Before the Bell: Services Drive the Economy in Europe and the U.S.

Pharma remains strong. Questions emerge over Microsoft’s AI growth.

Major European indices ended yesterday with gains of roughly a tenth of a percent. On Wall Street, the Nasdaq rose 0.3% and the Dow Jones climbed 0.9%. The S&P 500 added 0.4%. Insurer UnitedHealth Group (+5%) is trying to recover from its steep losses earlier this year. Pharma stocks were once again among the strongest performers: Bristol-Myers Squibb gained 5.6%, Amgen 2%, and Merck & Co 1.4%. Microsoft (-2.2%) trailed the market, with Nvidia (-1%) and Amazon (-0.9%) also slipping. Tech site The Information reported that Microsoft had lowered its sales outlook for AI-related products and services, though other media did not confirm that. In the absence of an official jobs report, investors scrutinised payroll processor ADP’s data, which came in weaker than expected—though these figures tend to be even more volatile than government numbers. Growth in the services sector accelerated in November in both the U.S. and Europe. It remains difficult to gauge where the business cycle is heading. In Brussels, Melexis (+4.8%) led the Bel20 after a long spell of underperformance. Argenx (+2.3%) continues its near-daily upward march. Ageas (-3.3%) and Proximus (-2.9%) fell after cutting their interim dividends.

In Tokyo, the Topix index is up around 2% this morning, supported by a successful government bond auction and renewed hope that the Fed may cut interest rates. Chinese markets trade about half a percent higher. On Wall Street, Kroger and Ulta Beauty report their earnings today.

Gold, Silver and Copper All at Record Levels

For the first time since 1980, gold, silver and copper are all trading at record highs. Gold is up 60% this year, silver 101% and copper 34.2%. The silver market is very small, and simply the expectation that it would eventually follow the much more expensive gold price was enough to spark a sharp rise. Gold’s sustained strength—without meaningful pullbacks—is largely supported by continued robust demand from central banks. For investors, it provides additional security as they hedge against geopolitical uncertainty. Trade restrictions, industrial policy and attempts to favour domestic economies can all lead to inefficiency and higher inflation. At the same time, strong growth in energy demand is expected (particularly driven by AI), and large amounts of copper are needed for electrification. If metal prices stay elevated, the mining companies producing them are heading for prosperous times.

Sales Power with AI

Salesforce reported after the bell that quarterly revenue rose 8.6% to 10.26 billion dollar, slightly below expectations of 10.28 billion. Earnings per share, at 3.25 dollar, came in well above the 2.86 dollar analysts had forecast. The stock could use a boost, having fallen 30% since the start of the year. Investors worry that AI will intensify competition. Salesforce emphasised that its AI platform already contributes 1.4 billion dollar in annualised revenue, “more than doubling growth,” CEO Marc Benioff said. It remains to be seen whether these results will dispel investor scepticism.

Did you know…

Carrefour Belgium has denied rumours that it plans to exit the country? The retailer says it is preparing to introduce Sunday openings for its hypermarkets.

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