STOCK MARKET BLOG DECEMBER 2024

by the CEO Silvano Grimaldi of the independent asset management company GRIMALDI & PARTNERS AG

MONTHLY REVIEW

The international stock markets ended the month of DECEMBER with slight losses.

BURDENING FACTORS (especially for European stock markets)

Muted interest rate cut expectations: The Fed has signaled fewer interest rate cuts than expected for 2025.
Persistent inflation concerns: particularly due to the tariffs proposed by Donald Trump.
Rising bond yields: The yield on 10-year US Treasury bonds is around 4.6%.

SHARE IN FOCUS

LONZA wants to divest from the capsule and nutritional supplement business

Lonza has announced new medium-term goals and will exit the Capsules & Health Ingredients (CHI) business unit to focus more on its core business as a contract manufacturer (CDMO). The sale of the business will be finalized in 2025. The business was previously considered a solid cash flow generator, but diluted Lonza's growth profile.

For 2024, the company expects flat sales development and an operating profit margin in the "high 20 percent range".

From 2025 onwards, Lonza is targeting sales growth of almost 20%, with a margin close to 30%. In the long term, organic growth in the low single-digit range and a disproportionate increase in margins are expected.

Conclusion: Lonza aims to achieve stronger growth momentum and improved margins by focusing on the CDMO business and discontinuing CHI.

MONTHLY OUTLOOK

Opportunities:

Solid economic data: Positive GDP growth figures, robust labor market data or strong corporate earnings can improve market sentiment.
Central bank policy: Indications of interest rate cuts or a continuation of loose monetary policy by the Fed, ECB or other central banks.
Technological breakthroughs: Advances in areas such as AI, quantum computing or green technologies could boost stocks in these sectors.
Decline in energy prices: Lower oil and gas prices could reduce costs for companies and boost consumer demand.
Geopolitical détente: Positive developments in conflict zones or progress in trade negotiations (e.g. USA-China).
Strong demand for emerging markets: Capital flows into emerging markets due to improved growth forecasts.
Regulatory relief: Reduction of bureaucracy or tax relief for companies in key industries.

Risks:

Higher interest rates: A restrictive monetary policy could make borrowing more expensive and slow economic growth.
Inflationary pressure: Unexpectedly high inflation figures could unsettle investors.
Geopolitical tensions: escalations in crisis areas or new trade conflicts (e.g. USA-EU, Taiwan question).
Fears of recession: Weaker growth forecasts, especially in the USA or China.
Stronger regulation: New regulatory measures in key industries (e.g. technology, energy) could weigh on corporate profits.
Crypto Market Volatility: A sharp decline in Bitcoin and other cryptocurrencies could lead to a broader market correction.
Energy crisis: Sudden supply shortages or a sharp increase in energy prices due to geopolitical or climatic factors.
Natural disasters: Unexpected climatic events such as storms, floods or droughts could impact certain markets.

For the month of JANUARY 2025 we expect a sideways trend.

STOCK RECOMMENDATION: BITCOIN (BTC/USD)