Weekly market update : The Fed doesn't want to let go

Risk appetite eased somewhat on the financial markets at the end of the week, following a rather hawkish speech by Jerome Powell. The Fed head hinted that the monetary tightening cycle in the US was not necessarily over. The next inflation and activity data will therefore be crucial. Optimism at the start of the week is giving way to some profit-taking, even if the overall trend remains positive.

Weekly variations* US 500 4415  +1.31% TRANSDIGM GROUP INC. +12.52% EXTRA SPACE STORAGE ... +11.35% GEN DIGITAL INC. +9.36% CORTEVA, INC. -13.30% ILLUMINA, INC. -15.87% ORGANON & CO. -16.39% DOW JONES INDUST... 34283.10  +0.65% NASDAQ 100 15529.12  +2.85% FTSE 100 7360.55  -0.77% GOLD 1936.72$  -2.60% WTI 77.36$  -4.49% EURO / US DOLLAR 1.07$  -0.45%

This week's gainers and losers

Gainers: Datadog (+22%): The software solutions provider soared on Tuesday after exceeding its quarterly estimates and raising its annual targets. Businesses have fallen victim to a growing number of IT breaches, and have made massive use of the group's cybersecurity solutions. Full-year revenues are expected to come in at between $2.10 and $2.11 billion, compared with a previous estimate of between $2.05 and $2.06 billion. New Fortress Energy (+15%): The company posted better than expected earnings, maintained its quarterly dividend, and issued an upbeat long-term forecast. It said that almost all of its construction projects were completed, which should accelerate earnings growth. Roblox (+11.7%): The online gaming platform topped quarterly revenue estimates for the third quarter, thanks to strong demand for its games. Net revenues reached $839.5 million, compared with $701.7 million for the same period a year earlier. Analysts were expecting $830.2 million. Losers: Diageo (-14%): The spirits maker,  known for its Guinness, Baileys, Johnny Walker and Captain Morgan brands, warned that its growth would slow in the first half of 2024 due to a sharp drop in business in Latin America and the Caribbean - regions that account for around 11% of its sales. Flutter (-13%): Despite results in line with forecasts in the third quarter, the sports betting and gambling company expects its annual profits to be at the lower end of the range initially forecast. In addition, it will change its listing from Dublin to New York. Veeva (-14%): The developer of digital solutions for the healthcare sector should finish the current financial year well. However, the forecast is not the same for the next two years, which should be far more complicated. The company has lowered its revenue expectations.

Commodities

Energy: Oil prices underwent an intense sell-off this week. The weekly decline is substantial, with Brent and WTI down 6% in five days, bringing the two benchmarks down to 81 and 76.50 dollars respectively. Two forces are behind this change in mood. On the one hand, the conflict between Israel and Hamas is a less and less worrying unknown insofar as it does not disrupt regional supply. On the other hand, demand is once again a source of concern, particularly in China, which this week presented mixed economic data. As a result, oil has fallen for the third week running, a trend that could prompt OPEC to do more to support prices. Metals: Copper stabilized in London, still trading above USD 8,000. Aluminum followed suit (USD 2240), while tin and zinc advanced to 24800 and 2600 dollars respectively.  On the precious metals front, China continues to shop for gold, with reserves up for the twelfth consecutive month. According to the World Gold Council, China's central bank increased its holdings by 23 tonnes in October. However, the ounce of gold is trading lower, at around USD 1950. Agricultural products: Volatility dropped another notch in Chicago, where grain prices generally stalled. A bushel of corn is trading at around 470 cents, compared with 570 cents for a bushel of wheat.

Macroeconomics

Atmosphere: The shadow of a doubt. After a hectic start to the month, with many monetary policy meetings around the world, investors are coming to their senses and trying to digest the wealth of information available. It has to be said that they are helped in this by a particularly "light" macroeconomic outlook. As a result, the US 10-year yield is stabilizing at around 4.50%, while its German counterpart has just landed at the bottom of its ascending channel, which has been in place since last March, at a support level of around 2.60%. We'll be keeping a close eye on this market's behavior over the coming week, as it is imperative that we break through this zone to confirm the easing underway and avoid a new sequence of rises towards 3.00%. Such a scenario would obviously be detrimental to the current equity market rebound. After the big rebound of the previous week, Jerome Powell cooled the mood a little on Thursday by reiterating that a rate hike remains a possibility. The market took the blow, but does not yet seem ready to believe the Fed chief. Meanwhile, in China, statistics remained hopelessly lackluster. Consumer prices even fell in October, hardly consistent with the long-awaited economic rebound in the world's second-largest economy. Crypto: Fourth consecutive week of gains for bitcoin, which has climbed almost 6% since Monday and is back above $37,000 at the time of writing. The same is true of the market's second-largest cryptocurrency, ether, which has outperformed the leader since the start of the week, rising 10%. The main reason for ether's surge was BlackRock's application to the SEC for a spot ETF based on the ETH cryptocurrency. This was enough to trigger a tidal wave of optimism in the market. Although no ETF of this type has yet been accepted by the SEC, the enthusiasm of the players in this ecosystem is palpable, and is reflected in the valuation of the main cryptocurrencies.

The Fed doesn't want to let go October consumer prices (Tuesday) and producer prices (Wednesday) in the USA, as well as Chinese industrial production and retail sales (Wednesday), will be the focus of attention next week. As you'd expect, the evolution of US inflation is a real deal-breaker. If all goes according to plan, prices should have risen by just 0.1% between September and October, not only because inflation is easing, but also for technical reasons (a sharp rise in the rent component in September). The calendar of earnings releases is a little less crowded than in the previous fortnight, but there are still some big names in sight, such as Home Depot, Tencent, Infineon, Cisco, Vodafone, Siemens AG, Walmart and Applied Materials. An excellent weekend to you all!

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*The weekly movements of indexes and stocks displayed on the dashboard are related to the period ranging from the open on Monday to the sending time of this newsletter on Friday. The weekly movements of commodities, precious metals and currencies displayed on the dashboard are related to a 7-day rolling period from Friday to Friday, until the sending time of this newsletter. These assets continue to quote on weekends.