After the Federal Reserve raised interest rates by 75 basis points last night, the fence was lifted. Suddenly, the Swiss also raised interest rates this morning and exchanges such as the AEX (-3.8%) turned dark red on that news.
The market didn’t seem to see this coming. The SNB, the Swiss central bank, unexpectedly raised interest rates by fifty basis points. As a result, the interest rate there rises from -0.75% to -0.25%. As planned, the Bank of England also added a quarter to the interest rate, bringing it to 1.25%.
All this set market rates on fire today. Although the rise in Dutch ten-year yields of ‘only’ five basis points seems to be better than expected, interest rates have seen all corners of the price board today.
Let’s also pause for a moment Philips (-9.7%), one of the largest decliners in the AEX. Today the company is mercilessly going under. The drama surrounding the sleep apnea devices already makes the company vulnerable and a sale recommendation from UBS will hit very hard. Especially when the market is as bad as it is today. The investment bank fears that the problems are not over for the time being and that they may even get worse. Advice? Dump those stocks. UBS lowered its price target to $18.
Philly Fed Index Drops Unexpectedly Below Zero
I would almost forget that there are also macro figures that we have to deal with. We’ll start with the Philly Fed index, which suddenly fell below zero in June. Economists expected an increase from 2.6 in May to 4.8 in June. That turned out to be quite different, however, as became apparent today when the index fell to -3.3 points.
Then there were the Initial Jobless Claims† The number of new applications for unemployment benefits in the United States. This number fell by 3,000 to 229,000 last week. A less sharp drop than expected, as experts consulted beforehand assumed a drop to 220,000. Now this has little effect on prices, because the labor market is so overstrained and jobs are up for grabs.
Air France-KLM continues to fall
Today 1.93 billion new shares were flushed Air France-KLM (-6.7%) on the market. Niels Koerts predicted in his analysis of Air France-KLM that many who have the claims would dump them today. “Simply because they want to cash in on the ‘profit’ on their new shares. We have put the concept of profit in quotation marks for the sake of convenience, because this is offset by a significant dilution of share capital,” Koerts writes.
You also have to be quick for that, because the rate of the airline is getting closer and closer to €1.17. Understandable, because Koerts still thinks the Franco-Dutch company is significantly overvalued. You can read his complete analysis below.
#AirFranceKLM After the recent price drop, it looks optically cheap, but in reality it is still one of the most unattractive shares of the Damrak.
You can read exactly how this works in the article belowhttps://t.co/FVE3SBOqUw pic.twitter.com/jWKbqO7qPK
— Niels Koerts (@KoertsNiels) June 16, 2022
Boeing
If we are in the aviation sector, we also mention Boeing (-1.5%). The IEX Investors Desk also took a look at this share and concluded that everything is going wrong here. “For a long time, Boeing was the darling of the stock market, but that has changed dramatically in recent years. It started in 2019 with the disaster plane Boeing-737 MAX and then the corona crisis came over it.”
While the S&P500 has almost doubled in the past five years, Boeing is still losing about 25%. Competitor Airbus (-3.3%) with a plus of 40% remained considerably better. The recent fall in share prices offered the Investors’ Desk a good opportunity to see whether this punishment is justified. You will find the answer in the analysis of Boeing.
Everything goes wrong at Boeing https://t.co/32AGxU2I8a #IEX
– IEX.nl (@IEXnl) June 16, 2022
The countdown can start!
Market commentator Arend Jan Kamp and stock analyst Niels Koerts will take their place behind the microphone again tomorrow for a brand new episode of the IEX InvestorsPodcast. You can leave questions for the regular round of questions in the comments as usual.
Would you like to attend the IEX InvestorsPodcast live? Then you can! The podcast will be recorded live on July 1 during the IEX Investors’ Day and Premium members can attend this interactive session. The Q&A takes a dominant role, and the public, CEOs and our analysts are involved in this packed podcast.
@ArendJanKamp, @KoertsNiels and myself are organizing a show you don’t want to miss! The #IEXBeleggersPodcast will be recorded live on the IEX Beleggersdag and you can be there. The public, CEOs and our analysts get involved in this packed podcast.https://t.co/RJEe6DubdZ pic.twitter.com/BxXvcCPsxa
– Coen Grutters (@CoenGrutters) June 13, 2022
Look at here the complete program of the Investors’ Day! More information about the investor event of 2022 and the possibility to register for the various sessions can be found here.
broad market
- The AEX (-3.8%) performs even worse than the French CAC 40 (-2.1%) and the German DAX (-3.6%).
- The CBOE VIX Index (Volatility) is soaring to 32.7 points.
- Wall Street is falling sharply: S&P 500 (-3.3%), Dow 30 (-2.5%) and the Nasdaq (-4%).
- The euro is up 0.6% and is trading at 1.051 against the US dollar.
- Gold (+0.6%) and silver (+0.4%) are in demand.
- Oil: WTI (-0.3%) and Brent (-0.8%) fall.
- Bitcoin (-5.9%) is falling sharply again. The price of the world’s most famous crypto currency is eerily close to € 20,000.
The Damrak:
- Ray Dalio’s Bridgewater, the World’s Largest Hedge Fund, Shorts $1 Billion ASML (-7%). He has taken several short positions in European equities. In total, this concerns $5.7 billion in short positions.
- A sharp drop in the AEX (-3.8%) today. But the biggest drop this year is still in the hands of March 4, when the Dutch main index fell 4.8%.
- Iron (-11.5%) rose yesterday during its investor day, but today it is falling extra hard on the stock market. It is the smallest and most risky chipper in the AEX and that is why this company moves a little faster on a day like today ASMI (-8.7%) and ASML.
- Unsurprisingly, it also plummets Just Eat Takeaway (-9.2%) strong again today. This way, it won’t be long before the stock drops below $16.
- Two weeks after the news that Aperam (-5.6%) was in talks with the Spanish Acerinox about a takeover, the case turned out to have been rejected on price. The Aperam share has fallen more than 20% since the offer, which affects the price target and advice. You can read all about this in the latest analysis from Aperam.
- Eurocommercial Properties (-8.9%) went $1.50 ex-dividend today. This, in combination with one of the worst trading days this year, means that the company is turning dark red.
- fugro (-4.9%) sees the order book expanding further, but the share price is nevertheless losing ground. How this affects the price target and advice that analyst Martin Crum puts on the share, you can read in his comprehensive analysis of Fugro.
- Ebusco (+0.3%) was the only senior on the Damrak today. Head of the Investor Desk Erik Mauritz jokingly called the share Eplusco on Twitter. That mediocre pun even appears to apply to the final auction.
Advice
- AkzoNobel: to €93 from €105 and buy – Swiss credit
- AkzoNobel: to €92 from €105 and buy – ING
- AkzoNobel: to €100 from €111 and buy – Goldman Sachs
- AkzoNobel: to €71.50 from €78 and sell – Baader Bank
- AkzoNobe;: to €88 from €105 and keep – JPMorgan Research
- Philips: to €18 from €26 and reduced to sales – UBS
- Heineken: to €92 from €90 and sell – Barclays
Agenda Friday 17 June 2022
00:00 Alumexx – Annual General Meeting
08:00 Retail Sales – May (UK)
11:00 Inflation – May final (EUR)
15:15 Industrial Production – May (US)
16:00 Leading Indicators – May (US)
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Coen Grutters is editor of IEX. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments. click here for an overview of the investments of the IEX editors.
