Macro at a glance
On 24 September, the Chinese government and central bank announced a series of measures aimed at achieving 5% growth by 2024. These measures enabled the Chinese stock markets to record their biggest weekly rises since 2008, with the CSI 300 up 25% between 23/09 and 30/09. (NY Times)
The FED cut rates by 50 basis points on September 18, after weeks of speculation about whether it would cut rates by 25 or 50 basis points. Jerome Powell praised the robustness of the US economy and employment, and considered inflation to be beaten. There are still doubts among investors as to the extent of this cut, since if the economy is as resilient as the FED describes it, a 25 bp rate cut would have been more justified. (Le Figaro)
France has a new government since September 21, with Michel Barnier as Prime Minister. The 39 ministers face many challenges, including the creation of a budget for the year 2025, when the public deficit is expected to reach 6% of GDP and public debt has reached 112% of GDP. (Le Parisien)
After the coordinated Hezbollah beeper explosion on September 17 and the walkie-talkie explosion the following day, Israel and Hezbollah clashed in southern Lebanon with attacks from the air, using fighter jets, drones, missiles and rockets. The head of Hezbollah, Hassan Nasrallah, was killed in an Israeli strike on 27 September in Beirut, as have many Hamas and Hezbollah leaders since last week. The situation is extremely tense, and the death toll ran into the hundreds. (FT, Le Figaro)
One Sector, One Insight
Basic Materials and Energy :
On September 18, Rolls-Royce (RR.L) won the tender to build several small-modular nuclear reactors in the Czech Republic. These plants are capable of generating 470 megawatts, and should help improve the Eastern European country's energy situation and independence. Rolls-Royce is also one of four finalists to produce modular power plants in the UK, a potential multi-billion pound contract. (Les Echos)
Consumption and General Public Services:
Shares in the luxury goods sector performed extremely well in the fourth week of the month, following the announcement of economic support measures in China and the consequent hope of a recovery in domestic consumption. LVMH (MC.PA), Hermes (RMS.PA), Kering (KER.PA), l'Oréal (OR.Pa) and Richemont (CFR.SW) all rose by between 10 and 17%. LVMH also announced that it had taken a 10% stake in Double R, a holding company controlled by Moncler (MONC.MI) CEO Remo Ruffini, who owns 15.8% of the company. Monclerc shares rose by up to 15% the day after this announcement, especially as LVMH will be able to increase its stake in Double R's capital. (Bloomberg)
Financial Services :
UniCredit’s (UCG.MI) acquisition of over 53 million shares in Commerzbank (CBK.DE) has reduced the German government’s stake to 12%, paving the way for a potential takeover. If completed, this deal would create a financial entity larger than Deutsche Bank. However, Germany’s government has expressed strong opposition, denouncing the move as “hostile”, due to concerns about job losses and the potential negative impact on Commerzbank’s role in financing SME. UniCredit has €10 billion ready for acquisitions, but political resistance remains strong. (FT)
Healthcare :
Roche (ROG.SW) is actively pursuing treatments for obesity, notably following its 2023 acquisition of Carmot Therapeutics for $3.1 billion. One of the promising drugs is an injectable treatment that showed strong results in early trials. This positions Roche in competition with market leaders like Eli Lilly (LLY) and Novo Nordisk (NVO). However, Roche recently reported that its oral treatment for obesity displayed
stronger-than-expected side effects, leading to some caution around its potential rollout. While the treatment was initially viewed as a key player in the weight-loss market, concerns about tolerability have tempered investor enthusiasm. (Yahoo Finance)
Industrials :
Boeing (BA) faced a major disruption as over 32’000 machinists went on strike, primarily in Seattle and Portland. The strike began after 95% of union members rejected Boeing’s proposed pay increase of 25% over four years, halting production of key models, including the 737 MAX. Boeing later improved the offer, increasing the pay rise to 30% and restoring some performance bonuses, but the union continued to push for a 40% wage increase and the reinstatement of pension benefits removed in prior contracts. This strike is projected to cost Boeing up to $3 billion based on the strike in 2008 including inflation and airplane production. (FT)
Technology and Network Equipments :
Intel (INTL) struggled with over $7 billion in operating losses, though its stock rose following a proposed $5 billion investment from Apollo Global Management (APO). Qualcomm’s (QCOM) interest in acquiring Intel has also surfaced, but regulatory hurdles could complicate the deal. Meanwhile, Super Micro Computer Inc. (SMCI) is under scrutiny for allegedly doctored financial accounts, raising concerns among investors, even as the company experiences high demand for its computing systems. Despite these challenges, Intel’s shares are down over 50% YTD. (Reuters)
The stock of the month
The Chinese company NIO Inc. (NIO) performed exceptionally well this month (+70,6%). This was largely due to the economic stimulus measures introduced by the Chinese government, and to foreign investors' great confidence in the company's ability to establish itself in the Chinese automotive market, one of the countries with the fastest-growing share of electric vehicles. (Yahoo Finance)
Key performances
Name | As of Sept 30 | Monthly change | YTD |
S&P500 | 5762.48 | 4.22% | 21.50% |
Dow Jones | 42’330.15 | 3.40% | 12.24% |
NASDAQ | 18’189.17 | 6.14% | 23.18% |
FTSE100 | 8236.95 | -1.52% | 6.68% |
CAC40 | 7635.75 | -0.13% | 0.77% |
DAX | 19’324.93 | 2.30% | 14.83% |
SMI20 | 12’168.87 | -2.03% | 8.60% |
MSCI WORLD | 3723.03 | 1.69% | 17.48% |
VIX | 16.72 | -19.26% | 26.74% |
CHF/USD | 1.1818 | 0.34% | -0.49% |
CHF/EUR | 1.0617 | -0.28% | -1.33% |
Brent $/bbl | 71.88 | -1.94% | -5.28% |
Gold Spot $/oz | 2654.80 | 5.24% | 28.06% |
Upcoming events
Oct 10 : Release of September 2024 US CPI
Oct 11 : Release of September 2024 US PPI
Oct 18 : Release of the Chinese GDP
Oct 24 : Release of UPS Q3 earnings*
* Alternative indicator of US household consumption
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Written by Hippolyte Metzger-Otthoffer and Pierre Siomash
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