Weekly market update : Big pivot or small pivot?

The financial markets posted a series of record highs this week, sparked by the end of rate hikes, the decline in US inflation and Jerome Powell's statement opening the door to rate cuts next year. Risk appetite remains intact as the holiday season approaches, a period that's traditionally upbeat for equity markets.

Weekly variations* US 500 4719  +2.49% SOLAREDGE TECHNOLOGI... +23.88% ENPHASE ENERGY, INC. +20.30% BROADCOM INC. +19.64% AMEREN CORPORATION -8.06% ORACLE CORPORATION -9.06% EXELON CORPORATION -9.49% DOW JONES INDUST... 37305.16  +2.92% NASDAQ 100 16623.45  +3.35% FTSE 100 7576.36  +0.29% GOLD 2019.01$  +0.60% WTI 71.66$  +0.62% EURO / US DOLLAR 1.09$  +1.20%

This week's gainers and losers

Gainers: Sirius XM (+23%): The digital satellite radio operator is to merge with Liberty Media's majority-owned entity to create a new listed company with a simplified shareholder structure. As part of the operation, the former shareholders of Liberty SiriusXM Group will hold 81% of the new company.  Carvana (+26%): Carvana is doing better. In serious trouble in 2022, the used car specialist soared after the publication of a report on US dealer sales in November, which showed a 5.8% year-on-year increase in November. Analysts at JPMorgan also confirmed their enthusiasm for the group's prospects by significantly raising their price target, citing improvements in productivity, costs and culture. Carvana gained 976% over the year. Zillow Group (+22%) Market hopes of a Fed and ECB rate cut as early as Q1 2024 are boosting real estate players, who have been severely weakened by successive rate hikes. The renovation/resale specialist are also benefiting from positive recommendation changes from analysts. Zillow also boasts of a fall in mortgage rates in November, which would have boosted its quarterly outlook.  Rivian Automotive (+18%): The electric vehicle manufacturer surged after announcing a major commercial partnership with AT&T. The telecom giant will be sourcing Rivian to build up its fleet of vans and pick-ups by the end of the year. As part of the agreement, AT&T will supply Rivian with the network connectivity in the cars.  Incyte Corporation (+17%): The US pharmaceutical company unveiled encouraging results from a Phase 2 study on axatilimab, a treatment for patients with chronic graft-versus-host disease, which it is developing in partnership with biopharma Syndax Pharmaceuticals. Following the announcement, several analysts raised their opinion or price target on the stock.  The Cigna Group (+15%): The market applauded the health insurance group's decision to abandon its planned merger with its counterpart and rival Humana. A series of disagreements over financial arrangements is said to be behind the deal's breakdown. Investors were also concerned that the deal, which would have created a $140 billion giant, would not pass antitrust scrutiny. In the wake of the deal, Cigna announced a $10 billion share buyback program. Losers: Apellis Pharmaceuticals (-17%): The US biopharma group is expecting an unfavorable decision on its treatment for chronic eye disease. As the European drug regulator considers the treatment, the group has said it is unlikely to win approval, but plans to appeal in the event of a refusal. Wells Fargo subsequently downgraded its opinion on the stock.  Oracle (-12%): Another slow quarter for the enterprise software publisher. The group reported weak sales in the cloud and cloud software segments, despite revenue growth of 25% in this division. The market also punished the group's timid forecasts, the absence of growth linked to artificial intelligence and the low ambition of future capital expenditure.  Pfizer (-9%): With the Covid vaccine windfall waning, Pfizer has warned the market: earnings and sales for 2024 will be below Wall Street expectations. Investors are also turning their focus away from the huge $43 billion acquisition of innovative anti-cancer specialist Seagen, as it will not have to make up for lost Covid revenues. Pfizer is therefore announcing 500 layoffs in the UK and $3.5 billion in future savings.

Commodities

Energy: Oil prices are finally picking up again this week. However, the weekly advance is well below that of other risky assets, which are continuing their long Christmas rally that began in November, but at least the seven-week run of consecutive declines should come to an end. The latest OPEC report has contributed to this rebound, as the cartel expects record demand next year. Despite economic uncertainties, demand growth is expected to be around 2.2 million barrels per day, synonymous with a market in deficit as OPEC+ strives to reduce production. By contrast, the International Energy Agency's forecasts are more nuanced, as it still expects a market surplus in 2024 despite demand growth of 1.1 mbpd next year. In terms of prices, Brent is trading at around USD 77, while WTI is trading at around USD 72. Metals: Risk appetite, a falling dollar and reassuring economic data from China: things are getting better for industrial metals, which rebounded this week in London. Industrial production continues to recover at a steady pace in China. It rose by 6.6% in November. As a result, a tonne of copper rose to USD 8550 on the LME, as did aluminum (USD 2200) and zinc (USD 2500). Gold is back above the USD 2,000/oz mark, thanks to the spectacular easing of bond yields. Agricultural products: Cereals lost ground overall this week in Chicago. The price of corn fell to around 480 cents a bushel, with a similar dynamic for wheat, which traded at around 615 cents.

Macroeconomics

Atmosphere: Happy Ending. This year, the market decided to play Santa Claus early. For the final act of 2023, the Fed pulled out all the stops. Even the most optimistic wouldn't have dared dream of such a spectacle. The members of the Monetary Policy Committee have singularly modified their positions since last September. Goodbye high rates, hello easy money! If the scenario unfolds without a hitch, the Fed could cut its key rates by 75 basis points in 2024. A boon for equity markets... Meanwhile, the easing continues, with the yield on the U.S. 10-year bond having just fallen back below the symbolic 4% threshold after flirting with 5% at its peak. Let's hope it lasts! Among the indicators published this week, we saw weakness in European PMIs, which suggests that the ECB, despite its more combative attitude than expected, may have to consider a rate cut soon. US statistics, meanwhile, remain resilient. In China, data continues to blow hot and cold. Crypto: After eight consecutive weeks of gains, bitcoin has fallen by 2.5% since Monday, dropping back below the $43,000 mark at the time of writing. In its wake, ether, the native cryptocurrency of the Ethereum blockchain, is also retreating, falling back to around $2250, down 3.8% this week. After gaining over 56% in just two months, a good number of crypto-asset market players are taking profits on BTC, which may explain this week's slowdown. Meanwhile, the most eagerly awaited event remains the approval of a Bitcoin Spot ETF by the US Securities and Exchange Commission (SEC). Many industry experts believe that the first potentially positive responses from the SEC on these exchange products will come early next year. Enough to keep aficionados of the digital currency industry languishing over the festive season.

Big pivot or small pivot? The market has finally reached the Fed's pivot point, the moment when the central bank has passed its rate peak and is heading for its first cut. There is still disagreement over the pace of the decline. The week before Christmas will be busy with macroeconomic announcements, with two highlights: the Bank of Japan's latest 2023 monetary policy decision (Tuesday) and US PCE inflation (Friday). The final earnings releases of the year include Heico, ThyssenKrupp Nucera, Ceconomy, Accenture, Fedex, Micron and Nike.

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.