AEX hesitated for fear of attention
Friday, 05 March 2021 9:15 PM
(ABM FN-Dow Jones) It is clear that the Amsterdam Stock Exchange was unable to shake off interest rate concerns last week. At a close of 653.87 points on Friday, AEX won by a modest 0.4 per cent on a weekly basis. The loss last week was 651.26 points, or 4.0 percent.
According to ING, investors are currently dealing with a stress area. “On the one hand, hope is for a rapidly improving economy, more financial incentives, higher commodity prices, higher inflation and higher interest rates,” said Simon Wirisma, director of investment at ING.
“On the one hand, high valuations, markets are tending towards euphoria, central banks are trying to control interest rates, and governments will soon announce higher taxes. After all, someone has to pay the higher debt,” Wirma said. According to ING, this could lead to big moves in the markets in the coming months.
According to technical analyst Roelof-Jan van den Akker of ING Financial Markets, AEX is in the middle of a correction. “In short, this means that the AEX index is in the middle of the correction process and we have not seen the bottom yet,” Van den Aker told ABM Financial News.
The analyst expects this bottom to be around 630 points. This should be a large rally in a long-term bullish trend.
The rise in interest rates has resulted in a clear rotation in the sector this week. Banks and insurance companies, as well as defensive nutritional values like Heineken and Unilever on Thursday, have the wind in their wickedness, while tech stocks are currently not favored.
Investors hoping Fed Chairman Jerome Powell would talk about interest rates in a speech on Thursday evening were back home from a blunt awakening.
Powell talks about increasing bond yields
In an event in the Wall Street Journal, Powell said that the central bank will intervene when financial conditions tighten.
“I would be concerned about squalid market conditions or tighter financial conditions that threaten the achievement of our goals,” Powell told the business newspaper. He stressed that the financial conditions are currently very flexible.
Powell said earlier that the rise in interest rates reflected confidence in the economic outlook for the United States.
“Powell’s soothing words are not calming. It makes sense to say you wouldn’t allow very high inflation,” Aktiam analyst Korn Van Ziegel said on Twitter.
The 10-year US yield climbed to 1.58% on Friday and the German equivalent is down at -0.30%.
The US labor market continues to recover
Powell confirmed this week that the Fed was still far from stable inflation at 2 per cent and the employment cap. Friday’s official jobs report found that US employment boomed in February, adding 379,000 new jobs.
“Much seems to be heading in the right direction in the United States, such as a decrease in the number of infections, implementation of vaccination programs and the next $ 1.9 trillion bailout package,” said Philip Marie, market analyst at Rabobank.
European buying data shows resilience in the industry
Meanwhile, the economic recovery in the Eurozone will depend mainly on industry.
The PMI showed strong growth in February, from 54.8 in January to 57.9 last month. The industry performed well in nearly all regions, with both Germany and France showing strong acceleration in growth.
Chris Williamson, the Markit economist, described European industry as the bright spot in the eurozone economy.
The Eurozone services sector contracted in February, albeit less sharply than expected. The PMI stood at 45.7 and was better than the provisional figure.
Nevertheless, Williamson of Markit is still relying on a “double-dip recession” after months of consecutive months of declining activity. He indicated that the headwinds this time were much less powerful than with the first halo wave.
With many of the Corona measures in place for some time, Williamson predicts that the economic recovery will also remain under pressure for some time.
EUR / USD was trading at 1.1919 on Friday; On a weekly basis, that is, down more than one percent.
OPEC + extends agreements
The price of oil rose sharply this week. The West Texas Intermediate barrel traded at nearly $ 66 on Friday, up 7 percent week-on-week.
The markets responded enthusiastically to extensions of existing manufacturing agreements for OPEC and its allies until April. According to OPEC +, the agreement compliance rate is currently 103 percent.
Moreover, Saudi Arabia is extending its voluntary production cut of 1 million barrels per day, which was due to expire at the end of this month, until April.
Before the meeting, expectations ranged from an output increase of 1.5 million per day from April 1 to an extension of the current output level, according to Hans Van Cleef, an energy economist at ABN AMRO, who confirmed that the OPEC + press release appeared unanimous.
Gainers and losers
Financial data performed well this week at AEX. NN Group, ASR and ING won 5 to 10 percent on a weekly basis. This made ING the leader in the main benchmark.
Galapagos this week announced the preliminary endpoint of ongoing safety studies with the anti-inflammatory filgotinib, as no effect on sperm concentration was found. The interim data could contribute to potential future approval in the US, according to Jeffries, thus removing the negative shadow on the stock. The stock has benefited slightly after the recent crisis, rising only 1.4 percent on a weekly basis.
Shell benefited from high oil prices this week, winning more than 7 per cent. Unibail-Rodamco-Westfield also posted gains of more than 7 percent on a weekly basis.
Technology shares ASML and ASMI tumbled 8 to nearly 10 per cent in value this week, ending lower in AEX. Prosus, Adyen, and Just Eat Takeway lost about 3 to 7 percent.
At Midcap, PostNL was rewarded with the final annual numbers, with an increased outlook and a clear dividend policy. The stock rose more than 2 percent on a weekly basis.
Boskalis also rose more than 2 percent on a weekly basis after numbers were better than expected, according to analysts.
However, the Vopak, SBM Offshore, and Fugro did better. Fugro won over 9% on a weekly basis, and Vopak and SBM nearly 3%.
Last week at AMX, Besi, a supplier to the semiconductor sector, posted a loss of 8.5 per cent.
Corbion’s numbers were punished with a loss of nearly 8 percent. Although sales were higher, EBITDA was higher, according to analysts.
Pharming shares fell 0.7 percent on a weekly basis after the numbers were published. The biotech group posted a solid gross margin in 2020, but operating expenses also increased significantly.
Accell has done a good job at AScX, earning over 9 percent on a weekly basis. The bike manufacturer achieved significantly higher turnover and higher profits in 2020. The outlook was positive and analysts reported strong results.
Alfen was the strongest drop with a loss of over 12 percent. The group was the leader in this area, with a profit of nearly 38 percent at € 14.10. A consortium led by NPM Capital is offering € 14.50 per share of ICT Group.
A takeover bid was also submitted to the local DPA fund this week. Gild made an offer of € 1.70 a share, estimating the DPA at € 80 million. The stock rose more than 11 percent on a weekly basis, with the close of 1.705 euros on Friday.
Domestically, CM.com and Euronext lost between 5 to 7 percent. Euronext announced that it has acquired the remaining 40 percent stake in iBabs for € 53.2 million. Euronext acquired 60% in 2017.
Ctac gained nearly 11 percent after Value8 raised its interest in the company to 21.26 percent. In the fourth quarter, the IT service provider reported higher profits and sales.
Stern incurred a smaller loss in 2020, despite falling sales as a result of the Coronavirus pandemic. The mobility group is not making any statements about 2021 due to the uncertainty surrounding the virus. The share rose nearly 1 percent on a weekly basis.
ABM Financial News; [email protected]; Revised text: +31 (0) 20 26 28999.