Stock Markets in a Coffee Break from Europe

The financial markets took a momentary pause this week, largely influenced by concerns over potential trade wars and the persistent geopolitical uncertainties in Ukraine. This brief respite comes after a period of steady growth, indicating a moment of reflection and caution among investors. Despite this temporary halt, the broader upward momentum that has characterized the markets since the beginning of the year remains robust, suggesting that the fundamentals driving market growth are still firmly in place. As we look ahead, investors are advised to brace for potential volatility, with several significant events on the horizon. This Sunday, Germany will hold legislative elections, the outcomes of which could have far-reaching implications for European politics and economics. Investors will be closely monitoring the results for any indications of policy shifts that could impact the markets. Next Friday will see the release of crucial inflation data for France, Germany, and ...

  Global financial markets are surging with optimism as major indices like the S&P 500, Nasdaq-100, and EURO STOXX 50, comprising 50 blue-chip companies from 11 Eurozone countries, reach record highs. Over the past few days, bond yields have seen a modest increase, with yields rising by 4 to 6 basis points. Despite this uptick, stock markets remain buoyant, bolstered by hopes of a resolution in Ukraine, which could alleviate geopolitical risks and reduce the associated risk premium.   The technology sector, particularly semiconductors, has shown strong performance with four consecutive sessions of gains. Although not at an all-time high, this resurgence is crucial for the overall market's long-term growth. Intel's recent 16% surge, driven by the potential split into two entities, has further bolstered the tech sector's recovery. This momentum is particularly important as the technology sector often sets the pace for broader market advances. Inflation in th...

Photo by Aad Brinkman The Eurozone's economic performance in 2024 has been marked by a blend of moderate growth and fluctuating momentum, reflecting the complex interplay of various economic factors. In the fourth quarter of 2024, the Eurozone's GDP grew by 0.9% year-on-year (YoY), maintaining the same growth rate as the previous quarter. However, the quarter-on-quarter growth was revised down to 0.1%, a notable decrease from the 0.4% growth observed in the preceding quarter. This downward revision suggests that while the Eurozone economy is expanding, the pace of growth is slowing, indicating potential underlying weaknesses. For the full year of 2024, the Eurozone's GDP grew by 0.7% YoY, a modest improvement from the 0.4% growth recorded in 2023. This growth reflects the economy's resilience in the face of numerous headwinds, including geopolitical tensions, supply chain disruptions, and the lingering effects of the COVID-19 pandemic. However, the decelerat...

Executive Summary The February 2025 Multi-Asset Barometer report highlights a cautious outlook for global financial markets, emphasizing the need for strategic asset allocation and vigilance amidst increasing economic risks. This report provides an in-depth analysis of global economic risks, market resilience, emerging market opportunities, sector performance, fixed income and currency outlooks, and the role of gold as a hedge against volatility. 1. Global Economic Risks - Risk Assessment: The global economy faces increasing risks, prompting a downgrade of equities to a neutral position and an upgrade of cash. - Key Concerns: Newly imposed trade tariffs, stretched equity valuations, and potential economic slowdowns are major concerns. - Investor Guidance: Recent market turbulence underscores the transient nature of market rallies, necessitating investor vigilance. 2. US Market Resilience - Market Outlook: The US market is expected to outperform others due to strong corporate earnings a...

This week, the focus will be on US inflation data and Federal Reserve Chair Jerome Powell's statements, but the most significant event will occur over the weekend: the Munich Security Conference, which will address geostrategic risk premiums. The corporate earnings season remains active and continues to support stock markets, as the aggregate figures are positive. With approximately three-fifths of listed American companies having reported, the average EPS stands at +13.3%, nearly double the expected +7.5%. This strong performance has once again provided reliable support for the stock markets for another quarter. Historically, stock markets align with corporate results over the long term. This week, the market's direction will largely depend on the US inflation data, scheduled for release on Wednesday at noon, and Powell's testimony before the Senate and Congress on Tuesday and Wednesday, respectively. Inflation is expected to remain steady at +2.9%, while the underlying ra...

In recent weeks, global stock markets have exhibited a tendency to rebound rather than retreat, driven by a confluence of factors that have bolstered investor confidence. This resilience is underpinned by several key developments in trade relations, geopolitical stability, and corporate performance. Trade Risk Reduction One of the most significant contributors to the market's positive trajectory is the reduction in trade war risks. The introduction of a 30-day grace period to negotiate tariffs with Mexico and Canada has eased tensions, providing a window for diplomatic resolution. This de-escalation has mitigated uncertainty, allowing markets to focus on fundamentals rather than geopolitical risks. Strategic Situation Geopolitical risks have also shown signs of abatement in key regions. The conflict in Israel appears to have temporarily subsided, reducing strategic risk in the Middle East. Meanwhile, the situation in Ukraine remains stable, although the upcoming peace conference in...

