Cyclical Stocks: Are They Back?

The European Stock Exchange yesterday gave an excellent overview of the internal conflict that has tormented it for months. Should we let go of the most prolific investments of 2025 to embrace those left behind with presumed high potential?

More concretely, is this the time to abandon defense and finance stocks to (re)throw headlong into cyclical values? It was LVMH and ASML which forced investors to ask themselves the question for the 9th time this year.

The two companies have a (relatively) similar stock market history. Breathtaking rise between 2016 and 2021. Then two years of negative stock market performance in 2022 and 2024 for LVMH and ASML. The French because the poor performance of the Chinese consumer has broken the momentum of the entire luxury sector. The Dutchman because of a fear of dips in the semiconductor investment cycle and a shift to companies more responsive to the AI boom. In 2025, ASML has already resumed its march forward. LVMH, not yet.

But yesterday, both companies published hopeful quarterly figures. There wasn’t much worry about ASML, because the world’s appetite for semiconductors somehow trickles down to the makers of chip-making machines. Management has confirmed flourishing prospects. For LVMH, the exercise was a little less obvious. But the market has started to learn to settle for little with companies in the sector. A commercial tremor was enough for the title to soar by 12% at the close yesterday. And when LVMH gains 12%, the CAC 40 has an easier time posting the best performance of all the Western stock markets: +2% yesterday, in an atmosphere lightened by the prospect of a political compromise in France (Lecornu is playing his face this morning in Parliament, but with more marbles than last week).

As suggested above, the LVMH / ASML duo pulled European cyclical and technological stocks yesterday. Investors bought a lot of these sectors and sold a lot of defense and financials. Before yesterday’s session and to give you precise (but rounded) indications, finance showed +35% on the clock in 2025 and defense 40%. Cyclical stocks -5% and technology stocks excluding ASML only +5%.

In the United States, the indices started by jumping, before diving, then rebounding. The S&P 500 ended with a gain of 0.4%. This volatility is almost solely fueled by the emotional elevator surrounding the Sino-US trade negotiations. Indeed, the question of lowering the Fed’s key rates is more or less resolved in the short term. And I am tempted to say that that of company results is also decided by anticipation. The first quarterly ones are good, but anyway, the market had decided that they would be, like every time.

So there remains the commercial drama.

Donald Trump and his Treasury Secretary Scott Bessent have resumed the game of good cop, bad cop. The American President added a little fuel to the fire by talking about the return of the trade war with China. Bessent, for his part, raised the possibility of a further 90-day extension of discussions between the two countries, suggesting that this will be played out in South Korea at the end of the month, during the scheduled meeting between Trump and Xi.

Meanwhile, the US President said Indian Prime Minister Narendra Modi has pledged to stop buying oil from Russia. A way to divide and conquer, while paving the way for a trade agreement with India.

The day will be punctuated by a new series of company results, in particular Nestlé, EssilorLuxottica, Pernod Ricard and ABB in Europe, then quite a few financials on Wall Street, including Charles Schwab and Bank of New York Mellon. Without forgetting the ogre of TSMC chips in Asia. In the United States, several statistics should have been published but will not be due to the closure of administrations due to budget impasse. Producer prices and weekly unemployment registrations will thus fall by the wayside. However, the NAHB real estate market index and several public interventions by central bankers are still scheduled.

In Asia Pacific, Tokyo continues its rebound of 1.2%. Mainland China gains 0.3% but Hong Kong drops 0.4%. Other markets are bullish, notably South Korea (+2%) and Australia (+0.9%). The CAC 40 gained 0.2% to 8,091 points in the first exchanges. The SMI rose 0.8% to 12,615 points. The Bel 20 lost 0.15% to 4,971 points.

Today’s economic highlights

See above for US statistics. The whole agenda here.

The quotes are those of the day around 7:00 a.m., the links provide real time:

