Weekly market update: A jam-packed week

Donald Trump's inauguration and initial proclamations were met with much excitement this week, and the S&P 500 joined the celebration by hitting a new all-time high on Thursday. Across the Atlantic, Europe put on quite the show with a remarkable rebound, buoyed by the banking sector, luxury goods, and the optimistic prospect of a reduced trade war with the United States. Quarterly earnings reports continued to fuel the stock market's momentum, painting a generally positive picture. However, with central bank decisions on the horizon and the impending earnings releases from U.S. tech giants, investors should brace themselves for continued volatility.

Weekly variations* US 500 6,101  +1.74% MODERNA, INC. +21.58% ORACLE CORPORATION +14.02% NETFLIX, INC. +13.92% CF INDUSTRIES HOLDIN... -9.18% FIRST SOLAR, INC. -12.77% ELECTRONIC ARTS INC. -17.92% DOW JONES INDUST... 44,424.25  +2.15% NASDAQ 100 21,774.01  +1.55% FTSE 100 8,502.35  -0.03% GOLD $2,771.09  +2.78% WTI $74.46  -4.13% EURO / US DOLLAR $1.05  +2.09%

This week's gainers and losers

Gainers: Moderna +21.58%: The pharmaceuticals group is back with more good news. After a substantial subsidy from the US government, Moderna has been awarded a tender to deliver vaccines to 19 European countries to combat Covid-19. Luxury goods +18.38%: After Richemont's tour de force the previous week, it was Burberry's turn to report good results. The British house continues the upward momentum in luxury goods. Netflix +13.92%: The streaming service has unveiled its 2024 results, and they're solid. While the competition seems to be weakening, Netflix is still showing good growth, with substantial profits and a 16% increase in subscribers. Oracle +14.02%: The announcement of the Stargate project, involving Oracle in collaboration with OpenAI and SoftBank, benefits the cloud specialist. The project takes the form of a joint venture aimed at strengthening American leadership in the field of artificial intelligence. Losers: Electronics Arts: -17.92%: The stock dropped after the company revealed that sales of its EA Sports FC 25 video game had “underperformed” in its preliminary report for the fiscal third quarter.  Trump Media & Technology Group -18.29%: In Finance, investors buy the rumor and sell the news. This applies here, as investors bought the stock in anticipation of the president's inauguration, and sold it after the event on Monday. Walgreens Boots -5.19%: The pharmaceutical distributor has been penalized by a U.S. Department of Justice action accusing it of dispensing opioid prescriptions without a legitimate medical purpose. The DoJ claims that the company ignored warning signs and pressured its pharmacists.

Commodities

Energy : Oil prices are under pressure following recent statements by Donald Trump, who expressed his desire at the World Economic Forum in Davos for OPEC and Saudi Arabia to increase production to bring prices down. However, Trump's ability to convince OPEC remains uncertain, given the fiscal needs of key members such as Saudi Arabia to balance their budgets. The Trump administration is also keen to accelerate oil production in the USA, but it is hard to imagine the US majors producing more in a weaker price environment. Meanwhile, the EIA's weekly report showed a further decline in US crude oil inventories, with a drop of 1.02 million barrels, marking the ninth consecutive reduction. This comes despite a reduction in refinery utilization rates, mainly for maintenance. Brent crude is trading down at USD 77.90, while WTI is trading around USD 75. Metals : It's hard not to mention Trump's declarations once again. The imposition of 25% tariffs on Mexico and Canada generated fears of global trade retaliation. Nevertheless, the price of copper in London (USD 9232 for the cash price), like aluminum (USD 2623), showed a certain resilience, supported by signs of economic recovery in China and, above all, the dialogue opened with China by Trump, raising hopes of a potential trade agreement. Meanwhile, the US dollar fell slightly, influenced by uncertainty surrounding US trade policies. This decline in the greenback boosted gold prices, with the precious metal reaching its highest level in almost three months at USD 2,775 per ounce and heading for a fourth consecutive weekly gain. Agricultural products: Extremely low temperatures in the United States are threatening winter wheat crops, increasing upward pressure on prices. Wheat reached 550 cents a bushel (contract expiry March 2025), up 3.7 points, while corn climbed to 490 cents.

Macroeconomics

Atmosphere: Who can do more can do less. What if President Trump was less surly than the candidate? Following a discussion with Xi Jinping, he said he would prefer “not to have to use” tariffs against China. European stock markets welcomed the news, while hoping that the old continent would also escape. The big loser, however, was the dollar, which fell back sharply and even seemed on the verge of invalidating its outperformance against the euro. No miracle on the interest rate front, however: the US 10-year yield has stabilized, but remains well above 4.50%. Good news on the inflation and government spending fronts will be needed for any meaningful easing. In the meantime, interest rates remain a sword of Damocles for stock market performance. Crypto: Bitcoin hit a new all-time high of over $109,000 this week. A record set after Donald Trump launched his own “TRUMP” cryptocurrency last weekend, two days before his inauguration, and which reached a valuation of $15 billion at its peak. A crypto-currency clearly identified as a memecoin, i.e. of no use whatsoever and whose sole purpose is speculation. In fact, its valuation has already melted by 58%. But the real pleasant surprise came at the end of the week for crypto-investors: Donald Trump signed an executive order entitled: “strengthening American leadership in digital finance technologies”. Behind this catch-all name are a series of amendments relating to the adoption of stablecoins, the protection of public blockchains and the creation of a task force to “evaluate the feasibility of creating and managing a national stockpile of digital assets”. Exactly what form will this take? We'll have the answer in the coming weeks.

A jam-packed week The last week of January promises to be packed with major events. Central banks will be in the spotlight, with monetary policy decisions expected successively in Canada, the United States, Europe and Brazil. On the macroeconomic front, investors will be scrutinizing the first estimate of US GDP for the first quarter, as well as the December PCE inflation indicator in the USA. Finally, the week will be punctuated by a flurry of corporate earnings releases, with heavyweights such as Microsoft, Meta, Tesla, Apple and Amazon, but also LVMH, ASML and SAP in Europe. All in all, plenty to keep the markets on their toes. An excellent weekend to you all.

Things to read this week

Are Donald Trump's economic goals realistic? Driven by new Treasury Secretary Scott Bessent, Donald Trump's economic policy has three objectives: more growth, more oil production and less deficit. Three... Read more Gold: Why does the negative correlation with real rates no longer work? Gold has set a string of record highs in recent months, despite the rise in real interest rates, which historically put the yellow metal at a disadvantage.... Read more Why are US developers struggling since the Fed started cutting rates? The single-family home construction sector has been one of the worst performers on the US stock market over the last six months. This trend may seem... 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.