Before the bell: Belgium not yet on speculators’ radar

Europe and Asia left to fend for themselves. The French remain enamored with Belgian companies.

On the last full trading day of the week on Wall Street (due to Thanksgiving), investors focused on the inflation figures that guide the Federal Reserve’s interest rate policy. Inflation, measured by the Personal Consumption Expenditures (PCE) index, rose from 2.1% in September to 2.3% in October, as expected. Core PCE inflation increased from 2.7% to 2.8%, also in line with forecasts but still reflecting a rise that failed to spark enthusiasm. As a result, the S&P 500 fell by 0.38%, while the Nasdaq lost 0.6%. Tech giants Nvidia and Microsoft each dropped 1.1%, and Salesforce declined 3.8%. Several companies reporting earnings took hits (see below). Despite rising inflation, U.S. long-term yields fell by 5 basis points to 4.26%. In Europe, bond yields also declined. The spread, or yield difference, between German and French bonds temporarily widened to 90 basis points, the highest level since the eurozone crisis 12 years ago. While Belgium still lacks a plan to reduce its 2025 budget deficit, its bond market remains calm. Belgian 10-year government bonds yield 2.8%, noticeably lower than the 3.02% for French 10-year bonds. Playing with luck, perhaps?

Asia opened today with a 1.3% loss in Hong Kong, while the Chinese CSI 300 dropped 1%. Wall Street is closed today for Thanksgiving, and Friday will see a shortened trading session. While Americans officially have fewer vacation days than Europeans, their stock markets close more frequently.

Computer says no

Dell and HP plummeted on Wall Street yesterday, losing 12.2% and 11.4%, respectively. Investors are disappointed that neither PC maker has capitalized on the AI hype. Dell issued a profit warning for the current quarter, while HP underwhelmed with its earnings forecast and posted lackluster results for the previous quarter. PC makers last enjoyed a demand surge in the post-pandemic period. While PCs provide access to AI applications, there’s currently no need for more powerful machines for this purpose.

Big, wealthy fish

A new transparency notification from BNP Paribas revealed that the French bank has further increased its stake in Ageas to 11.86%, up from 10.9% previously. BNP Paribas initially acquired the shares from China’s Fosun but has continued to buy Ageas shares. As the largest bank in the eurozone, BNP Paribas has surplus capital. It plans to acquire the asset management division of insurance giant AXA while still maintaining enough for a generous dividend (yielding 8.3%) and additional Ageas shares. Belgian insurer Ageas also has excess capital, which it uses for acquisitions to strengthen its European presence, pay a generous dividend, and repurchase its own shares. Meanwhile, British insurer Aviva has made a bid for UK-based Direct Line, which has already rejected Ageas’s previous offer. Direct Line considers Aviva’s 4 billion euro offer insufficient, even though it exceeds Ageas’s earlier bid.

Did you know…

Spain and Portugal, once among the so-called “weak PIGS countries” during the euro crisis of 2012, now pay only 2.9% and 2.65% interest, respectively, on their 10-year government bonds? These sunny countries have worked on fiscal consolidation and are now enjoying solid economic growth.

This article was translated from Dutch and was originally published on Spaarvarkens.be.