Financial markets have regained altitude this week, which is not obvious if we refer to Friday’s session alone. Traders benefited from the strong rebound in oil prices, the easing of the bond market and, above all, from bargain buying, after indexes hit annual lows at the end of last week. Risk aversion and volatility should nevertheless persist, especially since major data on inflation are expected next Wednesday in the United States. Next week, the Q3 earnings season will also officially start.
This week’s gainers and losers
Telecom Plus (+32.4%) The British energy multiservice company announced that its annual results will be significantly higher than market estimates, due to strong demand.
Shares in the technology sector, and online retailing in particular, were highly leveraged this week as investors’ risk appetite returned. Chewythe pet care specialist, gained 23.5%
Like its peers, US oil major Exxon Mobil is benefiting from the rebound in oil prices after the decision of Opec + to reduce its output in the coming months, to cope with falling demand and keep prices high. +16.9%
Marathon Petroleum (+26.3%) went up for the same reason
Tesla (-10.2%) The market didn’t like Elon Musk’s U-turns on the purchase of Twitter. Investors are realizing that the Tesla boss is as unpredictable as ever, and that he may have less time to devote to cars.
Video game distributor Embrace fell after Berenberg reduced its price target on the stock. However, the research firm remains a buyer, as the company could be a potential target for an acquirer. -5.5%
Carnival (-5%) Cruise lines are struggling to fill up ships in the fall and are offering big rebates. Cruise prices are not keeping up with inflation rates.
EnergyOPEC+ announcements provided: significant support to oil prices. The enlarged cartel decided to reduce its production by 2 million barrels per day, while the market was expecting a contraction of one million barrels per day. This reduction in supply is obviously to the detriment of oil consuming countries such as Europe and the United States. In this regard, the Biden administration announced plans to consult Congress to study a plan to reduce OPEC’s control over energy prices.The United States draws on its strategic stocks every week in order to curb the rise in oil prices. North Sea Brent is trading around USD 95 while US WTI is trading at USD 89 per barrel.
Metals: The London Metal Exchange (LME) has confirmed that it is restricting the supply of metals from Russia, including those from Ural Mining, whose co-founder is under sanctions in the UK. The London stock exchange could go further by banning deliveries of copper, aluminum and also nickel, which would be produced in Russia. These potential sanctions have supported the prices of industrial metals. Copper is trading at USD 7740 per metric ton, aluminum at USD 2350 and nickel at USD 22780.
agricultural commodities: Grain prices were broadly stable in Chicago, with wheat and corn trading at 890 and 676 cents per bushel, respectively. Brazil is forecasting a 12.5% increase in corn production from last year, a significant increase mainly due to an unfavorable base effect, as Brazil experienced severe droughts in the 2022/2022 season.
Atmosphere: “Let’s go again. Oh well, no”. Investors seem to have sincerely believed that the first signs of a slowdown in the US economy would shake the Fed’s determination to raise rates. That was the mood at the beginning of the week, and it was reinforced by the Australian central bank, which surprised everyone by raising its own rates at a minimum. But it didn’t last and the release of strong employment data in the US on Friday didn’t help matters. The unemployment rate fell from 3.7% to 3.5% and the labor market barely slowed. Another case of good news is bad news. If the economy holds up, the Fed will probably have to tighten its monetary policy even more. And investors don’t like that at all.
Rates: The yield on 10-year US government debt fell from 4% last week to less than 3.6% on Tuesday. But the latest data available, including September employment, pushed it back up to 3.88%. In Europe, bonds are also falling as yields rebound. The Bund is at 2.18% on 10 years and the OAT at 2.78%. British Gilts are at 4.2%, exceeded only by Italian BTP (4.65%) and Greek debt (4.77%). The inflationary outlook continues to keep yields high.
Currencies: There was a lot of turmoil at the beginning of the week, especially in mining-related currencies such as the Australian dollar (AUD) and the Canadian dollar (CAD), which crumbled against the US dollar. But things have pretty much rebalanced since then. The EUR/USD is trading at 0.9758, while the British pound is trading at USD 1.1146 to GBP 1. The Bank of Japan’s efforts to support the yen are not keeping the currency from falling back to JPY 145.08 per USD 1.
Cryptocurrencies: Bitcoin is starting October on the same track as previous weeks, still sailing around $19,500 at the time of writing. A low volatility that indicates the mistrust, the wait-and-see attitude and the observation of individual, professional and institutional investors, while waiting to see more clearly in a still very tense macroeconomic context. The ether, the second crypto-currency of the market in terms of capitalization, also fails to attract capital despite the success of its merger that took place in mid-September. Crypto-investors will therefore have to wait a while longer before regaining some optimism.
Calendar: A quartet of US statistics will set the tone next week. September’s producer price index (Wednesday) and consumer price index (Thursday), followed by September’s retail sales and the University of Michigan’s preliminary confidence index for October (Friday). Central banks are still on the prowl, with a speech by Lael Brainard (Fed) scheduled for Monday, followed on Wednesday by a speech by Christine Lagarde (ECB) and the release of the minutes from the last Fed meeting.
Good news is bad news!
After a strong start to the week, equity markets ended this Friday in a gloomy mood. Destabilized, the investor is now evolving in a world where monetary policies take precedence over economic policies, particularly in the United States. Good economic news is now synonymous with a contraction in equity markets. And if the investor was hoping for a little respite next week, we would advise him to stay alert. Quarterly earnings releases will be back, including PepsiCo, BlackRock and the banks JP Morgan, Wells Fargo and Morgan Stanley. In the meantime, have a great weekend!
Things to read this week
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Cardano: a late bloomer or a lost cause? Things have changed since, and not only because of the bear market. Cardano has been very slow in delivering real results, and upon delivery, market reaction… Read more
PUMP / DUMP #48: This week’s gainers and losers Today, our list includes Telecom Plus, Chewy, Exxon Mobil, Saipem, Porsche AG, VGP, Eramet, Twitter, and Embracer. Video x8ea2zo Read more
*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.