Taiwan is shaking, but AEX is expected to open flat, focus on inflation and purchasing dates

The AEX is heading for a flat to slightly lower opening after the stock markets on Wall Street and in Asia turned red and Taiwan was shocked by an earthquake.

Taiwan was hit by the strongest earthquake in 25 years last night. The earthquake occurred just off the coast and had a magnitude of 7.2 on the Richter scale. Chip giant TSMC had to halt production in some factories. Fortunately, a tsunami warning has been withdrawn. Other than that there is not much new. We are awaiting preliminary inflation figures from the eurozone and purchasing managers’ indexes for services from Europe and the US.

Asia turns red, earthquake in Taiwan

In Asia the price boards turned red last night. It was partly a reaction to Wall Street, which was gripped by interest rate fears. Partly the fear will be felt after the earthquake in Taiwan. Investors also digested the purchasing managers’ indexes for services from Japan and China. In China, these indicated an acceleration of growth, after the purchasing managers index for industry had also been strong. In Japan things are a bit slower: there is still growth, but less strong than expected. And the industry is shrinking.

Here are the positions of the most important indices at a glance, clocked at 7:55 am:

Nikkei 225: -0.7%
Shanghai Shenzhen CSI 300: -0.3%
Hang Seng (Hong Kong): -1.1%
Kospi (South Korea): -1.4%

Tech stocks also had an off day. This is especially true for TSMC, which has suspended production at some factories as a result of the earthquake.

Samsung -0.7%
Alibaba: -0.6%
Baidu: -0.5%
Prosus participation Tencent: -0.3%
TSMC: -1.3%

Wall Street loses for the second day in a row

Wall Street also ended the second day of April in the red. The S&P 500 fell 0.7% to 5,205.81 points. The Dow Jones index and the Nasdaq each lost 1%. Investors seemed to be concerned that an interest rate cut might take even 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. Yesterday, Fed directors Loretta Mester and Mary Daly expressed similar words. 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%.

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%. June is therefore still the most likely scenario, but doubts are clearly creeping in.

All this put pressure on stock prices over the past two days, while the interest rate on ten-year bonds rose to the highest level this year: 4.368%:

Tesla takes a tumble while Cathie Wood goes shopping

It was a noticeable decliner Tesla, which was punished with a share price drop of 4.9% due to disappointing car sales. In the first quarter, the group delivered 368,810 cars: 8.5% lower than in the same quarter of 2023 and 20% lower than in Q4. Analysts polled by Bloomberg expected 449,080 EVs sold. Production was also disappointing: 433,371, while 452,976 had been expected.

One small consolation: Tesla has once again overtaken major Chinese competitor BYD as the largest seller of electric cars. BYD sold 300,114 EVs last quarter: 13.4% more than a year earlier, no less than 43% less than in the previous record quarter.

In any case, Cathie Wood, CEO of Ark Invest, cannot be denied courage. As Tesla shares headed south, she stocked up on 62,000 shares for the flagship Ark Innovation Fund. Apparently she believes that the bottom has just about been reached: since the top of July 2023, the price has plummeted by 44%. Her opinion is not shared by everyone. The share now receives eleven sell recommendations from analysts, according to an inventory by Reuters. There were four a year ago. 16 analysts still have the stock on their buy list, compared to 22 last year. 22 stock exchange researchers have a hold recommendation (compared to 16 last year).

Stock exchange darling Nvidia gave up 1%, despite a repeat of Oppenheimer’s buy recommendation. Meta Platforms was treated to a price target increase from Bank of America (to $550 from $510) and a repeat of the buy recommendation. This share did remain dry: +1.2% was stated on the boards.

Yesterday also saw the completion of the split of General Electric, an industrial icon founded by Thomas Edison in 1892, into three companies. The energy branch (GE Healthcare) had already split off. And now the aerospace arm (GE Aerospace) and the energy branch Vernova its own listing.

Trump media company founders fighting in the street

The rate of Trump Media & Technology Group of former US President Donald Trump shot up 6%. The stock has been on a wild rollercoaster ride since the reverse listing on the Nasdaq last week. On the first day of trading the price rose by 16%, but on Monday and Tuesday it fell by 26%.

