Final call: there goes the profit, but fortunately chippers limit the damage

The AEX index started the second quarter in good spirits, but had to give up its opening profit at the end of the afternoon after a disappointing opening from Wall Street. It is thanks to the chippers that the loss was not greater.

Investors were clearly looking forward to it this morning. The AEX index opened approximately 1% higher, led by ASMI, Besi and ASML, which had received fan mail from Barclays. But after noon things took a turn and when Wall Street opened with a loss, the last vestiges of profits melted away.

Still, it could have turned out much worse. Much higher losses are expected in the stock exchanges surrounding us. It is therefore thanks to the same chippers that the losses remained limited. Index heavyweights Shell and ING also kept the index fairly in check.

For the AMX and the AScX the losses are considerably higher: 0.6% and 1% respectively, thanks in particular to Alfen and Ebusco.

Moisture problems neck Alfen

Alfen received a major blow after the Almere company reported that it had to stop supplying its Pacto medium-voltage areas (intended to strengthen the power grid). The group was forced to do this after moisture was found in some rooms supplied to grid operator Liander.

What the impact will be is not yet known and is difficult to estimate at this stage. But it inevitably leads to damage. You can read what this means for the price target of the IEX Investor Desk here.

Ajax CEO faces dismissal due to inside information

Ajax also made the headlines in a negative way. CEO Alex Kroes has been suspended immediately due to possible insider trading. It turned out that he had purchased 17,000 shares a week before his intended appointment. The Supervisory Board plans to dismiss him permanently, but before that an Extraordinary Shareholders’ Meeting must be convened. After disappointing sporting performances and an investigation into the transfers led by Sven Mislintat, yet another stain on the football club’s reputation.

The group thus disqualifies itself as a listed company, according to Patrick Beijersbergen, who believes that the share has no place on the Amsterdam stock exchange at all. Investors don’t seem to care: the price rose by 1.5% today, on low volumes.

IEX Model portfolios expand lead

For nice price gains you would have been better off investing in the IEX Model Portfolios. We have three: a portfolio with Dutch shares, dividend shares and international shares. They further increased their average lead over the benchmarks last week. The average outperformance since the start has increased to 11.8%. This is mainly due to the international and dividend portfolios: they beat their benchmark by 10.0% and 31.6% respectively.

Unstoppable gold price

The gold price is currently setting one record after another. Technical analyst Royce Tostrams looked at the price development and it seems that there is more to come. In his view, the precious metal is in excellent shape in the short term. And the long-term picture also looks positive: with the breakout above $2,075.35, a four-year barrier has been broken, opening the way to $2,500.

According to analyst Martin Crum, there are also sufficient fundamental factors that justify a further increase in the gold price, as can be read in this analysis. You would expect that investors would then be queuing up to buy gold. Yet interest in the West is disappointing. It is also remarkable that the prices of gold producers, such as Barrick Gold, are lagging behind. That does raise the question of whether it is interesting to buy such a share. You can read the advice from the IEX Investor Desk here.

Wall Street starts in a bad way, and how

The major indices on Wall Street are in the red for the second day in a row. This is partly due to – how could it be otherwise – the prospect that an interest rate cut may take longer to materialize than previously anticipated by the market. Fed Chairman Jerome Powell hinted last weekend that he is in no hurry with the first interest rate hike. In addition, there were better-than-expected purchasing managers’ indices for industry, both of which pointed to growth: a sign that the American economy is certainly not yet cooling down. PCE inflation also appears to still be too high: 2.8% in February, while the Fed is aiming for 2%.

All this put pressure on stock prices yesterday and today, while the interest rate on ten-year bonds rose to the highest level this year: 4.368%:

Shortly after the interest rate decision of March 20, the market still assumed that the Fed would decide to finally cut interest rates on June 12: that chance was then estimated at 74.3% according to the so-called FedWatch tool from CME Group. That chance has now shrunk to 58.7%. So June is still the most likely scenario, but there is clearly doubt:

Much will depend on Friday’s US labor market report. A cooling labor market (with lower than expected job growth and low wage growth) would be good news in that respect. But if the labor market proves to be persistently strong, Powell will be confirmed in his view that he does not have to turn the interest rate knob like a hare.

A notable faller on Wall Street is Tesla (-5.3%), which is being punished for disappointing car sales. The electric car manufacturer is facing considerable headwinds. The supply of parts has been disrupted by attacks by Houthi militias in the Red Sea and in China Tesla is experiencing fierce competition from parties such as BYD and Xiaomi. We see this reflected in the production and sales figures. Tesla’s share price is down more than 32% YTD.

