Before the Bell: Investors Pounce on the November Dip

Technology is November’s weakest sector, pharma the strongest. Alphabet emerges as the best-performing Magnificent Seven stock.

Doubt and the urge to lock in hefty year-to-date gains made for weak markets in November, but last week share prices rebounded sharply. Even though strong Black Friday sales were reported, most economic indicators remain soft. As a result, markets are now almost certain the Fed will cut rates in December. Tech stocks—last month’s weakest sector—have managed to limit their losses. The Nasdaq (-2%) and S&P 500 (-0.6%) still ended the month in the red, but the earlier decline had been far worse. Nvidia is November’s big loser (-12%), while Alphabet (+19.7%) is the big winner. Google’s parent company may even prove capable of competing with Nvidia in artificial intelligence. The strongest sector by far, however, was pharma: Eli Lilly gained 31%, Johnson & Johnson 11.4% and AbbVie 10.3%. Belgian stars Argenx (+9.8%) and UCB (+5.9%) continued their momentum, while holding company Tubize moved sideways.

In China, markets open higher this morning with gains of more than 1%, while in Japan the Topix trades 1.2% lower. The Bank of Japan says it is weighing the pros and cons of a rate hike—a strong hint that the move may be coming. Investors are also watching this week’s U.S. macro data, beginning with today’s manufacturing PMI, Wednesday’s services PMI, inflation figures, and anything related to the labour market. Weak economic data may again turn out to be good news for equities and bonds.

A Telecom Turning Itself Into a Tele-Winner

Proximus has been one of Belgium’s weakest stocks of the past decade, yet with a gain of nearly 50% it is also one of 2025’s winners. As so often happens after a long bear or bull market, exaggeration occurs near the end. For Proximus, that was clearly the case a year ago, and I noted a purchase on the forum and in the following edition of Spamalot. (See also “Proximus vs KPN” in De Week van Jan, issue 36, 20 December 2024.) The core thesis: domestically, Proximus is solid, and over time it might generate growth and profit abroad. The latter remains uncertain, but the telecom sector as a whole may be heading for better times. Thanks to AI, telecom operators may soon offer new services to new types of clients, especially data-protection services. Equipment suppliers like Nokia and Ericsson are positioning for this, and new Proximus CEO Stijn Bijnens sees growth opportunities as well, including in the domestic business. Last week, Proximus rose 7.6%.

G for Greatness

Alphabet is without question the best Magnificent Seven stock of the year. We bought the shares in April for the buy-and-hold portfolio, and together with many Spaarvarkens we are now sitting on a gain of 94%. We were not always perfect timers, but this is impressive. At the time of purchase there were fears that AI would erode Google’s dominant search business. Today it is increasingly clear that Google’s Gemini is among the very best in AI, and the company has even built its own custom chips—chips that Meta, among others, wants to use to run AI applications. Combine that with Alphabet’s strong growth in cloud data centres, and the group holds many cards to become an even bigger winner. The stock is no longer cheap. But it does raise the question of whether companies like Salesforce and Adobe truly have so much to lose from AI as investors currently fear.

Did you know…

JP Morgan last week raised its rating on Proximus from hold to buy, with a price target of 10.88 euro—46% above Friday’s close?

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