Trade review: current reports, trends, indices, stock prices, bonds, foreign exchange and commodities and analyst recommendations
10:56
Trading in Europe is now on a positive trend, the DAX and KAC indices are up by 0.5%, the POTSI by 0.2%.
Rafi Gozlan, Chief Economist, IBI Investment House points to a return to a horizontal improvement in global activity: “After positive momentum in risk assets in the first quarter of the year, the second quarter opened with a negative trend, mainly due to the effect of the increase in yields in the bond market against the background of better than expected macro data, which led to the continuation Moderation in expectations for interest rate cuts in the US”.
“The good news in terms of global activity are the continued signs of a transition from growth that relied mainly on the US led by the service industries, towards horizontal and more balanced growth in terms of industry and geography. Thus, the Global Purchasing Managers’ Index continued the expansion trend that began at the beginning of the year, with a further increase in March to 52.1, with a general improvement in activity, with the emphasis being on a return to expansion in industrial activity after a prolonged contraction.”
“Also in the Eurozone, indications of an improvement in activity continue. The Aggregate Purchasing Managers’ Index crossed the 50-point mark, after a prolonged contraction since the end of the first half of 2023. The recovery in activity is led by the service industries, among other things, supported by the low unemployment rate and an improvement in real wages against a background The moderation of inflation. It is reasonable to expect that in the coming week the ECB will signal a high probability of reducing the interest rate already in June.”
“This mix is positive for the European stock market as it includes an improvement in activity, alongside a positive but moderate inflation environment that allows for a transition to interest rate reductions, all against a more favorable pricing background than in the US which includes an environment of multipliers and lower interest rates.”
10:19
Trading in Europe opened this morning stably, the leading indices DAX, CAC and POTSI traded with minimal changes.
The trading week in Asia opened this morning with a mixed trend. The Japanese Nikkei index recovered after a bad week in which it fell by 2.3% and rose by 1.6% today. In China, the Shanghai index fell by 0.7% and the Hang Seng index by 0.4%, the South Korean Cospi traded stably.
08:39
The trading week in Asia opened this morning with a mixed trend. The Japanese Nikkei is recovering after a bad week in which it fell by 2.3% and rose by 1.6%. In China, the Shanghai index falls by 0.7% and the Hang Seng index by 0.4%, the South Korean Cospi trades stably.
In New York the futures contracts are trading in small increments.
Last Friday, Wall Street indices closed higher. The Dow Jones index rose by about 0.8%, the S&P 500 index rose by about 1.1%, the Nasdaq added to its value by about 1.2%. In a weekly summary, the Dow Jones lost its value by about 2.3% and concluded the worst week his since early 2024. The S&P 500 lost 1% and the Nasdaq fell 0.8% last week.
stock Tesla jumped 3.8% in late trading on Friday following CEO Elon Musk’s announcement of the launch of the Robotaxis, the robotic taxi, later this year, probably in August. Musk has been talking about this project for years, and it could be a new growth engine for the automaker, while Investors fear a period of weak growth experienced by the company. In addition, it was reported by Reuters that plans for Tesla’s low-cost car were canceled. Musk said that Reuters “lied.”
Berkshire Hathaway Manages investments with a value of approximately 380 billion dollars, most of which is invested in a small number of companies. Many think, quite rightly, that Buffett’s preferred investment is Apple. Buffett once even said that Apple is “a better company than his own”. Apple does indeed constitute about 40% of the aforementioned investment portfolio, $155 billion after Berkshire invested about $36 billion in it in 2016. Berkshire also has significant holdings in Bank of America, American Express, Chevron and Coca-Cola, and in total its investment portfolio consists of About 45 companies.
A closer look indicates a stock that is even more loved by the Oracle of Omaha and Berkshire Hathaway, at least according to the amount of money the latter invested in it, roughly double what it invested in Apple. This stock is – Berkshire Hathaway.
Since 2018, when Berkshire changed the conditions that allow the company to make a self-purchase, Buffett and his late right-hand man, Charlie Munger, purchased Berkshire shares in the amount of $74 billion.
Berkshire does not pay a dividend, and a buyback is the only way it has left to return cash from its coffers to investors. Some will prefer this way over dividend distribution, since a buyback reduces the number of traded shares, increases the profit per share and decreases the profit multiplier of the share, which makes it more attractive for purchase.
Quarterly report season opens this week, investors are hoping that corporate earnings will support the stock rally in the first quarter. Among those to report, Delta Airlines on Wednesday and the banks Citigroup, Wells Fargo and JP Morgan on Friday.
In the US debt market, government bond yields rose throughout the entire curve during the past week, with the 10-year yield rising by 19 basis points to 4.39% and the two-year yield rising by 14 basis points to 4.54%.
In the commodity market, the fear of a security escalation with Iran pushed oil prices up on Friday, to a five-month high, and a barrel of Brent traded at around $91. But this morning, amid the talks in Cairo for a ceasefire, oil prices are down by about 2%. American oil traded at 84.6 and Brent oil at 89.5 dollars per barrel.
Gold broke (again) its record high and traded on Friday at $2,345 per ounce. Gold strategist at State Street Global Advisors, George Milling-Stanley, argues that the demand for gold is a combination of geopolitical tension and high interest rates in the US that have remained at a high level for too long. What’s more, if the Fed lowers the interest rate as it predicts, the dollar will weaken, which will move more investments to gold, the price may go up to $2,400.”
And there are even more optimistic about the price of gold – the famous economist David Rosenberg, president of the research company that bears his name predicts that the price may soar even to $3,000, about 30% above its current price. “The price increase comes at a time when the dollar is strengthening, inflationary expectations are falling and interest rates have remained high for too long. All of these were supposed to lower its price, but it is rising despite everything.”
Macro: In the US, two important figures will be published this week. On Wednesday, the consumer price index, the expectation is for annual inflation of 3.4% compared to 3.2% last month. Core inflation is expected to drop from 3.8% to 3.7%. On Thursday, the producer price index will be published.
● The Federal Reserve’s floundering boils down to the question: Will interest rates drop at all in 2024?
Jefferies’ AI winner: The company’s analysts wrote in their weekly report that the generic AI market is undergoing a transformation. “In 2023, utmost importance was given to the possibilities and potential that technology brings with it, now, the emphasis is on moving to more tangible uses.”
The investment bank predicts that manufacturers are now fine-tuning both the applications and the pricing of their AI products. “In our opinion, spending on AI will spread to other infrastructure providers and applications that allow corporations to gain a competitive advantage thanks to AI. In this sense, we think thatMicrosoft will be the big winner in the generic AI market, the company has an advantage in both infrastructure (OpenAI) and applications (Azure cloud service), and thus it will benefit from the change.” Jefferies raised Microsoft’s target price from $465 to $550, in -30% more than the stock price now.
On Nvidia On the other hand, the forecast is less encouraging. Gil Luria, an analyst at the consulting company DA Davidson, predicts a drop of about 20% in the company’s stock by the end of the year. “The company will not keep up with growth,” he wrote. Loria gave the company a “hold” rating with a target price of $620. “Many customers have purchased large quantities of GPU products, but that means they have pretty much filled their inventory and will purchase much less in the future. The higher it is this year, the bigger the drop the year after,” Loria said.
Deutsche Bank also warns of Nvidia’s high value. The German bank ranks the stock as a “hold” with a target price of $850, about 5% less than its current price. “Despite the company’s incredible innovation and despite the fact that we see the company as a clear AI leader, all of these are already embodied in the share price.”
