Last year was a complicated one for the stock market, with high interest rates and soaring agricultural and energy commodity prices. The result was a 53.7% rise for the Nasdaq (the Nasdaq 100, not the Nasdaq Composite, which gained "only" 43%), -10% for oil and -17% for agricultural commodities.

The big performance of the US stock market in 2023 was driven by the "Magnificent Seven" - Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla - which gained between 50 and 240%. They also fed into the general S&P500 index, where they accounted for two-thirds of the 24% rise, no less. What's more, 72% of S&P500 stocks underperformed the index, which is a record. Expressed another way, this means that a minority of stocks pulled the index up, including the Magnificent Seven, of course. As the year drew to a close, other US companies woke up to do their bit, reassuring managers that the rise was democratic. The Magnificent Seven have an average P/E of 33.6 times, compared with 20 times for the S&P500. Investors don't care about multiples as long as the former remain the former.

We continue our review with the Japanese market, one of the year's pleasant surprises, with the Nikkei 225 up 28%. This is far better than the Stoxx Europe 600, which rose by 11.3%, and even the CAC40 (+14.75%). And even more so than the Chinese markets, which lost 10% both in Hong Kong and among the major companies listed in mainland China.

On the upside, gold has gained 13% in the last year, while bonds have recovered some 5%.. Special mention should be made of bitcoin (+155%), which was awakened by speculation about the arrival of its first ETF. On the downside, oil gave up 10% in 2023, while the dollar fell by 2%, its first year of decline since 2020.

So what's on the agenda for 2024? Well, since the post-war period (1939-1945), the S&P500 has always risen for two consecutive years when it lost more than 10% in one year and then rebounded by more than 10% the next. Roughly speaking, since it lost 19% in 2022 then recovered 24% in 2023, it should advance this year. This has happened six times in 73 years, with an average rise of 11.7%.

The second key statistic is that, should the S&P500 hit a new record high (it failed to do so by just a few points in December), it should be even higher in a year's time. One research firm has determined that 13 out of 14 times since 1928, the index has been on average 14% higher a year later. In short, a rise begets a rise.

A final fact to consider is that the S&P500 has always risen when an outgoing US president has sought re-election, whatever his label. Or his age, for that matter. The situation has arisen 14 times in history, resulting in 14 rises of 15.5% on average.

Let's end this column with a short recap of the world news over New Year's Eve. Conflicts in Ukraine and Gaza continued. Japan suffered a major earthquake. Reunification between China and Taiwan is inevitable, according to Chinese President Xi Jinping in his New Year's speech, which added a little to the early 2024 geopolitical nervousness gauge. The leader also acknowledged that his country has been struggling to recover economically. China, where refined PMI data for December confirmed a divergence between the official manufacturing PMI (still in contraction zone) and the Caixin PMI (in slight recovery). Geopolitical tension was also heightened by the arrival of an Iranian warship in the Red Sea, which led to a rebound in oil prices.

Anyone is now allowed to create content featuring the original version of Walt Disney’s Mickey and Minnie Mouse. The company's 95-year copyright on the 1928 cartoon short Steamboat Willie, in which the characters first appeared, expired on New Year’s Eve. A new horror video game featuring Mickey has already been announced…

In the Asia-Pacific region, the Japanese market is still closed for a public holiday. China is down by more than 1%, both in Hong Kong and Shanghai. India also lost 0.6%. Things are better in Australia (+0.5%) and South Korea (+0.8%). Leading indicators are down in Europe, while futures on Wall Street’s main three indices are in the red.

Economic highlights today:

The year begins anew with the second reading of the December manufacturing PMI indicators, notably in the eurozone and the United States. The full agenda is here 

The dollar rise 0.7% against the euro to EUR 0.9130 and 0.8% against the pound to GBP 0.7920. The ounce of gold is flirting with USD 2070. Oil rebounds, with North Sea Brent at USD 78.74 a barrel and US light crude WTI at USD 73.46. The yield on 10-year US debt is 3.88%. Bitcoin is trading at USD 45,700.

In corporate news:

  • Tesla- According to data published on Tuesday by the Swedish automotive industry federation Mobility Sweden, the American carmaker recorded 1,789 new registrations in December, compared with 1,645 over the same period in 2022, an increase of 9%. Tesla's market share in Sweden is now 6.1%.
  • Avangrid, Iberdrola's US subsidiary, has terminated its $8.3 billion (including debt) agreement to acquire competitor PNM RESOURCES, as it was unable to obtain all the regulatory approvals necessary to close the deal by December 31, the group said in a statement released on Tuesday. PNM Resources shares are down 3.9% in pre-market trading.
  • Oil groups rose in pre-market trading due to tensions in the Red Sea, where an attack on a cargo ship by fighters belonging to the Yemeni Houthi rebel movement was repelled by the US Navy on Sunday.

Analyst recommendations:

  • Alliant Energy: Barclays downgrades to equalweight from overweight with a price target raised from USD 50 to USD 53.
  • Apple: Barclays downgrades to underweight from equalweight with a price target reduced from USD 161 to USD 160.
  • Avalonbay Communities: Wolfe Research downgrades to peerperform from outperform.
  • Capital One Financial: Barclays maintains its equalweight recommendation and raises the target price from USD 114 to USD 154.
  • Campbell Soup: Baptista Research upgrades to buy from hold with a price target raised from USD 46.50 to USD 54.50.
  • Chewy: Baptista Research downgrades to hold from buy with a price target reduced from USD 28.90 to USD 25.30.
  • Citizens Financial Group: Barclays downgrades to equalweight from overweight with a price target raised from USD 38 to USD 40.
  • Equinix: Wolfe Research upgrades to peerperform from underperform.
  • Estee Lauder: Deutsche Bank downgrades to hold from buy with a target price of USD 146.
  • Evergy: Barclays upgrades to overweight from equalweight with a price target raised from USD 53 to USD 56.
  • Fifth Third Bancorp: Barclays maintains its overweight recommendation and raises the target price from USD 34 to USD 43.
  • Huntington Bancshares: Barclays upgrades to equalweight from underweight with a price target raised from USD 12 to USD 15.
  • Lululemon Athletica: Baptista Research downgrades to underperform from hold with a price target raised from USD 440.60 to USD 532.
  • Marks & Spencer Group: BNP Paribas Exane upgrades to outperform from neutral with a price target raised from GBX 275 to GBX 320.
  • Regions Financial: Barclays downgrades to underweight from equalweight with a price target raised from USD 20 to USD 22.
  • The Cooper Companies: Baptista Research downgrades to underperform from hold with a price target raised from USD 373.10 to USD 390.
  • Unity Software: Piper Sandler & Co downgrades to underweight from neutral with a price target raised from USD 20 to USD 35.
  • Wells Fargo & Company: Barclays maintains its overweight recommendation and raises the target price from USD 54 to USD 66.