Before the bell: Friday the 13th

Traders on the financial markets are reacting to a military operation carried out by Israel overnight. The oil price is surging.

“Oil prices have dropped sharply and will remain low for a long time,” experts claimed yesterday. Well, not quite. Predicting oil prices turns out to be even harder than guessing where the stock market will go in the short term. Yesterday, a barrel of crude oil still cost 68 dollar, but this morning it’s trading at 74.5 dollar — a rise of nearly 10%, driven by an Israeli air force operation that targeted dozens of military and nuclear sites in Iran overnight. Israel has declared a state of emergency, fearing retaliation. These attacks are now causing unrest and uncertainty in the financial markets. Fear is no solution, though. What does Warren Buffett say again? A wise investor buys when the cannons roar. You should sell only later, when the trumpets sound. We’re following his advice.

It’s secondary and already in the past, of course, but just to mention what happened on Wall Street yesterday: both the S&P 500 (+0.4%) and the Nasdaq (+0.2%) gained ground. Boeing’s stock, however, plunged 4.8% following a bizarre plane crash in western Gujarat, India, that claimed the lives of over 240 people. The cause is still unclear — pilot error? Negligence by Air India? A terrorist act? Or a manufacturing fault? It’s not the first time Boeing’s production practices have come under scrutiny. Things look better at Oracle, which surged 13.3% yesterday thanks to a strong outlook for 2025. In Europe, markets fell by about 0.5% on average. London did manage to rise 0.25%. Supermarket chain Tesco gained 1.6% thanks to a solid quarter.

On the Tokyo Stock Exchange, shares are down 1.1% this morning. In Hong Kong, the loss is 0.7%, although oil companies CNOOC (+2.2%) and PetroChina (+1.9%) are in positive territory.

Meta makes a mega AI bet

I used to think: “A company like Meta Platforms can easily maintain its lead in the sector thanks to its cash and cash flow. All Mark Zuckerberg has to do is pull out his chequebook and offer a billion when a start-up comes up with a potentially threatening technology.” I need to revise that view. The principle still holds, but the number has changed. Meta now plans to invest a staggering 14 billion dollar in the start-up Scale AI. The deal values the company, founded only in 2016, at over 29 billion dollar. Will Meta ever earn back the investment? I think so. Scale AI has technology that could be valuable in generating AI-driven marketing content — exactly the kind of business model Zuckerberg and his team are built on. Read my lips: AI will be big business. This is no hype.

Made in the USA

UCB plans to invest 2 billion dollar over the next six to seven years in a new factory in the United States, which will eventually create 300 American jobs. The construction phase alone will bring another 500 temporary jobs. Some may frown at the news — “2 billion dollar? That’s a lot of money.” But this investment will pay off. I’m also glad to see UCB, like every pharma company that sells and earns most of its revenue in the US, now choosing to produce there too. The current US president may be a temporary phenomenon, but I’m almost certain his successors — Democrat or Republican — will also support local manufacturing. It makes UCB less vulnerable. A well-informed Spaarvarkens reader had already heard that UCB would significantly expand its Eigenbrakel plant before it hit the news. At the time, I was disappointed they didn’t choose the US. Now, I’m satisfied. The added investment is another sign of insider confidence. UCB isn’t doing this just to please Trump — it’s also a signal of the success of Bimzelx in the US.

Did you know…

that UCB booked a record revenue of 6.15 billion euro last year, but its psoriasis drug Bimzelx alone could eventually generate as much as 5 billion euro in annual revenue?

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