Vinci SA's stock has seen a notable increase, rising by 2% to close at €108.10. This surge is attributed to a combination of positive market sentiment and strategic initiatives that have bolstered investor confidence. Expansion in the UK Infrastructure Sector On October 30, 2024, Vinci SA announced the acquisition of FM Conway Limited, a significant player in the UK's infrastructure sector. This strategic move is set to enhance Vinci's presence in the UK market, leveraging FM Conway's expertise and established client base. The acquisition is expected to drive growth and innovation, further solidifying Vinci's position as a leading infrastructure provider. Securing a Major Contract in the U.S. Just two days prior, on October 28, 2024, Vinci secured a prestigious contract to extend a metro line in Chicago. This project marks a significant milestone for the company, expanding its influence in the U.S. infrastructure market. The contract not only underscores...

Photo by Yorgos Ntrahas The market appears to be stabilizing with a positive outlook. Yesterday marked the second consecutive day of recovery, bolstered by a reduction in bond Internal Rates of Return (IRRs)—the German Bund fell to 2.37% and the US T-Note to 4.43%. This decline in yields has provided some breathing room for equity markets, assuming no new disruptions occur. Yesterday's US ADP Private Employment Survey exceeded expectations, reporting 183k new jobs compared to the forecasted 150k, with previous records revised upward. Typically, strong employment data could negatively impact Wall Street, as it signals potential inflationary pressures. However, the market's focus quickly shifted to the US ISM Services report, which indicated a decline in the Prices Paid component from 64.4 to 60.4, suggesting lower inflationary pressures. This news overshadowed the employment data, allowing the T-Note IRR to drop significantly from 4.50% to nearly 4.40%. Today, severa...

Spotify's stock experienced a significant surge today, rising by approximately 11%. This impressive increase was primarily driven by the company's outstanding fourth-quarter 2024 earnings report, which highlighted several key achievements that have boosted investor confidence. Profitability Turnaround One of the most notable achievements in Spotify's earnings report was its profitability. The company reported a profit of €1.76 per share, marking a significant turnaround from the previous year's loss of €0.36 per share. This financial performance has been a major factor in the stock's upward trajectory. Subscriber Growth Exceeds Expectations Spotify also reported a substantial increase in its premium subscriber base. The platform added 11 million new premium subscribers during the quarter, bringing the total to 263 million. This figure surpassed analyst expectations, which had projected an addition of 8 million subscribers. The strong subscriber growth in...

Ferrari has reported outstanding financial results for the fourth quarter of 2024, significantly surpassing market expectations. The luxury sports car manufacturer posted earnings per share (EPS) of €2.14, marking a 32% year-over-year increase and beating the estimated €1.86. This impressive performance has bolstered investor confidence and driven the stock price higher. Strong 2025 Guidance Looking ahead, Ferrari has provided robust guidance for 2025, anticipating continued strong growth. The company expects EPS to reach at least €8.60, representing a minimum 2% year-over-year increase. This optimistic outlook reflects Ferrari's strategic initiatives and the enduring appeal of its high-performance vehicles. Sustained High Demand and Margin Expansion The demand for Ferrari's products remains elevated, driven by the brand's prestige and the allure of its exclusive offerings. Customizations continue to be a significant driver of margin expansion, allowing the comp...

The financial markets have experienced a tumultuous start to 2025, with recent events such as the announcement of US tariffs and the DeepSeek incident causing significant volatility. Stocks initially fell by 2% following the tariff announcement, but a 30-day grace period for negotiations provided some relief, leading to a slight recovery. This adjustment comes after a strong start to the year, which saw markets gaining considerable momentum. A Complex Year Ahead 2025 is shaping up to be a complex year for financial markets. Analysts anticipate high risk premiums and erratic market behavior, driven by ongoing uncertainties about inflation, interest rates, economic growth, and geopolitical strategies. Given these challenges, stocks are expected to make little progress until the summer, when the economic outlook is likely to be clearer. Key Economic Indicators and Events Several critical economic indicators and events are scheduled for this week, which could further influence ...

Eurozone CPI Data for January: - General Inflation Rate: +2.5% (vs +2.4% expected and +2.4% previous) - Underlying Inflation Rate: +2.7% (vs +2.6% expected and +2.7% previous) The most recent Consumer Price Index (CPI) data from the Eurozone highlights the ongoing difficulty in managing inflation, as both overall and core rates have come in slightly above expectations. This small uptick suggests that the journey to curb inflation is still slow and filled with obstacles. Nevertheless, we remain optimistic that inflation will gradually ease over the year. The European Central Bank (ECB) is likely to keep implementing rate cuts to boost economic growth across the Eurozone. This forward-thinking strategy is designed to combat ongoing inflationary pressures while fostering a stronger economic rebound.

