Weekly market update : Five of the magnificent seven enter the arena

Despite a few disappointing quarterly results, the week ended on a bullish note for the stock markets. Wall Street continues its record-breaking run, buoyed by a robust US economy and the prospect of imminent rate cuts. Europe is benefiting from the decelerating inflation and good earnings from large groups, while Asia is regaining some ground following the announcement of new support measures in China. Risk appetite remains intact, even if volatility tends to increase.

Weekly variations* US 500 4890  +1.06% NETFLIX, INC. +18.11% AMERICAN AIRLINES GR... +10.76% HALLIBURTON COMPANY +10.48% DUPONT DE NEMOURS, I... -12.23% TESLA, INC. -13.65% ARCHER-DANIELS-MIDLA... -23.67% DOW JONES INDUST... 38109.43  +0.65% NASDAQ 100 17421.01  +0.62% FTSE 100 7635.09  +2.32% GOLD 2018.52$  -0.44% WTI 78.05$  +6.72% EURO / US DOLLAR 1.09$  -0.36%

This week's gainers and losers

Gainers: Netflix (+16%): Netflix overcame market doubts about its growth. The streaming giant reported quarterly revenues up 12.5%, driven by a 12.8% increase in the number of subscribers to 260 million. The group boasts an operating income that almost tripled year-on-year, to $1.49 billion, and a net profit that exploded over the period, from $55 million to $938 million. NetEase (+13%): The US-listed Chinese video game giant is simultaneously benefiting from the announcement of a rescue plan for the Chinese stock market, which reassures local investors, and from hopes of a softening of the regulations imposed on its industry by Beijing. Restrictions on online spending within video games could be lifted by the administration. IBM (+11%): The US IT group reported solid quarterly and full-year results (net income and sales up 9% and 4% in Q4), and published a revenue outlook well ahead of expectations, underpinned by strong demand for its artificial intelligence services. The company also expects to generate free cash flow of around $12 billion in 2024. This news propelled the company's shares to 10-year highs, and several analysts subsequently raised their price target on the stock. American Airlines (+12%), United Airlines (+11%): the two airlines managed to overcome Boeing's setbacks, despite aircraft groundings and flight plan revisions. They both reported better-than-expected results for the last quarter, and unveiled an encouraging outlook for 2024, anticipating a strong rebound in domestic and international travel. Losers: Archer Daniels Midland (-25%): The US food giant is in upheaval. The company said it was suspending its CFO Vikram Luthar after an investigation was launched into its accounting practices in the nutrition segment. It also announced that it would delay the publication of its results for the fourth quarter and the year 2023. In the aftermath, several analysts downgraded their recommendation and lowered their target price for the stock.  Tesla (-14%): There are several headwinds for the electric car champion. The group published lower-than-expected results for the fourth quarter, missed consensus on sales growth and reported a year-on-year decline in non-GAAP earnings. The automaker also announced a recall of 200,000 vehicles in the US for a software problem affecting rear-view mirrors, less than two months after a major recall. Management's cautious comments on the outlook for 2024 and Morgan Stanley's prediction of a fall in profitability in the near future further exacerbated the situation.  Humana (-11%): The health insurance group disappointed investors. After posting an unexpected loss in the fourth quarter due to rising medical costs, the company unveiled a bleak outlook for 2024, forecasting profits well below analysts' expectations. The company's stock, which blames the Medicare program for its poor performance, has lost a third of its value since the end of October. Intel (-8.6%): Intel cast a pall over the market, with its cautious forecasts. The stock fell by 10% after the close of the session on Thursday after it said that its first-quarter revenue could miss estimates by over $2 billion. Intel lost 11.3% in premarket trading on Friday morning.

Commodities

Energy: Positive economic data and the ongoing troubles in the Red Sea supported crude oil prices. Brent crude managed to break the USD 80/barrel barrier. The US economy grew faster than expected in the fourth quarter, a strength also confirmed by January's PMIs, which came in above economists' expectations. Also in the US, weekly inventories fell dramatically versus consensus (-9.2 million versus consensus -1.2 million), which also contributed to the upward turn in prices. Brent crude is trading at around USD 81, while its American counterpart, WTI, is trading at around USD 76.50. In Europe, the price of natural gas remains on a downward trend, at precisely 27 EUR/MWh for the Dutch benchmark. Metals: Industrial metals are on the rebound, ending a long downward trend. China probably has something to do with this, as it is likely to roll out more support measures for its economy. On the other hand, Europe is raising its voice against Russia, and could go further in its sanctions targeting Russian aluminum. A tonne of copper rose in London to USD 8,500, as did aluminium, which climbed back above USD 2,200. In precious metals, there was nothing to report. Gold is flat at USD 2020, a lethargy caused by financial doubts about the timing of the Fed's first rate cut. Agricultural products: In Chicago, corn prices are still on a downward trend, with a bushel of corn still trading at around 445 cents. Wheat prices were also neutral, although a bushel of wheat nibbled at 610 cents.

Macroeconomics

Atmosphere: What recession? This week's ECB meeting was completely overshadowed by US activity statistics. It has to be said that the central bank left its rates and rhetoric unchanged. Across the Atlantic, US GDP rose by 3.3% in the fourth quarter, against a forecast of 2%, reinforcing the scenario of a soft landing for the economy. At the same time, the US manufacturing and services PMIs are both back in the expansion zone. In short, the risk of a recession is fading a little further. As a result, the S&P 500 hit new all-time highs, while the yield on the US 10-yr bond peaked below 4.23/25%. The other big news of the week is the measures China is taking to try to get out of its rut. It's hard to say exactly what Beijing is up to, but the choice has been made to support the financial markets rather than announce a more comprehensive economic stimulus plan. Chinese indexes reacted positively, but investors remain, once again, a little disappointed.  Crypto: Bitcoin fell back again this week, approaching $41,000, down more than 1% since Monday. For its part, ether is suffering far more, falling by over 8% over the same period and now hovering around the $2,250 mark. The ether's fall is due in part to a further postponement of the SEC's decision on Grayscale and BlackRock's Ethereum Spot ETFs. As far as Bitcoin is concerned, the approval of the eleven Bitcoin Spot ETFs has had the opposite effect to that hoped for by many investors. Since January 11, when the ETFs were approved, bitcoin has fallen by 15%, and the cryptocurrency market as a whole has shed almost $200 billion in valuation since that date.

Five of the magnificent seven enter the arena The week straddling January and February will be extremely rich in earnings announcements, including five of the Magnificent Seven, the emblematic tech stocks. If we had to choose just ten - and that's complicated enough - we'd have to mention Microsoft, Apple, Alphabet, Amazon, Meta Platforms and ExxonMobil in the USA, and Novo Nordisk, Novartis, BNP Paribas and Glencore and Dassault Systèmes in Europe. Blimey, that's eleven already. The economic agenda includes the monetary policy decisions of the US Federal Reserve (Wednesday) and the Bank of England (Thursday). We'll also have to reckon with the US employment figures for January (Friday). We wish our readers a pleasant weekend.

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.