Before the Bell: Oh, Beautiful Days

AI stocks are being snapped up, ABN Amro unveils major job cuts, and Alibaba reports earnings.

Yesterday was another one of those days you don’t want to miss as an investor. The S&P 500 jumped 1.6%, and the Nasdaq even surged 2.7%. That performance makes 24 November one of the best market days of the year. The trigger for the optimism isn’t entirely clear. Some media point to renewed hopes of interest rate cuts, but the mood is more likely driven by the constant swing between “AI bubble” and “AI opportunity.” Tesla (+6.8%) benefited from a post on X by Elon Musk, reminding followers that the company has been active in the AI chip market for a long time. Alphabet (+6.3%) was also bought aggressively by AI believers. Europe’s performance was modest in comparison, though that gap may be narrowed this morning. The Euro Stoxx 50 barely moved. In Paris the index fell 0.3%. Frankfurt fared better thanks to Bayer (+10.9%), while Siemens Energy (+5.6%) also impressed. Rheinmetall (-5%) moved in the opposite direction. The Bel20 closed flat, though Lotus Bakeries added 1.8%. In Copenhagen, Novo Nordisk slid 5.8% after disappointing trial results.

Asian markets show no signs of euphoria this morning. Tokyo’s Topix opened 0.6% higher, but those gains quickly evaporated. Hong Kong’s Hang Seng is still up 0.7%. Alibaba is strengthening by 2% ahead of its earnings release later today, with Baidu (+3.6%) also in positive territory. Alongside Alibaba, NIO — and in the U.S., Best Buy and Kohl’s — will publish quarterly results. Today we’ll also receive data on new car registrations in Europe for October and U.S. retail sales for September.

Alibaba: What to Watch

Alibaba and its shareholders are lucky the company has long since evolved beyond pure e-commerce. It is now deeply rooted in cloud computing and artificial intelligence. That diversification will likely help offset the weakness in China’s consumer market with the strength of AI. Three months ago, Alibaba reported 26% year-over-year growth in its cloud division, while the AI business more than doubled in size. That stood in stark contrast to the 21% drop in operating profit in the Chinese e-commerce segment. Investors will be watching closely to see whether any improvement was achieved last quarter, and — crucially — whether cloud and AI growth is strong enough to satisfy the market. Alibaba remains relatively cheap versus its U.S. peers: you pay 23 times next year’s expected earnings. In return, you gain exposure to two high-growth sectors (cloud and AI) in a region where long-term expansion potential remains high.

The Bank Does It With Fewer Staff

Dé bank. That’s how our Dutch neighbours sometimes refer to ABN Amro. Since the failed takeover, breakup and nationalisation, the bank has lost some of its lustre. But like many banks, ABN Amro is currently enjoying the benefits of higher interest margins — helped by the wide gap between short-term and long-term euro rates. Three years ago you could pick up the stock for 9 euro; yesterday it closed at 26.82 euro. That price is likely to rise further today after ABN Amro announced it will cut 5,200 full-time positions over the next three years. CEO Marguerite Bérard unveiled the plan alongside the bank’s new strategy. Unions won’t be pleased, but shareholders — including the Dutch government, which still holds a 30.5% stake — will welcome any initiative that boosts profitability.

Did you know…

ABN Amro was formed in 1991 through the merger of ABN Bank and Amro Bank? ABN itself resulted from a 1964 merger between Nederlandsche Handel-Maatschappij and Twentsche Bank. Amro was created in 1952 from the merger of Amsterdamsche Bank and Rotterdamsche Bank.

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