The broad market

The AEX closed 0.04% lower and that makes us lucky compared to the surrounding stock exchanges. The DAX40 closed 1.1% lower, the CAC40 lost 0.9%, the Bel20 lost 0.4% and the FTSE100 ended down 0.2%.
The CBOE VIX index (volatility) has risen sharply to 15.80, but that is not yet a level to worry about.
Red rates on Wall Street. The S&P 500 is down 1%, the Dow is down 1.2% and the Nasdaq is down 1.3%.
The euro is slightly higher at 1.0766 dollars.
The US ten-year yield is rising, now that it looks like the Fed will wait a little longer before cutting interest rates. There is now 4.36% on the signs. The Dutch ten-year interest rate is now 2.66%. That is 6 basis points less than last week.
The gold price continues its rally. Today 1% added to $2,257 per troy ounce.
A significant loss for bitcoin: more than 6% off at $65,074. Several reasons are given for this: the impending halving (which is always accompanied by volatility), a large net outflow from bitcoin spot ETFs and the prospect of interest rates remaining high for longer (which takes some of the shine off assets that do not earn interest, such as bitcoin ).
Oil prices, on the other hand, are on the rise. The price of a barrel of WTI is 1.8% higher at $84.59. Brent is 1.6% higher at $88.34.

Further on the Damrak

A severe punishment for Alfen, but Shell saves the proverbial furniture.

Besi is trading 1.8% higher after the share was put on the buy list by Barclays.
ASMI gains 1.1% after a price target increase from Barclays
ASML was also treated to a price target increase from Barclays, but was unable to capitalize on it: the price ended 0.2% lower.
Galapagos was put on the sell list by Bank of America, but the stock ends unchanged.
Renewi is among the biggest increases after the waste processor announced that it has started a sorting facility for hard plastics in Brabant.
Shell (+3.2%) led the AEX, probably thanks to higher oil prices. The energy giant’s appeal in Milieudefensie’s high-profile climate lawsuit starts today. The court in The Hague must determine whether Shell is indeed obliged to quickly reduce its CO2 emissions.
Corbion has completed the sale of its emulsifier activities to Kingswoods Capital Management. Investors take it for granted: the stock ended fractionally higher.
NX Filtration The price rose 2% after it became known that the company had won an order in Canada.

Advice

Barclays has put the Dutch chippers through the car wash. This results in a higher price target for all shares and a buy recommendation for Besi. And Bank of America is throwing in the towel at Galapagos.

ASML: to €920 from €650, but advice remains – Barclays
ASMI: to €530 from €405, but advice remains – Barclays
Besi: to €175 from €150 and replace hold advice with buy advice – Barclays
Unibail-Rodamco-Westfield: to €107 from €70 and buy – Goldman Sachs
SBM Offshore: to €19.80 from €24 and buy – Barclays
Galapago: recommendation downgraded from hold to sell, with price target of €28.88 – Bank of America
Adyen: to €1,850 from €925 and buy – Morgan Stanley
Heineken: to €107 from €118 and buy – Goldman Sachs
InPost: to €15.40 from €14.50 and buy – Barclays
HAL Trust: to €123 from €126 and hold – Degroof Petercam
Arcadis: to €65 from €60 and buy – Jefferies

Agenda: European inflation and repurchase data

Tomorrow we look forward to seeing inflation in the eurozone in March. Although this is only a preliminary estimate, the figure will attract a lot of attention, especially because the financial markets are eagerly awaiting a first interest rate cut by the ECB.

In February, inflation stood at 2.6% on an annual basis: slightly lower than in January (when 2.8% was measured), but still above the ECB’s target of 2%. Economists expect inflation to have reached the same level in March.

Core inflation, which excludes volatile items such as food and energy, fell for the seventh month in a row in February, to 3.1% (down from 3.3% in January). By March, this figure is expected to have fallen slightly further to 3.0% on an annual basis. If inflation is better than expected, this will bring an interest rate cut a little closer and that could lead to relief on the stock markets.

Purchasing manager indexes are also appearing again, this time for services. The figures for the industry are already in and they show a mixed picture: contraction in Europe and Japan, growth in China and the US.

Eurozone: decrease from 46.6 to 46.1 (so contraction)
Netherlands: increase from 49.3 to 49.7 (smallest contraction in 17 months)
Japan: increase from 47.2 to 48.2 (still shrinking)
China (S&P): increase from 50.9 to 51.1 (growth and highest level in 13 months)
China (government): increase from 49.1 to 50.8 (from contraction to growth)
US (S&P): decline from 52.2 to 51.9 (third month of growth in a row, but growth slowdown)
US (ISM): increase from 47.8 to 50.3 (faster growth than expected).

Here is tomorrow’s full agenda: