Before the bell: Wall Street records longest losing streak in four years

On Monday, the losing streak in equity markets continues in Asia. Rising oil prices are putting pressure on the global economy and clearly making investors nervous.

For the fifth consecutive week, Wall Street declined due to geopolitical concerns in the Middle East. The S&P 500 (-1.7%) and the Nasdaq (-2.2%) fell again on Friday, extending their weekly losing streak. It has been since 2022 that the indices were under pressure for five straight weeks. Shareholders of Meta (-7.9%) were hit after a court ruled that the company failed to protect young users adequately from its addictive apps. Consumer-related stocks were also broadly under pressure across sectors. Companies such as Starbucks (-4.8%) and Norwegian Cruise Line (-6.9%) declined, as did the Magnificent 7 stocks, with notable losses for Amazon (-4%) and Microsoft (-2.5%). Belgian equities also struggled, with a notable drop for Sofina (-4.9%) and real estate stocks. Investors reacted negatively to news that major shareholder Jan Niessen reduced his stake in diaper manufacturer Ontex (-9.2%) to below 3%.

In Asia this morning, the negative sentiment continues. South Korea’s Kospi index is down 3.1%, and Japan’s Topix index is also losing 3.1%. Oil prices remain elevated, threatening to weigh on Asian economies. Electric vehicle manufacturer BYD reported weak quarterly results this morning, with revenue falling 14% in the fourth quarter. The company’s chairman warned of challenging conditions in the Chinese EV market. Toyota Motor Corporation (-3.9%) also reported declining February revenue, citing increased competition in China. Among the few gainers in Asia are aluminium-related stocks, which are rising after aluminium plants in the Middle East were hit.

Do not buy the dip?

Over the weekend, the VFB Happening took place in Antwerp, the annual investment conference of the Flemish Federation of Investors. What stood out this year? Economists and analysts urged investors not to invest. “Be cautious as an investor.” “Do not buy the dip.” At Spaarvarkens, we find this rather unusual advice. On the one hand, because markets have barely declined since the outbreak of the war in the Middle East. Anyone following our weekly Spamalot sees that the Bel20 is down just 1.8% this year, while the Euro Stoxx 50 has fallen 4.9%. Is that what we now call a dip? On the other hand, it is strange advice because opportunities always exist in the market. Pascal bought the dip in Tessenderlo last week, as the chemicals sector came under pressure. I also see opportunities everywhere, even across very different sectors. There may well be opportunities in offshore oil. It is likely that oil majors will want to increase drilling outside the Middle East. I also see opportunities in the green energy sector. I will return to this in this week’s “Before the bell,” with concrete ideas for green energy on Thursday and oil on Friday.

Equities are more tax-efficient than crypto

Former Minister of Justice Vincent Van Quickenborne also attended the VFB Happening and had good news for Spaarvarkens. For some time, there have been rumours that the government is working on a proposal under which investors making more than five transactions per year could be classified as speculators. In that case, they would no longer benefit from the 10% capital gains tax but could face a higher rate. Van Quickenborne, now mainly in the news as an opponent of the capital gains tax, stated that he has not heard anything about such a proposal. He considers it highly unlikely, as it would classify passive investors who contribute monthly as speculative traders. However, there may be less favourable news for crypto investors. The decision framework for crypto could mean that anyone making more than three transactions per month may be considered a speculator, potentially triggering a higher tax rate on gains. The vote on the capital gains tax law is scheduled for 2 April. Van Quickenborne asked Spaarvarkens to provide strong arguments against it. If you have any, share them below, and we will pass them on.

Did you know…

that more than 50% of Starbucks’ net revenue in the United States comes from drive-thru sales? This makes the company vulnerable to higher fuel prices, as a large share of customers place orders during their commute—precisely the type of driving that consumers cut back on first when fuel prices rise.

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