What undoubtedly doesn’t help is that Trump and the co-founders (former participants in TV program The Apprentice) are rolling across the street fighting. The founders can whistle for the promised stake of 8.6%, while Trump takes them to court because they allegedly failed ‘spectacularly’ to get the company off the ground.

Unstoppable gold price

We also see spectacular price movements in some commodities. Take the gold price, which is currently breaking record after record. If we can believe technical analyst Royce Tostrams, there is more in store. Fundamental analyst Martin Crum also sees sufficient 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 quite meager.

And what strikes both Crum and commodity analyst Koen Lauwers: 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.

…and that also applies to the oil price

The oil price has also been on the rise for some time. The price of WTI has already risen by 18% this year and Brent by 15%. The increases are attributed to rising tensions in the Middle East. Israel’s recent attack on the Iranian embassy in Damascus (Syria) literally adds fuel to the fire.

The strong purchasing managers’ indices for industry in the US and China also have the effect of pushing up prices: more activity in factories can boost demand for oil. On the supply side, the continued production cuts of the OPEC+ countries are creating a floor in the oil price. OPEC meets again today. This may provide more insight into the view on the oil market and production goals. Furthermore, Mexico is being closely examined, where the state oil company has indicated that it wants to export oil.

The indicators:

European stock markets are expected to open lower.
The stock markets in Asia were under pressure last night.
The CBOE VIX index (volatility) is up slightly to 14.61, but that is not yet a level to worry about.
The euro is slightly lower and is trading at 1.0831 against the dollar.
The Dutch ten-year interest rate is 1 basis point lower at 2.66%. The American rate is 4.36%, which is 13 basis points higher than last week.
The gold price continues to climb to $2,285 per troy ounce.
Oil prices are rising slightly. A barrel of WTI now costs $85.14 and you can put a barrel of Brent in your garage for $88.94.
Bitcoin is recovering slightly after yesterday’s carnage: adding 1% to $66,298.

The AEX is expected to open flat.

News, advice, shorts and agenda

08:19 Flat opening of AEX foreseen
08:15 Taiwan is shaking, but AEX is expected to open flat, focus on inflation and purchasing dates
08:09 Stock market view: Jefferies increases price target for InPost
07:46 Strong earthquake in Taiwan
07:22 Lower prices in Asia
07:14 European stock markets are expected to open in the red
07:05 Growth rate of Chinese economy increasing
07:03 Japanese economy is growing less strongly than expected
07:01 Dutch inflation is shooting up again: 3.1% on an annual basis
06:57 Stock market agenda: macroeconomic
06:55 Stock market agenda: foreign funds
06:54 Exhibition agenda: Dutch companies
Apr 02 Tesla crashes on red Wall Street
April 2 Stock market update: AEX on Wall Street
Apr 02 Oil price continues to rise
Apr 02 Fed officials are in no hurry to cut interest rates
Apr 02 Wall Street is trading lower
Apr 02 European stock markets close lower
Apr 02 Stock exchange view: production figures indicate possible demand problem for Tesla
Apr 02 Final call: there goes the profit, but fortunately chippers limit the damage

IEX also produces an overview of the most important news in the morning newspapers every morning. The complete news overview can be found here.

The AFM reports these shorts.

Advice

Adyen has been put on the buy list by Evercore:

Adyen: to €1,850 from €1,109 and hold advice exchanged for buy recommendation – Evercore Partners
InPost: to €17.50 from €16 and buy – Jefferies

Agenda: European inflation and purchasing data

Today we are looking forward to 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.

The figures for the Netherlands and Germany are already in, and they point in different directions. While Dutch inflation rose to 3.1% in March (compared to 2.8% in February), it fell to 2.2% in our eastern neighbors (compared to 2.5% in February and 2.9% in January).

Inflation across the eurozone as a whole stood at 2.6% on an annual basis in February: 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. China and Japan have already come through. In China it is going to a crescendo. There is still growth in Japan, but less strong than expected.

The purchasing data for the industry showed 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 the full agenda for the rest of the day: