US equities retreated for a second day from year-highs, driven by concerns about the labour market and debates on potential rate cuts. Moody’s cut the outlook for Chinese bonds, highlighting concerns about the country’s debt. Long-term Treasury yields declined, and oil prices fell due to scepticism about OPEC+ supply cuts. There was a shift from tech giants to small-caps and value investments. The S&P 500 and Dow Jones eased by 0.1% and 0.2%, respectively, while the Nasdaq managed to a gain of 0.3%. Mixed market action suggested ongoing digestion of November gains, with energy shares lagging, while technology and consumer discretionary sectors remained resilient. Signs of rotations and adjustments in the US market were evident. In the Euro area, the Stoxx 50 closed up 0.8%, reaching fresh 4-month highs, with gains in real estate, auto, travel and tech sectors, while mining and financial shares experienced declines. 

Summary for 06.12.2023 

  • Asian shares rallied as weak US labour market indicators increased expectations of a Federal Reserve rate cut, with Japan Nikkei 225 rising 1.7% and Australia’s ASX 200 gaining 1.4%. Despite Moody’s negative outlook on China’s credit and concerns about economic risks, Chinese equities advanced slightly, while Indian shares reached a $4 trillion valuation buoyed by election victories and a stronger-than-expected GDP figure for the September quarter. 
  • Oil prices remained near five-month lows in Asian trade as concerns over China’s economic outlook and signs of an unexpected build in U.S. crude stockpiles added pressure. Brent oil futures expiring in February rose 0.1% to $77.29 a barrel, while Crude Oil WTI Futures steadied at $72.58 a barrel, reflecting ongoing worries about global economic conditions, weaker oil demand, and the recent underwhelming OPEC+ decision on production cuts for 2024. 
  • European shares are poised for gains on expectations of potential Fed rate cuts, while US stock futures suggest a positive open following mixed Tuesday trading. 
  • The Australian economy expanded by 0.2% quarter-on-quarter in Q3 2023, below market expectations and a slowdown from the 0.4% growth in Q2. The softer pace was attributed to a decline in household consumption, a negative contribution from net trade, and a slowdown in fixed investment growth, despite a boost from solid public investment. 
  • The JOLTS (Job Openings and Labor Turnover Survey) report, as of the end of October, indicated a relatively stable number and rate of hires at 5.9 million and 3.7%, respectively, while the job openings rate declined to 5.3% from the previous month’s 5.6% and the prior year’s 6.4%. The data suggested a potential slack in the labour market, aligning with the Federal Reserve’s goal of slowing job and wage growth to curb inflation, influencing market expectations for future Fed rate cuts. 
  • The ISM Services PMI for November 2023 rose to 52.7, surpassing expectations of 52, indicating stronger growth in the services sector. The increase was driven by faster growth in business activity, employment, and a rebound in inventories, while price pressures slightly slowed, and there were concerns expressed about inflation, interest rates, and geopolitical events. 
  • Mastercard has increased its quarterly cash dividend by 15.8% to $0.66 per share, along with approving a new share repurchase programme of up to $11 billion, following the completion of its existing $9 billion share repurchase programme announced in December 2022. As of December 1, 2023, approximately $3.5 billion remains available for repurchase under the current programme. 
  • Toll Brothers reported better-than-expected fourth-quarter results, with Q4 EPS of $4.11 on revenue of $3.02 billion, surpassing analysts’ expectations. Despite challenges from higher mortgage rates, the company noted solid demand, reporting a 53% increase in net signed contract value compared to the same period a year earlier.  
  • Tesla’s global EV market share dipped to 13% in October from September’s 17%, with an overall 18% share for the year 2023, according to Morgan Stanley. In the US, Tesla’s EV market share was 51.9% in October, down from 55.6% year-to-date. Meantime, Elon Mush anticipates the Cybertruck to have a signifcant impact on Tesla’s finances starting in 2025, projecting a minor contribution in 2024 due to construction and delivery challenges. 
  • Eli Lilly’s obesity treatment Zepbound is now available in US pharmacies at a cost of $550 per month for customers without insurance coverage, half the list price. Analysts anticipate strong sales, estimating Zepbound to reach $2 billion in 2024, while Novo Nordisk’s rival drug Wegovy is expected to hit around $7.5 billion in sales, both contributing to the fast-growing weight-loos drugs market. 
  • Chinese electric automaker Nio Inc reported narrowing losses in its Q3 earnings, with revenue slightly below estimates. Despite facing competition in the electric vehicle market, Nio aims to enhance efficiency and reduce costs, as reflected in a recent 10% workforce downsizing. 
  • CVS Health forecasts 2024 revenue above market estimates, unveiling a new model, CostVantage, to simplify drug pricing by implementing fixed markups and fees for over 9,000 pharmacies. The move aims to achieve transparency and address demands from customers and the government while positioning the company for long-term earnings growth. 
  • American Express aims for over 10% revenue growth in 2024 and beyond, according to CEO Stephen Squeri, citing a resilient post-Thanksgiving consumer and a bounce back in billing trends. The company expresses confidence in its competitive position and anticipates mid-teens EPS growth, despite a drop of 1.5% in its share price during yesterday’s session.  
  • Wells Fargo initiated coverage on the hotel sector, favouring Hyatt with an Overweight rating due to its favourable exposure and valuation, assigning Hilton an Equal Weight rating citing a balanced risk/reward, and giving Marriott an Equal Weight rating, acknowledging its strength for 2024 but noting a fair valuation. The analysts believe the US lodging industry is stabilising, preferring names catering to group and higher-end business/leisure travel. 
  • Citigroup and Bank of America were reportedly left holding some shares in Barclays after failing to find sufficient demand for a £510 million stake sold by Qatar Holding. The move was part of Qatar’s effort to reduce its crisis-era investment in Barclays, and while the banks may sell the shares over time, the unsold portion contributed to a decline in Barclays’ share price. 
  • BNP Paribas has secured a deal with Goldman Sachs, the leading trading member on the Vienna stock exchange, to provide custody and settlement services for assets in Austria. The agreement underscores BNP Paribas’ commitment to the Austrian market and strengthens its longstanding partnership with Goldman Sachs in the Securities Services business. 
  • Goldman Sachs initiated coverage of Nike with a Buy rating and a 12-month price target of $139 per share, citing expectations of an earnings growth upturn. Despite short-term challenges like competition and macroeconomic uncertainty, analysts believe Nike’s attractive valuation, along with anticipated benefits from cost recapture and improved marketplace inventory, supports the positive outlook.