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London Quick Take – 9 Dec - Bond yields rise on hawkish tilt, Nvidia gets China green light, BAT falls as BAE Systems rallies
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
Another day another European antitrust investigation...this time into Google’s use of online content for AI. This stuff always rumbles around and doesn’t really affect things usually – the EU way of taxing big tech companies. Still positive on Gemini for Alphabet - Pivotal says it will go to $400 and cause OpenAI to cut capex.
President Donald Trump approved Nvidia to sell H200 chip sales to China in a deal that gives the US government a 25% cut of revenues. Trump also said he will sign a single AI rule which is seen as supportive for companies in the broader AI space by curtailing the ability of individual states to set down regulations.
European clean energy stocks caught some favourable tailwinds after federal judge Patti Saris ruled that President Donald Trump’s executive order banning new wind projects is illegal. Watch Vestas, Orsted, Nordex, Siemens Energy.
M&A taking off: Confluent shares surged 29% after IBM said it will acquire the data-streaming company in an $11 billion deal. Paramount Skydance shares surged 9% after it announced a $108bn hostile bid for Warner Bros., gatecrashing the Netflix party.
Oracle was up almost 1% ahead of Wednesday’s earnings, while the iShares Semiconductor ETF Soxx hit a record high. Chipmaker Marvell fell on reports Microsoft is in talks to design future chips with Broadcom, which would mean switching its business from Marvell. CRH and Carvana both jumped after it was announced they will join the S&P 500 later this month.
Satellite stocks got a boost from reports that Elon Musk’s satellite startup, SpaceX, is aiming for an $800 billion valuation ahead of a mooted IPO next year. The likes of Rocket Lab and Echo Star rallied on the rumours.
Stocks are looking a bit mixed and languid as the Fed starts its two-day meeting amid a bond market selloff that’s taken hold on bets that global central banks are turning hawkish. The FTSE 100 edged a tick lower as crude prices slipped lower and British American Tobacco fell, while European stock markets are a little more on the front foot. Wall Street edged lower yesterday in cautious trade. Alphabet and Meta dipped while Nvidia, Microsoft and Broadcom rose. Tesla fell over 3% as Morgan Stanley cut the stock from buy to hold for the first time in two years.
Divergence: Bond yields rose despite Fed rate cut bets...there was selling across the sovereign debt space yesterday as markets appeared to lean into global central banks moving higher next year. The yield on the 10yr bund hit its highest in 9 months after the ECB’s Isabel Schnabel said the next move in rates, when it happens, would likely be to hike, albeit that time is not soon. RBA governor Bullock also talked about a possible hike as the next move as she called an end to the easing cycle – Australian bond yields rose to their highest in over a year. If they’re hiking with the Fed ‘running it hot’ next year with a couple more cuts then we should expect further dollar weakness, which could be good for risk assets even if bond yields are rising. However, the hawkishness we are starting to sense will almost certainly be echoed in a 'hawkish cut' by the Fed tomorrow.
Just a couple of notes on fiscal/monetary stuff – rising global bond yields could be a problem for the chancellor...UK 10yr gilt yields were up 10bps since late last week. And two, France’s PM faces a vote today on a welfare package that includes freezing (ie ditching) pension reforms, pushing French politics and public finances into the spotlight again. Germany’s Chancellor just passed a vote on his measures...Europe is still just about getting things done on the fiscal side and today Germany is set to approve a record £52bn in defence orders – whether there is peace in Ukraine or not, Europe is rearming fast and for the long haul – Rheinmetall shares up 4% today and bid is seen across the sector.
In Britain, Barclays says spending in November was down on last year, whilst the BRC data today shows retail sales struggling last month – Budget chill I think. Whether there is any festive cheer for December is up for debate.
On the FTSE 100, British American Tobacco weighed as it said revenue and profits would be at the lower end of guidance but increased its buyback. Miners were also off but defence names caught some bid with BAE Systems and Babcock +2.5% as European leaders rallied round Ukraine.
Divergence: Bond yields rose despite Fed rate cut bets...there was selling across the sovereign debt space yesterday as markets appeared to lean into global central banks moving higher next year. The yield on the 10yr bund hit its highest in 9 months after the ECB’s Isabel Schnabel said the next move in rates, when it happens, would likely be to hike, albeit that time is not soon. RBA governor Bullock also talked about a possible hike as the next move as she called an end to the easing cycle – Australian bond yields rose to their highest in over a year. If they’re hiking with the Fed ‘running it hot’ next year with a couple more cuts then we should expect further dollar weakness, which could be good for risk assets even if bond yields are rising. However, the hawkishness we are starting to sense will almost certainly be echoed in a 'hawkish cut' by the Fed tomorrow.
Just a couple of notes on fiscal/monetary stuff – rising global bond yields could be a problem for the chancellor...UK 10yr gilt yields were up 10bps since late last week. And two, France’s PM faces a vote today on a welfare package that includes freezing (ie ditching) pension reforms, pushing French politics and public finances into the spotlight again. Germany’s Chancellor just passed a vote on his measures...Europe is still just about getting things done on the fiscal side and today Germany is set to approve a record £52bn in defence orders – whether there is peace in Ukraine or not, Europe is rearming fast and for the long haul – Rheinmetall shares up 4% today and bid is seen across the sector.
In Britain, Barclays says spending in November was down on last year, whilst the BRC data today shows retail sales struggling last month – Budget chill I think. Whether there is any festive cheer for December is up for debate.
On the FTSE 100, British American Tobacco weighed as it said revenue and profits would be at the lower end of guidance but increased its buyback. Miners were also off but defence names caught some bid with BAE Systems and Babcock +2.5% as European leaders rallied round Ukraine.
Another day another European antitrust investigation...this time into Google’s use of online content for AI. This stuff always rumbles around and doesn’t really affect things usually – the EU way of taxing big tech companies. Still positive on Gemini for Alphabet - Pivotal says it will go to $400 and cause OpenAI to cut capex.
President Donald Trump approved Nvidia to sell H200 chip sales to China in a deal that gives the US government a 25% cut of revenues. Trump also said he will sign a single AI rule which is seen as supportive for companies in the broader AI space by curtailing the ability of individual states to set down regulations.
European clean energy stocks caught some favourable tailwinds after federal judge Patti Saris ruled that President Donald Trump’s executive order banning new wind projects is illegal. Watch Vestas, Orsted, Nordex, Siemens Energy.
M&A taking off: Confluent shares surged 29% after IBM said it will acquire the data-streaming company in an $11 billion deal. Paramount Skydance shares surged 9% after it announced a $108bn hostile bid for Warner Bros., gatecrashing the Netflix party.
Oracle was up almost 1% ahead of Wednesday’s earnings, while the iShares Semiconductor ETF Soxx hit a record high. Chipmaker Marvell fell on reports Microsoft is in talks to design future chips with Broadcom, which would mean switching its business from Marvell. CRH and Carvana both jumped after it was announced they will join the S&P 500 later this month.
Satellite stocks got a boost from reports that Elon Musk’s satellite startup, SpaceX, is aiming for an $800 billion valuation ahead of a mooted IPO next year. The likes of Rocket Lab and Echo Star rallied on the rumours.
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