Before the bell: investors take some profits

What drives politician Elon Musk and a Christmas gift from the FDA saves Sequana Medical’s upcoming capital round

With 2024’s impressive market gains in the bag, it’s no surprise that investors on Wall Street decided to lock in some profits last Friday. The S&P 500 dropped 1.1%, while the Nasdaq slid 1.5%. On a weekly basis, however, the S&P 500 was up 0.6%, and the tech-heavy Nasdaq gained 0.7%. The Euro Stoxx 50 matched this weekly increase, while Japan’s Topix Index outperformed with a 3.7% rise. Trading volumes were thin due to the holiday break and many traders taking vacations. Friday saw particular profit-taking in the year’s top-performing stocks. The 45 biggest gainers of the year all closed in the red. Tesla fell 5%, and Nvidia lost 2%. Despite this, shareholders of these high-flyers can hardly complain—Nvidia surged 182% this year, while Tesla climbed a hefty 70%, with the entirety of those gains materializing after Trump’s election victory.

Following last week’s strong performance by Japanese stocks, investors are cashing in some profits this morning. The Topix is down 0.6%, and Nissan plunged 6.3%. In Hong Kong, the index remains flat compared to the end of last week, but on the Chinese mainland, stock prices are up by an average of 0.6%.

Tesla tumbles

Elon Musk campaigned hard and provided financial backing to support Donald Trump’s election bid. Rumors had circulated that in return, Musk might become an advisor if Trump won—a prediction that came true. Immediately after the election, Tesla’s stock price skyrocketed. A month and a half later, it’s up more than 70%. Musk is now tasked with helping the Trump administration reduce government spending and ease regulations—a move likely to benefit Tesla as it rolls out self-driving cars and taxis. However, Musk’s political ambitions may stir opposition. In an op-ed, Musk controversially called Germany’s far-right party, Alternative für Deutschland, “the country’s only hope.” As Musk’s political profile grows, so too might resistance against him and Tesla.

The best Christmas gift

Shareholders of Belgian medtech company Sequana Medical received an extraordinary Christmas gift. The stock quintupled in value after the FDA approved its diuretic pump for market launch during the holiday week. Sequana estimates the market for this device at 2 billion dollars. However, the company itself has faced liquidity challenges in recent years, repeatedly raising capital and diluting shareholder value. As a result, the stock isn’t even positive year-to-date; it started 2024 trading above 4 euros and closed Friday at 3.87 euros. While the potential remains significant, so do the risks. A large market opportunity doesn’t guarantee success, and Sequana will likely need to raise funds again soon.

Panic buying

U.S.-listed companies like DuPont, Entegris, and Chemours likely had a strong quarter. Many Chinese firms have rushed to place large orders in recent weeks, fearing that the new U.S. president will restrict exports of materials essential for high-end chip production. According to the Asian financial newspaper Nikkei, Chinese companies are stockpiling filters, lubricants, polishing materials, and even specialized lamps to safeguard production. In the last earnings season, several Western companies reported declining demand from Chinese consumers. However, some American firms are now profiting from China’s panic buying spree.

Did you know…

investors have already handed over 6.6 billion euros to the Belgian government in the first 11 months of the year? That’s a 32% increase compared to the same period last year. Revenues from withholding tax on fixed-income investments soared 72%.

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