
Macro at a glance
Since the Federal Reserve began cutting interest rates in September, lowering its benchmark rate by 100 basis points by now, the US 10-year Treasury yield has paradoxically risen by the same amount. This divergence deepened after the Fed’s December announcement, which revised inflation targets for 2025 and 2026 upward, signaling a more persistent inflationary outlook. Combined with projections of higher than expected federal funds rates, these updates have reshaped market sentiment, reinforcing a hawkish stance despite ongoing rate cuts. Consequently, investors now expect only two rate cuts in 2025, compared to four previously. (CME Group, Federal Reserve Board)
On 3 December, President Yoon surprised the world by declaring martial law in South Korea and sending the army to Parliament. Under pressure from the public and members of parliament, Yoon lifted martial law a few hours later. On 14 December, the National Assembly voted to remove Yoon Suk Yeol from office. In the meantime, Prime Minister Han Duck-soo took over as interim Prime Minister, before being removed from office on 27 December. The political crisis destabilised the South Korean financial markets. The declaration of martial law caused the Kospi index to fall by 2.5% and the South Korean won by almost 3% against the dollar at the height of the day, reaching its lowest level since 2009. (FT, Bloomberg)
On December 12, the Swiss National Bank (SNB) cut its interest rate by 50 basis points to 0.5%, its largest reduction in nearly a decade. The move aims to counter weak inflation (0.7% in November), global economic uncertainty, and the challenges of a strong franc, which hurts Swiss exporters. (Reuters, RTS)
Japan’s Nikkei 225 is set to close 2024 at its highest level since 1989, surpassing the peak of the late 1980s economic bubble. The current rally, with the Nikkei up 20% in 2024, is largely driven by corporate buybacks, shareholder activism, and a weak yen boosting exports. Gains have been concentrated in major companies like Toyota, Sony, and Fast Retailing (Uniqlo’s parent). Despite these achievements, concerns over deflation and Japan’s long-term economic prospects continue to temper optimism. (FT, Reuters)
One Sector, One Insight
Basic Materials and Energy :
In 2024, France broke its all-time record for electricity exports, with a net balance of 85-90 TWh, far exceeding the previous peak of 77 TWh in 2002. This record contrasts sharply with the difficulties encountered in 2022, when half of France's nuclear reactors were shut down for maintenance and modernisation. This situation forced France to be a net importer of electricity for the first time since 1980. This export record also illustrates an inescapable truth: nuclear power remains a cornerstone of energy security in Europe. Governments are not the only ones who depend on nuclear power. Technology giants such as Google, Microsoft and Amazon have been investing heavily in the sector since the beginning of the year, notably by financing small modular reactor (SMR) projects or concluding agreements with nuclear operators. (FT)
Consumption and General Public Services :
The Vivendi split came into effect on 16 December, after being approved by more than 97% of shareholders on 9 December. The former media conglomerate listed on Euronext Paris is replaced by 4 companies. The ‘new’ Vivendi (VIV), which manages all the group's minority interests, remains listed on Euronext Paris, advertising agency Havas (HAVAS) will be listed on Amsterdam, media group Canal + (CAN) is listed on London, and finally Louis Hachette Group (ALHG), comprising the 66.5% stake in Lagardère (MMB) and Prisma Media, will be listed on Euronext Growth. The announced objective of bringing more value to shareholders has not been achieved for the moment, with a Vivendi share worth €8.75 before the split, compared with €7.73 for the 4 shares at 31 December.. (Le Figaro, Les Echos)
Financial Services :
Donald Trump has nominated cryptocurrency advocate Paul Atkins as SEC chair, signaling a potential shift towards a more crypto-friendly regulatory approach. Atkins, a former SEC commissioner, has criticized excessive regulation and supports fostering innovation in digital assets. His nomination has been praised by the crypto industry, contrasting with the stricter enforcement policies of current SEC chair Gary Gensler. These appointments reflect Trump's strategy to balance pro-business policies. (FT, Reuters)
Healthcare :
On 20 December, Novo Nordisk (NVO) published the results of the phase III trial of its experimental anti-obesity drug CagriSema. Average weight loss for patients was 22.7%, below market expectations of a 25-27% reduction. The announcement led to a historic fall in Novo Nordisk's share price, which lost up to 29% during the session before stabilising at 20.72% at the close. Nevertheless, all is well for Eli Lilly (LLY), which on December 21 received FDA approval for the treatment of sleep apnoea in obese adults for its drug Zepbound. (Barrons)
Industrials :
On 20 December 2024, Japanese carmakers Honda (7267) and Nissan (7201) officially entered into merger talks. The two companies plan to create a joint holding company, with a stock market listing envisaged for 2026. Mitsubishi Motors (7211), in which Nissan holds a 34.1% stake, has also been invited to join the alliance.The new entity would target combined sales of $190 billion and an operating profit in excess of $19 billion. The markets reacted well to the announcement, with Honda, Nissan and Mitsubishi up 11%, 37% and 28% respectively since rumours of a merger began on 17 December. (FT, Les Echos)
Technology and Network Equipments :
The quantum computing sector is booming, driven by breakthroughs such as Quantum Computing Inc.'s (QUBT) 135% stock surge following a NASA contract (16th December) and an astounding 1,730% increase year to date. Meanwhile, Google's (GOOG) "Willow" chip, capable of solving problems in minutes that would take classical computers 10 septillion years, highlights the field's transformative potential. These advancements could revolutionize AI, medical research, and nuclear fusion within the next five years. (Yahoo Finance, The Guardian)
The stock of the month
Semiconductor specialist Broadcom (AVGO) has had a fantastic month on the New York Stock Exchange. Its share price rose by almost 43%, taking its market capitalisation to 1087 billion dollars. The company benefited from the difficulties of Nvidia, which is suffering from the geopolitical tensions that are affecting this strategic sector. (FT)
Key performances
Name | As of Dec 31 | Monthly change | YTD |
S&P500 | 6032.38 | 5.73% | 27.19% |
Dow Jones | 44910.65 | 7.54% | 19.08% |
NASDAQ | 19218.17 | 6.21% | 30.15% |
FTSE100 | 8287.30 | 2.18% | 7.33% |
CAC40 | 7235.11 | -1.57% | -3.93% |
DAX | 19626.45 | 2.88% | 17.04% |
SMI20 | 11764.20 | -0.24% | 5.32% |
MSCI WORLD | 3810.14 | 2.52% | 20.22% |
VIX | 13.51 | -41.67% | 2.35% |
CHF/USD | 1.1339 | -1.67% | -4.54% |
CHF/EUR | 1.0728 | 0.92% | -0.37% |
Brent $/bbl | 72.09 | -1.17% | -6.47% |
Gold Spot $/oz | 2650.35 | -4.44% | 28.47% |
Upcoming events
Jan 10 : US Unemployment rate
Jan 15 : US Inflation rate
Jan 20 : US President’s inauguration
Jan 22/28 : Visa/Mastercard 4th quarter results
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Written by Hippolyte Metzger-Otthoffer and Jeremy Kündig
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