The main changes in recommendations

• ArgenX: Rothschild & Co Redburn maintains its buy recommendation and raises the price target from 795 to 815 EUR.
• ASML Holding: BNP Paribas Exane remains outperforming with a price target raised from 900 to 920 EUR. Evercore ISI remains outperforming with a price target raised from 755 to 1000 EUR.
• AstraZeneca: Baptista Research goes from outperform to hold with a price target raised from USD 92.40 to USD 93.70.
• Banca Monte Dei Paschi Di Siena: Jefferies starts monitoring for purchase with a price target of 9.30 EUR.
• Centrica: Barclays moves from market weighting to overweight with a price target raised from 180 to 210 GBX.
• EDP Renováveis: Barclays moves from market weighting to overweight with a price target raised from 9.40 to 15 EUR.
• Elisa: SEB Bank goes from buy to hold with a price target reduced from 53 to 49 EUR.
• Endesa: Barclays moves from overweight to market weighting with a price target of 28.60 EUR.
• Exosens: Berenberg starts monitoring for purchase with a price target of 57 EUR.
• Flughafen Zürich: Goldman Sachs moves from buy to hold with a price target of 270 CHF.
• Gestamp Automoción: Bestinver Securities goes from hold to buy with a price target raised from 3.15 EUR to 3.75 EUR.
• GTT: Jefferies starts monitoring for purchase with a price target of 205 EUR.
• Kering: TD Cowen remains to be retained with a price target raised from 240 to 260 EUR. Berenberg goes from hold to sell with a price target of 160 EUR.
• LVMH: Berenberg goes from buy to hold with a price target of 570 EUR. Landesbank Baden-Württemberg maintains its buy recommendation and raises the price target from 550 to 655 EUR.
• NKT: DNB Carnegie moves from hold to buy with a price target raised from 600 DKK to 820 DKK.
• Redeia Corporacion: Barclays goes from overweight to underweight with a price target reduced from 20.30 to 14 EUR.
• Repsol: Morgan Stanley moves from overweight to market weighting with a price target of 15.80 EUR.
• Rexel: Barclays goes from overweight to market weighting with a price target of 30 EUR. Goldman Sachs maintains its buy recommendation and raises the price target from 31 to 34 EUR.
• STMicroelectronics: Aletheia Capital Limited remains to be retained with a price target reduced from 26 to 22 EUR.
• Suominen: Inderes goes from sell to light with a price target reduced from 1.70 EUR to 1.60 EUR.
• UBS Group: Zacks remains at Outperform with a price target reduced from $48.30 to $46.50.
• Veolia Environnement: Barclays remains overweight with a price target reduced from 39 to 38.50 EUR.

In France

Important announcements (and less important… I should point out that the information is given immediately before the opening and does not prejudge the color of the shares during the session)

• Altice rejects the takeover offer for SFR submitted by Bouygues, Orange and Free, which persist.
• Pernod Ricard posted a turnover down 7.6% in the first quarter.

• Canada threatens to sue Stellantis for transferring Jeep production to the United States, according to Bloomberg.

• Orange plans to recover 400 to 500 million euros from the sale of 50% of its shares in its data center business in France, according to Bloomberg.
• EssilorLuxottica acquires Swiss medtech “RetinAI”.
• Société Générale completes its share buyback program.

• Traffic at Vinci Airports increased by 4.2% in the third quarter.

• Sartorius Stedim Biotech is aiming for the high end of its forecast range.
• FDJ United is targeting a turnover of more than 3.7 billion euros in 2025.
• OPmobility has signed a letter of intent for global cooperation with Chery Automobiles.
• SRP Groupe has signed a letter of intent for the sale of The Bradery to its founders
• GeNeuro postpones the publication of its half-yearly financial report.
• The main publications of the day : GL Events, Catana, Maurel, OSE Immuno, Thermador, LightOn, Pullup, Hydrogen Refueling, MGI Digital, Netgem, Catering International, Cibox, Drone Volt… Le reste ici.

In the big world

Important (and not so important) announcements

D’Europe

• The main publications of the day:
  • Nestlé sees its sales decline over nine months and plans to cut 16,000 jobs.
  • ABB reports an increase in its net profit and turnover in the third quarter.
  • Sartorius AG revises its forecast upwards after nine-month sales growth.
  • Merck KGaA confirms FY25 net sales guidance and releases mid-term guidance.
  • VAT Group revises its forecasts downwards.
  • Flatexdegiro has revised upwards its forecasts for the 2025 financial year.
  • Canal+ confirms its outlook for the 2025 financial year.
  • Nordea beats third-quarter profit estimates.
• Novo Nordisk will buy a drug candidate for rare blood diseases from Omeros.

• Novartis’ Fabhalta meets primary endpoint in phase III study in kidney disease.

• Givaudan opens a new biotechnology innovation center in France.

• ISS recommends that Staar Surgical shareholders reject Alcon’s offer.

• Ems-Chemie finalizes the takeover of Eftec China.
• The main publications of the day : ABB, Industrivärden AB, VAT Group, Nordea Bank, Nestlé, EQT, Investor AB…

From North America

• Stocks that rise outside the session after their quarterly: JB Hunt (+12%)…

• Stocks which fall outside the session after their quarterly results: United Airlines (-3.3%), Becton, Dickinson (-3%)…

• Apple’s new AI chief Ke Yang is reportedly leaving the company for Meta, according to Bloomberg.

• BlackRock, in consortium with several companies including Nvidia, will buy data center operator Aligned Data Centers for $40 billion.

• American cybersecurity provider F5, Inc victim of intrusion blamed on China.

• The main publications of the day : Charles Schwab, Marsh & McLennan, CSX Corporation, M&T Bank Corporation, East West Bancorp, Bank of New York Mellon Corporation, Snap, KeyCorp, US Bancorp, The Travelers Companies, Truist Financial Corporation, Interactive Brokers…

From Asia and beyond

• TSMC reports profit that beats expectations and reaches a record level in 3rd quarter
• Santos is lowering its production forecasts for 2025 due to a technical problem at the Barossa site.
• The main publications of the day : TSMC, Santos, Hygon Information Technology, Wipro, Infosys…

The rest of the global publications calendar here.

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