This week begins on a turbulent note, despite some favorable macroeconomic and corporate developments. While stock markets had been regaining stability more swiftly than anticipated, today's events will disrupt this trend. The implementation of tariff increases by the US on Canada, Mexico, and China will lead to a volatile Monday, characterized by stock market declines, significant losses in cryptocurrencies, a stronger dollar, and lower bond yields, which will serve as a safe haven. Fears of a potential trade war will result in a bearish and unpredictable week. On a more traditional front, European inflation data released today is expected to remain at +2.4%, with the underlying rate potentially improving by a tenth to +2.6%. Later in the week, US employment figures are anticipated to be slightly weaker due to reduced economic activity in California caused by wildfires. Friday's Non-Farm Payrolls report is likely to show a slowdown to around 150,000 jobs created, c...

Tesla reported weaker-than-estimated Q4 2024 results, but the stock received a boost due to the promise of more affordable vehicles. Key Figures vs. Bloomberg Consensus: Revenues: $25,707 million (+2% YoY) vs. $25,200 million estimate. EBIT: $1,583 million (-23%) vs. $2,670 million. EPS: $0.66 (-71% YoY) vs. estimated $0.67. Analysis of Tesla's Results: Disappointing Performance Tesla's Q4 2024 results were weak and fell short of estimates. Demand weakened, leading to a -1.1% drop in deliveries (to 1.78 million units) for the full year. The company's strategy to increase volume involves maintaining discounts and financing facilities, which has negatively impacted margins. The gross margin for the auto business closed the quarter at 16.6% vs. the estimated 18.9%, aligning with the margin achieved in Q4 2023. Excluding regulatory loans, the margin was 13.6% vs. an estimated 16.2% and 14.8% in Q4 2023. In Q3 2024, it reached 17.0%. Despite these challenges, the sto...

Overview The 2024 results for LVMH slightly exceeded revenue expectations but showed a worsening deterioration in margins during the second half of the year. Key Financial Metrics vs. Bloomberg Consensus - Revenues:b€84,683 million (-1.7%) vs. €84,382 million (-2.1%) expected. - Gross Margin: €56,765 million (67.0% margin) vs. €57,540 million (68.2%) expected. - EBIT: €19,571 million (-14.2%) vs. €20,450 million (-9.4%) expected. - EBIT: €12,550 million (-17.3%) vs. €13,380 million (-11.8%) expected. - Free Cash Flow: €10,478 million (+29%) vs. €12,748 million expected. - Net Financial Debt: €9,228 million (-14%) vs. €10,746 million in 2023. Organic Revenue Growth Organic revenues increased by 1% for the year. In the fourth quarter, sales amounted to €23,930 million (+0%) vs. €23,428 million (-2.2%) expected, with organic growth of +1.0% vs. -1.0% expected. Divisional Performance - Fashion & Leather: -1% vs. -2.8% expected. - Wines & Spirits:b+8% vs. -6.9% expected....

Key Figures Compared to Market Consensus (Bloomberg): - Revenues: €9,263 million (+28%) vs. €9,021 million expected. - *Gross Margin: 51.7% vs. 49.62% expected. - EBITDA: €2,693 million (31.5%) vs. €2,624 million expected. - Order Backlog: €7,088 million vs. €3,530 million expected. ASML has provided its usual guidance for Q1'25, which exceeds expectations: - Revenues: Between €7,500 million and €8,000 million (vs. €7,247 million expected by consensus). - Margins: 52%-53% (vs. 51.2% expected by consensus). For the full year 2025, ASML maintains its previous guidance: - Revenues: €30,000 million to €35,000 million (vs. €32,185 million expected by consensus). - Margins: 51%-53% (vs. 52% expected by consensus). ASML's latest results confirm that 2025 will be a year of recovery, with revenues expected to grow by 15%. This growth is supported by the development of chips for Artificial Intelligence. The strong financial performance and robust order book are likely to posi...

Apple has released results and guidance that exceeded market expectations, despite disappointing performance in China. In after-hours trading, the stock rose by 3.01%. Key Figures Against Consensus (Bloomberg): - Sales:$124.3 billion (+4% YoY), compared to the expected $124.1 billion. - EBIT:$42.832 billion, against an anticipated $42.429 billion. - Net Income:$36.330 billion (+7%), surpassing the expected $35.500 billion. Regarding its performance in China, the company reported sales of $18.513 billion, reflecting an 11% YoY decline and falling short of expectations, which were set at $21.567 billion. For the next quarter, Apple anticipates mid/low single-digit growth, slightly above expectations. Opinion on Apple’s Results: Despite the disappointment with figures from China, we view Apple's overall results positively. The company has met expectations and is making progress in its mixed-revenue business model, where the services segment is increasingly gaining importan...