Final Call: Biggest drop in AEX in over a month, and companies are no longer helping

The 900 pip limit is easy to maintain, but the -0.7% that AEX received today, compared to what we were used to last month, is a bad hit.

Such a decline in itself is not a very surprising result for a stock market index like the AEX, but we now have to go back to April 17 before we see a more significant daily decline on the books.

May was simply a stellar month for the stock market, with prices looking mainly green. If you are Sold in May It’s actually used as its slogan, so it’s at least hoped that you waited until the final days of this month.

Strong balancing

What causes weaker emotions? Stock market commentary mainly focuses on interest rates and central banks’ battle against persistent inflation. It certainly happens, but it also seems that at the end of Q1 earnings season — with Nvidia’s festive fireworks display last week as a resounding finale — support from companies at the bottom of the market disappears somewhat.

Because the excellent performance of most companies over the past month and a half formed a strong counterweight to the more worrying macro environment. In Europe, two-thirds of companies delivered better or equal numbers than expectations. Market-weighted EPS was 8% higher on average than expected Morgan Stanley calculated.

In the United States, the numbers were slightly better. according to Figures from Factset 78% of S&P 500 stocks beat market expectations for earnings per share. In 61% of companies, trading volume was higher than expected.

A look at the docket shows that the first-quarter earnings season is now almost over, except for a few latecomers. https://t.co/WdDXRIVhtl

— IEX Investors Desk (@Beleggersdesk) May 26, 2024

Interest rates are rising rapidly

With the loss of that support, fears returned to control again, which was reflected in interest rates. In America, the ten-year interest rate rose by 30 basis points (0.3 percentage points) in two weeks, from 4.31% to 4.61%.

The benchmark European interest rate, the German Bund, showed a similar increase, from 2.42% to 2.68%. This is still remarkable in some ways, because the ECB’s cut in European interest rates in June is already all but certain. Of course, ECB members do not announce this out loud, but their statements at the moment clearly point in this direction.

In America, the chance of lowering interest rates is constantly diminishing. Interest rates are now expected to be cut only – very cautiously – in November, but the chance of them remaining unchanged then is about as good, according to CME’s Fedwatch tool.

An important number will be released next Friday in the form of PCE (personal consumption expenditures) inflation – an important indicator for the Federal Reserve – and the market already appears to be holding its breath a bit.

The broad market

At -0.7%, the AEX is still laughing at everyone in Europe, with almost all indices up more than -1%.
Wall Street also has a day off: S&P 500 -0.7%, Nasdaq -0.6%
Interest rates are rising, see above
Volatility is starting to wake up: the VIX index exceeds the 14 level for the first time since early May
Dollar is also gaining strength: EURUSD -0.4%
Gold, Bitcoin, and Oil are down a bit today

The risers and the fallers

The top three places and the 3rd flop in Damrak:

Only a select group ends in a plus sign on AEX, KPN leads the way without any news (+0.9%)
Others too Defenses Among the best-performing (or least underperforming) stocks are RELX, Unilever, and Ahold
Shell is closely following KPN, which may have something to do with the takeover news in the sector
No news on Adyen (-3%) or ArcelorMittal (-3.2%), but there is no demand for them today
A few positive outliers in the mid-cap section, but further down: JET (-4.3%), AMG (-4.0%), Air France-KLM (-3.5%)
NX filtering has been rising for a few weeks and today sees a heavy yo-yo day ending at +2.8%
Shareholder Krytinsky brought in Royal Mail, but this does not lead to imagination at PostNL (-2.4%).
Rollercoaster Vivoryon shares fell again today

schedule of work

The main focus of the week will be Friday, when US PCE inflation will be announced, among other things, but there is plenty to keep us busy tonight and tomorrow. Figures on a number of small, and perhaps sometimes nice, stocks, and a second estimate of US economic growth – which of course only moves markets if it clearly deviates from expectations.

8:00 PM Federal Reserve – Beige Book (US)
10:00 PM HP Q2 numbers (US)
10:00 PM Salesforce Q1 numbers (US)
06:30 Producer prices April (Netherlands)
06:30 Producer confidence in May (Netherlands)
08:00 Azerion Q1 numbers
08:00 Annual numbers for the colors of the Netherlands
08:00 Renui annual results
08:00 Dieterin Q1 numbers
09:00 Exor excludes €0.46 from dividends
10:00 JDE Peet Annual Meeting
11:00 May Consumer Confidence Final. (euro)
1:00 PM Best Buy numbers for the first quarter
2:00 PM CAPCA Annual Meeting
14:30 Q1 GDP, 2nd estimate (US, consensus +1.5% q/q)
2:30 PM Help Requests – Weekly (US)
4:00 PM Home Sales Coming in April (US)
5:00 PM Oil Inventories – Weekly (US)

Then this

Is Nvidia’s massive market value still defensible?

Is this sound right for you?

“A lot of the big, very important growth stories in the stock market are now intertwined with the AI narrative.”https://t.co/3A2wgINDjX

by @downtown pic.twitter.com/XmNkwPqCAF

– Ritholtz Wealth (@RitholtzWealth) May 29, 2024

Europe will gain an important stake in the energy transition

Northvolt aims to list its shares in Sweden next year after previously indicating an IPO could happen in 2024, according to a source. https://t.co/qNmlYxTfnq

– Bloomberg (@business) May 29, 2024

Contributors want to know from Meta how they will protect their AI applications from misinformation

Meta is preparing to confront shareholders at its annual investor meeting today about the growing threats to AI generation. https://t.co/nJqyVoDJOo

– ADOIC (@ADWIK) May 29, 2024

Nice invention, online banking, but JPMorgan CEO Jamie Dimon knows why not all bank branches will disappear:

? Damon on bank branches: People like to visit their money

– * Walter Bloomberg (@DeItaone) May 29, 2024

Peter Court is editor-in-chief of IEX Media. The information in this column is not intended to provide professional investment advice or a recommendation to make specific investments.