Before the bell: Rate Cut Coming in the Eurozone?

Wall Street slumps, Europe holds steady, and Asia rallies. All eyes are on the ECB’s interest rate decision today.

Stocks sold off on Wall Street Wednesday. The S&P 500 lost 2.2%, and the Nasdaq dropped 3.1%. Many are blaming central banker Jerome Powell, who reiterated at The Economic Club of Chicago that the Federal Reserve is not planning to cut interest rates anytime soon. But that’s hardly breaking news. What really weighed on sentiment was Nvidia’s rough day—after issuing a revenue warning Tuesday night, the chipmaker’s shares fell 6.9%. That dragged down the rest of Big Tech: Amazon (-2.9%), Microsoft (-3.7%), Meta (-3.7%), Apple (-3.9%), and Tesla (-4.9%). European markets were much more resilient. Most indices even closed slightly higher. ASML lost 5.2% in Amsterdam after reporting a disappointing order book, while TomTom (-8.9%) gave back much of the previous day’s gains. Heineken’s results were well received. Belgium’s Bel20 ended virtually unchanged at +0.1%. Top performers were AB InBev (+2.6%), Ageas (+3.1%), and Cofinimmo (+4%). UCB had a rough day, down 2.9%.

Asian markets, meanwhile, brushed off Wall Street’s nervous energy. Japan’s Topix is up 1% this morning, and Hong Kong’s Hang Seng has gained 1.6%. Today, all eyes are on the European Central Bank. Will it cut interest rates again? At the beginning of the year, the deposit rate was still at 3%. That dropped by 25 basis points in both February and March, bringing us to the current 2.5%. Another 25-point cut is likely this afternoon at 2:15 PM CET. Bad news for savers, but good news for investors. Today’s earnings reports include results from Sipef, Econocom, Wereldhave Belgium, ABB, Hermès, and L’Oréal. Taiwan Semiconductor (TSMC) also reports today. In the U.S., we’ll get earnings from United Health Group and American Express (pre-market), and Netflix (after the bell).

Chips Selling Like Hotcakes

TSMC (Taiwan Semiconductor Manufacturing Company) posted a strong quarter—no surprise, as it had already revealed on April 10 that March revenue was up 10% month-over-month and a whopping 46.5% compared to March of last year. Q1 revenue rose 41.6% year-over-year. This morning, the company also reported that its net profit surged by 60.3%. Its operating margin came in at 48.5%. The world’s largest chip foundry, which counts AMD, Apple, Broadcom, Nvidia, and Sony among its clients, is attractively priced—but geopolitical risks involving China and Taiwan remain a major concern.

Safe Haven

In Q1, Belgian REIT Wereldhave Belgium posted a net rental income of 17.8 million euro, up 11.4% from 16 million euro in the same quarter last year. Core net profit per share came in at 1.36 euro, a 16.5% increase from 1.17 euro in Q1 2024. The EPRA occupancy rate stood at 96.8% on March 31, compared to 95.3% at the end of Q1 2024 and 97% at year-end. The debt ratio, at 33.7% (27.2% as of March 31, 2024), remains moderate. The management of the shopping center-focused REIT reaffirmed its full-year guidance of 5.35 to 5.45 euro in core net profit per share. The net asset value per share was 83.62 euro (+2%) as of March 31, while the stock closed at 49.10 euro yesterday.

Did you know…

that the governor of California has filed a lawsuit against Donald Trump’s tariffs? As the world’s fifth-largest economy in its own right, California has been hit especially hard by the ongoing trade war.

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