Publication date: November 7, 2024
Course of the AEX Index
Thursday, November 7, the AEX is at 878 in the morning session. That is 3 points (0.35%) higher than last week's reading. The chart of the AEX over the past 5 months is above. You see the most likely scenario plotted.
Last Friday the important labor figures came out of the US. These were disappointing and were therefore good for the stock market because they gave the FED another reason to cut interest rates further. The AEX rose slightly as a result. This week was of course dominated by the much-discussed presidential elections in the US. The AEX was trading quietly around 880.
Trump, meanwhile, won a clear victory, after which the AEX rose to 897 points. However, when it appeared that the Republicans were also likely to win a majority in Congress, the AEX dropped sharply to 873 points. Currently, the AEX is recovering to 878 points.
The impact of the US elections on the stock markets
We can be short and clear about this. With Donald Trump as president and additionally, a majority in Congress for the Republicans, the America First program will be implemented vigorously and without hindrance over the next two years. After two years, there will be another vote for Congress and the situation may change.
This will be very beneficial for American companies and international companies that get a lot of sales from the US. In the Netherlands, these companies include Aegon, AHOLD, and Randstad.
In contrast, the situation in Europe has grown uncertain. Companies with a European focus might initially face challenges due to Trump's policies, but they could potentially gain from anticipated positive economic changes in the U.S. However, this outcome is uncertain and adds to the unpredictability.
What does this mean for sentiment?
For some time now, we have been seeing a split between the course of stock markets in the EU and the US. The algorithm has a short position in the AEX and a long position in the Nasdaq.
The sentiment in the stock markets in the EU can be characterized as "tired and uncertain" and in the US we may speak of "positive and hopeful".
Because of this sentiment and the expectation that Mr. Trump and the Republicans will gain full control, the U.S. markets will become more interesting to follow over the next few years. Starting next week, we will be including more coverage of the Dow Jones Industrial Index in our Updates and Trading sections. This well-known stock index represents the 30 largest capitalized companies in the U.S. and is thus comparable to the AEX of America.
What is the expectation for the AEX?
The algorithm remains unambiguous about the short term; the index can continue to go down and has a running short signal for the AEX from 885. The price target has been changed from 835 to 860 and the stoploss remains 910.
The most likely scenario remains that the AEX has completed its recovery in the 920-925 zone. Then the longer correction will be completed by a decline of the AEX to the 860 level. There remains the possibility of a further decline to 835 but that is no longer the most likely.
In the long term, there is indeed a shift. As mentioned, the uncertainty regarding price trends over the long term has significantly increased. Consequently, the algorithm now holds a neutral stance on the expected price targets ranging from 860 to 835. The long-term price target of 1025 for the AEX has been temporarily set aside. We will have to observe how the AEX progresses after achieving the short-term price target of 860.
Look back: read our view of the October 31, 2024 AEX here
Course of the Nasdaq
The Nasdaq futures are currently at 20.940 which is 625 points (+3.1%) higher than last week's position.
The Nasdaq futures started the week quietly sideways but reacted positively again with a 3% increase in Trump's election victory. With this, the Nasdaq future achieved our first price target.
What is the expectation for the Nasdaq future?
Positive. The Nasdaq future showed some weakness for a while but once again appears to possess a lot of upside strength. The short-term price target of 21,000 has been met but the expectation within the most likely scenario is that after a modest correction, the Nasdaq futures will smoothly pull through to the new price target of 24,000 points. The stop-loss has been adjusted to 19,800 points.
Below is the chart of the Nasdaq futures over the past seven months with the most likely scenario plotted.
Important items on the economic calendar for the week of Nov. 11 through Nov. 15:
The coming week will again revolve around inflation data from the US. On Wednesday at 2:30 p.m. the full set of Consumer Price Index (CPI) figures and on Thursday at 2:30 p.m. the Producer Price Index (PPI). These figures may not be higher than expected for the stock market because that means that inflation is picking up and the Fed may again wait to cut interest rates further in the US.
Disclaimer: Investing involves risk. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. They are therefore for educational purposes only.