Before the bell: jealous of the American neighbors

First profitable year after three years of loss for the Chinese index. European stocks performed decently. Boeing stays afloat despite challenges. Hyloris works toward recovery.

Today marks the final trading session for European markets like Euronext, closing at noon to officially wrap up the year. During yesterday’s last full trading day, indices faltered. The Euro Stoxx 50 dropped 0.6%, while the AEX and Bel20 each lost 0.9%. Despite this, 2024 has been long enough to produce respectable gains. The Eurozone’s 50 largest stocks climbed 7.7% this year, with an additional 3.6% dividend yield, culminating in a solid 10% total return. However, the narrative around Europe tends to oscillate between complaints of weak performance and failed financial markets. Pessimists attribute Europe’s survival to the pull of the U.S., while optimists see room for growth. The reality? A 10% return feels less satisfying when compared to the 25% rise of the S&P 500 across the Atlantic. Factor in the dollar’s 6% appreciation, and U.S. investors enjoyed a 30% total return—triple that of their European counterparts. It’s akin to owning a BMW while envying your neighbor’s Porsche.

In Japan, markets have already closed, with the index gaining 19.2% for the year. However, foreign investors would need to shave off 5% due to the weaker yen. Meanwhile, China’s December PMI for manufacturing stabilized at 50.1, and services activity improved from 50.0 to 52.2. The Chinese CSI index delivered its first annual profit in three years, with a 15.9% gain.

Investors not completely shocked

Boeing’s turbulent ride continues. The tragic accident in South Korea involved yet another Boeing aircraft. Additionally, two Boeing 737s returned to Schiphol on Sunday evening due to technical issues. Earlier, a KLM flight using a Boeing returned to Oslo shortly after takeoff due to a loud noise during ascent. Despite these events, investors remained composed. Boeing shares, which opened 6% lower, ended the day down just 2.3%. The stock is now 30% below where it started the year. Efforts to improve product quality, resolve a major strike, and raise additional capital have provided some relief, but restoring trust takes time. Competing against a strong Airbus is further complicated by the expensive dollar.

The long road to restored confidence

As 2024 draws to a close, investors are cashing out on stocks that performed exceptionally well while picking up beaten-down names. One notable gainer was Hyloris, which surged 16% to 7 euros yesterday. However, the stock remains far below its opening price of 12.5 euros at the start of 2024. Hyloris faced a major blow in August when the FSMA lifted a lengthy trading suspension and demanded clarification on dubious profits stemming from a transaction with a Dutch company. This deal, tied to an acquisition, allowed Hyloris to present a more favorable annual result. Hopefully, this marks the first and last time the company resorts to such practices. The extra scrutiny should prevent recurrence. Yesterday’s rally was driven by positive test results for a treatment targeting herpes-related infections.

Did you know…

Wall Street will close on Thursday, January 9th, for a National Day of Mourning to honor former U.S. President Jimmy Carter, who recently passed away at the age of 100?

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