Before the bell: high oil prices and weak credit keep markets under pressure

Bank stocks are falling, car manufacturers continue to struggle, and Microsoft is celebrating a special anniversary.

An average European stock, as measured by the Euro Stoxx 50, lost 0.8% yesterday. The Bel20 also had to give up 0.5%. The biggest losers were bank stocks. In Brussels, KBC Group lost 2.5%. In Paris, BNP Paribas (-4.4%) took a hit, while in Amsterdam ING Group fell 2.3%. Deutsche Bank even lost 6%. Investors fear that banks may have been too generous in lending to (software) companies that could run into trouble. On the other side of the Atlantic, the S&P 500 dropped 1.5% and the US technology-heavy Nasdaq tumbled 1.8%. A military escort for oil tankers in the Strait of Hormuz is not imminent, although the oil price has once again climbed to around 100 dollar. Even the largest release of strategic oil reserves ever has failed to push prices down. Expectations of higher fertiliser prices are lifting the shares of fertiliser producers for the second consecutive day. Shareholders of CF Industries (+13.2%), Mosaic (+7.6%) and Norway’s Yara International (+8.1%) are enjoying strong gains. Dow Inc also surged 9.3%, as plastic prices are rising as well. Dollar General (-6.1%) fell sharply after issuing a cautious outlook for 2026.

Asian markets are also under pressure this morning. In Tokyo, the Topix is down 0.7%, while in Hong Kong the Hang Seng has fallen 0.8%. Alibaba (+1.4%) and especially Baidu (+2.7%) are moving against the trend. Today we will receive the figures for industrial production in January. In the United States, the University of Michigan will publish its consumer confidence indicator, while the US Bureau of Labor Statistics will report the number of job vacancies in the country. In Belgium today we will see results from Roularta, Warehouses Estates Belgium and textile company Belysse. In the Netherlands, SIF Holding will publish its results. The company produces steel foundations for offshore wind turbines.

Stellantis asks for a helping hand

Stellantis is reportedly in talks with its Chinese competitors Xiaomi and Xpeng. The car manufacturer is said to be looking for investors for its struggling brands. It may sell stakes in brands such as Maserati and is also believed to have offered Chinese companies European production capacity. This illustrates how desperate European carmakers have become. It is not a surprise, but it does confirm that the situation is serious and unlikely to improve soon. At Spaarvarkens we have repeatedly said that the seemingly low valuations of carmakers are not a sufficient reason to buy the shares aggressively. During a recent webinar with MeDirect, Spaarvarken Pascal once again emphasised that we should not expect the damage in the European automotive sector to be repaired. It will not return to what it once was. The disruption from Tesla and Chinese car manufacturers is simply too large.

Honda’s engine also sputters

Car manufacturers are not only struggling in Europe. The same phenomenon can be seen in Japan. Toyota remains a strong performer. But Honda, which has no issue with traditional combustion engines, is also struggling with the difficult electrification process. The latecomer appears to have missed the party. Honda now feels compelled to cancel several of its electric models. The Japanese carmaker has also issued a profit warning. The company expects to report a full-year loss next month of between 360 billion yen and 630 billion yen. That equals 2 to 3.4 billion euro. Previously the company still expected to report a profit of 2 billion euro. It would be the first full-year loss for Honda since the company went public more than 75 years ago. That hurts, even if the losses are largely due to write-downs. The old guard clearly seems unable to withstand the new Chinese entrants in the market. Nothing is certain. Nothing lasts forever. But those who saw the trend coming (you, therefore) will be far less shocked than the average newspaper reader.

Did you know…

that today marks exactly 40 years since Microsoft went public? A share cost 21 dollar on the day of the IPO. Anyone who bought one share at that time and never sold it would now own 288 Microsoft shares thanks to the many stock splits, worth nearly 116,000 dollar.

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