Before the bell: it’s party time

Those who were not invested yesterday missed one of the best stock market days of the year. This morning, the party continues in Asia.

A wise investor knows that it is better to always be “in the market. Because if you do not invest because you expect an upcoming correction, you may miss the best days of the year. Your return is then a lot lower than that of your colleague, who simply always invests. Yesterday was one of the best days of the year. The drop in US interest rates was widely expected and so the “news” was not really news. We wrote that it could go either way and that a 50 basis point drop in interest rates could cause the market to panic because “the economy might be worse off than we thought”. But no, so yesterday was the party. The S&P 500 climbed 1.7%, the Nasdaq even advanced 2.5%. Apple (+3.7%), Meta (+3.9%), Nvidia (+4%), Alibaba (+4.8%) and PayPal (+6.1%) gained as much or even more than the average Belgian pension fund (+4.2%) raked in during the first half of the year. Earlier in the day, the European continent was also celebrating. The Euro Stoxx 50 closed 2.2% higher. Adyen (+5.6%), Prosus (+4.7%), ASML (+4.6%), Schneider (+4%), Bayer (+3.7%), Airbus (+3.7%), L’Oréal (+3.6%) and many other European companies outperformed their index even more. Nay, yesterday was a day you didn’t want to miss. Although the Bel20 (+0.7%) did not score as well as its peers, here too there were many gains for the likes of Syensqo (+2.9%) and Umicore (+3%).

Will today be the hangover after the stock market party? Not for now, as optimism in Japan (+2%) and Hong Kong (+1.3%) continues after the US interest rate cut. Later, look out for consumer confidence figures in Belgium (11 a.m.) and the Eurozone (4 p.m.).

A suit for the pants

There must always be a killjoy. That one today is called Federal Express. Because even though the Federal Reserve went out of its way to deliver good news yesterday, its near namesake is now the courier of bad news. The parcel delivery company issued a profit warning yesterday aftermarket that could count. In the past quarter, which for FedEx is the first of its broken fiscal year, the company posted a net profit of $790 million. A year ago, that figure was $1.08 billion. For the full year, the company expects earnings of $20 to $21 per share. Before the warning, that was still $22 per share. The profit warning reflects the trend of customers opting for less expensive options of delivery. Shareholders better put on a parachute. FedEx’s share price doubled in one year, but soon the firm will undoubtedly be worth another packet less at the opening of Wall Street. 

Fading star

Federal Express is joined in Europe by Mercedes-Benz. While the Germans were still at the banquet yesterday with a 2.4% gain for the stock, it will soon be a lot less. The German carmaker announced yesterday after trading hours that sales are not doing well. Especially in China, Mercedes is struggling. Consequently, the forecast is adjusted. The adjusted return on sales will not be 11% this year, but only 7.5-8.5%. As a result, operating profit this year will be “significantly lower” than last year. It is no coincidence that today the German Economy Minister is at the table with the managers of the German carmakers. The minister wants to prevent the major employers from cutting their workforces too sharply. But a German minister cannot boost sales in China, and certainly not if Europe imposes hefty import duties on Chinese carmakers. 

Did you know…

the Bank of Japan announced this morning that interest rates in yen will remain unchanged? Japan’s interest rate is barely 0.25% and screaming for an increase. But that quarter percent is already Japan’s highest policy interest rate since 2008.