This week's US inflation data was much better than expected. In other words, decelerating. This has clearly rekindled traders' appetite for risk, who are now betting on the end of the monetary tightening cycle and on a first rate cut in the United States at the end of the first quarter of 2024. As a result, financial markets regained their height, with the Nasdaq100 less than 6% off its all-time high of 2 years ago.
Weekly variations*
34947.28  +1.94%
15837.99  +1.99%
Chart NASDAQ 100
FTSE 100
7504.25  +1.95%
Chart FTSE 100
1980.33$  +2.06%
Chart GOLD
75.97$  -1.18%
Chart WTI
1.09$  +2.07%
This week's gainers and losers
  • Hotel Chocolat (+169%): A meteoric rise for the small British chocolatier (Capitalization: 164 million pounds). US giant Mars is to acquire the high-end manufacturer and retailer for £534 million, and expand its presence in the UK (where it owns 130 stores) and internationally.
  • Target (+20%): In these inflationary times, Target is holding up well. The retailer's quarterly sales fell by less than expected, profit gained 36% year-on-year, exceeding expectations, and gross margin stood at 27.4%. The Group also expects a significant rebound for the last 3 months of the year, and is targeting a profit well above forecasts. This should boost the share price, which has lost almost 13% since the start of the year.
  • Williams Sonoma (+16%): The American furniture specialist also reported better-than-expected quarterly earnings, despite a 15.5% drop in sales. The retailer benefited from the normalization of transport costs to improve its gross margin from 41.5% to 44.4%. However, it remains cautious about its annual outlook, pointing to "persistent consumer hesitation". 
  • Tencent Music Entertainment (+15%): The Nyse-listed Chinese music streaming company, little sister of Internet giant Tencent, reported quarterly revenues down 11% but ahead of expectations, and net income up 15.6%, buoyed by steady growth in paid subscriptions. In the wake of this, JPMorgan raised its recommendation and price target on the stock.
  • Sea Limited (-17%): The US-listed Asian online gaming, e-commerce and digital payment company reported a surprise quarterly loss, which alerted investors to its financial discipline. The company's management went further, announcing investments to gain market share, probably at the expense of profitability. Nevertheless, sales were up 4.9%, better than expected, and adjusted earnings improved. 
  • Cisco Systems (-9%): The tech group did not disappoint in the latest quarter, with revenues and adjusted earnings up and ahead of expectations. But the company lowered its annual sales and earnings forecasts, due to a slowdown in demand for its networking equipment. It forecasts annual revenues of $53.8 to $55 billion, compared with analysts' expectations of $57.89 billion. 
  • Entain (-8%): While the British online gaming and betting group published its results two weeks ago, and unveiled a 7% increase in net gaming revenue in the third quarter of 2023, the share price has fallen as analysts have changed their recommendations: Berenberg has reduced its target price and Exane BNP has downgraded its recommendation on the stock.
  • Burberry (-7%): The British luxury goods group is sanctioned for a warning on its annual results for the current financial year. The company says it is unlikely to meet its annual revenue targets in the context of slowing demand for high-end products.
Chart Commodities
  • Energy: A new downward sequence for oil prices, which have fallen for the fourth week running. The mood on the oil markets has quickly changed, with traders expecting the market to be less tight than expected. In this respect, the increase in weekly US inventories confirmed this trend, with stocks up by 3.6 million barrels (versus a consensus of 2.5 million). However, this price weakness could prompt OPEC, and Saudi Arabia in particular, to further limit production. Riyadh could well extend its production quotas (by around 1 million barrels a day) next year, again with the aim of supporting crude prices. Finally, the oil cartel will meet in Vienna on November 26. In terms of prices, Brent is trading at around USD 78.30, while WTI is trading at around USD 74.
  • Metals: While barrel prices remain under pressure, this is not the case for industrial metals, which remain generally well oriented in London, with the exception of nickel, which continues its decline to USD 16900 . Copper is up to USD 8165, while zinc is trading at USD 2570 and lead at USD 2270. The latest Chinese statistics have helped prices to hold up well. Industrial production rose by 4.6% year-on-year in October, slightly higher than the consensus forecast of 4.5%. On the gold front, falling bond yields are clearly making gold holders happy. For the umpteenth time, the golden metal has come close to the USD 2,000 per ounce mark.
  • Agricultural products: Grain prices did not fluctuate much this week in Chicago. Corn prices stabilized at around 490 cents a bushel, compared with 580 cents for wheat.
Chart Commodities
  • Atmosphere: When will rates come down? The week's biggest news was undoubtedly the release of a consumer price index that set the world alight. The scenario of a soft-landing is taking on new color against a backdrop of tame inflation. The U.S. Core CPI came in at +4.0% year-on-year, against an estimate of +4.1%. In the wake of this announcement, the 2-year yield fell by 18 basis points, while estimates of a status quo at the December 13 meeting have now reached 100%! The narrative remains anchored around a rapid return of inflation below the Fed's targets in the first half of 2024, accompanied by strong corporate earnings. But beyond inflation, producer prices and industrial production itself came in below expectations in October in the US, helping to reinforce market sentiment on rate trends. Strong retail sales and the Empire State index did not derail the rebound. In China, data remained mixed, with consumer spending showing signs of recovery, but the property market still in a state of depression. In Europe, the final inflation reading for October was in line with the preliminary figure, declining, while the same trend was confirmed in the UK.
  • Crypto: Bitcoin ended its 5-week bull run with a decline of -2% since Monday, returning to the $36,300 mark at the time of writing. Ether, for its part, is following the same trend, but is suffering more than the market leader, dropping -4% and falling back below the psychological threshold of $2,000. Crypto-investors are still clinging to the idea that the launch of a Bitcoin Spot ETF will create the long-awaited gateway for traditional finance to gain direct exposure to bitcoin, and consequently for capital to flow into BTC. Although there's no guarantee that this will happen, the US Securities and Exchange Commission (SEC) has not yet given the green light for the commercialization of such an exchange-traded product, although it is expected to do so in the coming weeks.
Historical Chart
The market believes that the Fed pivot is finally upon us
On Tuesday, the Fed will publish the minutes of its latest meeting. The market will also be interested in October's durable goods orders on Wednesday and the leading PMI indicators for the major economies on Thursday, with the exception of the US, where this data will be released on Friday, after the Thanksgiving holiday. In Europe, ECB President Christine Lagarde is scheduled to speak on Tuesday and Friday. On the corporate front, Nvidia's results on Tuesday evening are the most eagerly awaited. The American group truly embodies the rise of artificial intelligence, with very high market expectations. The results for Lowe's, Medtronic, Compass, Sonova and Deere will pale into insignificance. Until then, have a good weekend!
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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.