December 2, 2022

The opening of the AEX is pending before the US elections

The Amsterdam stock market is expected to open more or less neutral on Tuesday. Investors await today’s US midterm election results.

On Monday, the AEX had a positive start to the trading week, up 0.6 percent at 676.06 points. On Wall Street, the benchmark S&P 500 closed Monday evening 1.0 percent in the green after a hesitant start.

In midterm elections, scheduled between presidential elections, Americans elect a new House of Representatives and a new Senate, which together make up Congress. Democrats still hold majorities in both chambers and gains for Republicans could undermine President Joe Biden’s influence. The general belief among investors is that a Republican victory would be good for financial markets.

“Investors are counting on Republicans to take back the House of Representatives,” RBC Capital Markets analyst Lori Galvacina told CNBC. According to Galvacina, the only real boost to stock markets is if Republicans also hold a majority in the Senate.

America’s purchasing power has been under pressure for more than a year and a half due to high inflation, and political analysts say this could be a deciding factor at the polls.

In 17 of the 19 midterm elections since 1946, the stock market has done better in the six months after the election than in the six months before, according to analysts at stockbroker Charles Schwab. According to analysts at Deutsche Bank, this trend is visible even for a century.

Historically, the president’s party loses elections during midterms. This often creates political gridlock in the last two years of a presidency and makes it more difficult to get effective legislation through Congress. It provides predictability and generally benefits stock markets.

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Stock markets in Tokyo and Seoul are trading in the green this morning with gains of more than one percent. In China, on the other hand, investors have slowed after a sharp rally in recent trading days, fueled by rumors that strict corona measures may be eased. However, government agencies are against this.

U.S. oil futures fell to $91.32 a barrel this morning after falling nearly one percent Monday night in New York. The EUR/USD currency pair is trading flat this morning.

Meanwhile, investors are already looking ahead to the October release of US inflation, due on Thursday, which could have a major impact on the Federal Reserve’s interest rate policy and the prospects for a year-end rally. Inflation in the US was 8.2 percent on an annual basis in September.

Inflation in the Netherlands was 14.3 percent year-on-year in October, the statistics office said this morning, after an inflation rate of 14.5 percent in September. The big difference with US inflation is mainly due to higher European energy prices and an expensive dollar, which translates into inflation for Europe but deflation for the US.

Company news

ASML and Besi could be on the move, thinks today’s group trader Bert van der Pol, after Morgan Stanley analysts said the two stocks are their favorites in the semiconductor sector.

In the third quarter of 2022, Kendrion saw its turnover and results increase, especially with net profit rising strongly. According to Kendrion, the economic environment will be unstable this year, and this trend will continue in 2023. Kendrion also hopes to meet the targets for 2025.

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Berenberg raised the price target for KPN from 3.00 to 3.20 euros, while maintaining a buy recommendation.

Air France-KLM repaid 3.5 billion euros in advance of 1 billion euros in state aid outstanding in France.

Wall Street closing levels

The S&P 500 ended Monday up 1.0 percent at 3,806.80, the Dow Jones gained 1.3 percent at 32,827.00 and the Nasdaq gained 0.9 percent at 10,564.52.