. Economic indicators to watch today include British and European inflation rates.

Market Reactions to Fed Decisions

Yesterday, all eyes were glued to the American central bank as it prepared to announce its rate decisions, leaving Western stock indices either stagnant or slightly down. Wall Street experienced a dip of 0.4% on the S&P500, while Frankfurt fell by 0.33% and London by 0.8%. However, Paris managed to rise by 0.1%, thanks to modest gains in the luxury sector.

Anticipating Future Rate Moves

As we navigate these crucial periods of rate announcements, it’s essential to dissect the situation further. It is widely believed that the Fed will cut its rates by 25 basis points, a move that would likely astonish the market if it were to deviate. The focus now shifts to the future actions under the potential leadership of Donald Trump II, with Jerome Powell expected to adopt a cautious approach while preparing markets for a slower pace of rate cuts. This seems to be the most probable scenario while we await the first concrete measures from the former president.

Unlike previous meetings, the December Fed gathering will not present any additional forward-looking documents. However, both the end-of-January and early-March meetings are set to include significant reports, such as the ‘Statement on Long-Term Goals and Monetary Policy Strategy‘ and the ‘FOMC Projection Materials‘, which will provide insights into each member’s forecasts regarding rate movements in various timeframes.

The stock market thrives on a blend of low rates, robust growth, and controlled inflation. Interestingly, it has also shown resilience in the face of high rates coupled with solid growth and elevated inflation, a trend that has persisted for over two years. However, any downturn in growth or an upsurge in inflation could create challenges, and these potential imbalances are under scrutiny by both investors and the Fed.

As the year draws to a close, market activity is subdued, with trading volumes diminishing significantly. A notable development is the revival of discussions regarding a merger between Honda and Nissan, as the two Japanese automotive giants explore ways to strengthen their partnership. Meanwhile, Renault, which maintains a significant stake in Nissan, is assessing its options amidst rumors of interest from Foxconn in Nissan. This trend highlights the growing intersection of technology and the automotive industry, evidenced by the successes of companies like Tesla and the ventures of Huawei and Xiaomi in electric vehicles.

On the political and geopolitical front, the dynamics between the United States and China remain intricate. The White House is reportedly poised to initiate an investigation into Chinese semiconductors sold domestically, with national security concerns looming large. Despite this, Chinese stock indices seem to be responding positively to President Xi Jinping’s call for officials to strategically plan for economic recovery by 2025. In contrast, France is witnessing a downward trend, reflected by credit rating downgrades of major banks by Moody’s, which followed the downgrade of France’s sovereign rating. The Bank of France has adjusted its growth forecasts downward, and the country continues to seek stable governance amidst ongoing challenges.

In Eastern markets this morning, results are mixed, with Japan, India, and Australia showing moderate declines, while South Korea and Taiwan report more substantial gains. US futures appear optimistic, yet European leading indicators convey a sense of hesitation.

The CAC40 opens with a slight increase of 0.1% to 7366 points, while the SMI drops 0.4% to 11,695 points. The Bel20 sees a modest rise of 0.2% to 4250 points.

Today’s Economic Highlights

Key economic indicators to watch include British inflation (8:00), European inflation (11:00), and building permits in the United States (14:30), all preceding the Fed’s rate decision at 20:00. Here’s the complete agenda:

  • Euro: 1.0502 USD
  • Spread Bund / OAT: 80 points (stable)
  • Gold ounce: 2645 USD
  • Brent: 73.22 USD
  • 10-year US: 4.39%
  • Bitcoin: 103,872 USD

Main Recommendation Changes

  • Aedifica: Bernstein maintains its market performance recommendation with a reduced price target from 72.50 to 70 EUR.
  • Alfa Laval: RBC Capital upgrades its sector performance advice to outperform with a price target raised from 450 SEK to 570 SEK.
  • Allianz: Autonomous Research moves from neutral to outperform with a price target raised from 284 to 330 EUR.
  • Axa: Autonomous Research upgrades from neutral to outperform with a price target raised from 36 to 39 EUR.
  • Carmila: Bernstein maintains its underperformance recommendation with a price target raised from 16.80 to 17 EUR.
  • Covivio: Bernstein downgrades from outperform to market performance with a price target raised from 62 EUR to 63 EUR.
  • DFDS: Carnegie Group downgrades its buy advice to hold with a price target reduced from 375 DKK to 173 DKK.
  • Gecina: Bernstein maintains its outperform recommendation with a price target reduced from 124 to 121 EUR.
  • Generali: Autonomous Research downgrades its outperform recommendation to neutral with a price target of 30 EUR.
  • Halma: Oxcap Analytics begins coverage at overweight with a price target of 3500 GBX.
  • Havas: Barclays starts coverage at overweight with a price target of 2.15 EUR. Bernstein starts coverage with a market performance recommendation and a price target of 1.90 EUR.
  • Icade: Bernstein downgrades from outperform to market performance with a price target reduced from 30 EUR to 26.60 EUR.
  • Kemira: SEB Bank upgrades its recommendation from hold to buy with a price target of 23 EUR.