New “all-time high” for Microsoft after KI coup

Microsoft shares rose around two percent on Monday after it became known at the weekend that the company has hired the recently fired OpenAI boss Sam Altman to lead the giant’s new AI team. The share price now stands at $377, a new “all-time high”. The tech giant is worth 2,810 billion dollars, equivalent to 30,000 billion kroner at today’s krone exchange rate.

Equity analyst Kirk Materne in Evercore believes it is a clear victory for Microsoft.

“While it remains to be seen how much ‘brain drain’ there will be in OpenAI, we believe the fundamental risk for Microsoft will be largely limited with Altman and the team in place,” he writes in a note, according to Bloomberg News.

On Monday, it became known that over 500 OpenAI employees are threatening to follow Microsoft if the board does not resign and bring Altman back.

More records

It was otherwise a lovely stock market day for US investors. All three key indexes rose sharply, with the technology index Nasdaq Composite leading the way. The index rose more than one percent.

From the bottom of the autumn at the end of October, the Nasdaq index has risen 13 per cent. It is not far from the summer peak, and if it passes it, it will be at its highest level since spring 2022.

It wasn’t just the Microsoft share that reached a new high on Monday. So did the Nvidia share, the day before the computer chip manufacturer – which to some extent has ridden the AI ​​wave – is to present figures for the third quarter.

The number crunchers expect nothing less than an income growth of 170 per cent for the stock market rocket. Not only that: the estimates also point to a growth of almost 200 percent for the fourth quarter, according to CNBC.

According to Bank of America analysts, investors will keep an eye on, among other things, possible China restrictions and the competitive picture when the figures are presented after the close of trading on Tuesday. In particular, it is pointed out how the far smaller competitor AMD is rising in the market for generative artificial intelligence (AI).

Argentine oil jubilation

It wasn’t just tek shares that got a boost on the week’s first trading day.

Boeing shares rose more than four percent after Deutsche Bank upgraded the stock to buy as orders for new planes begin to accelerate.

It was even fiercer for the state-owned Argentine oil company YPF. The company’s American “depositary receipts” rose 40 per cent. Such certificates represent ownership in shares.

The wild price rise comes after a snap election for the right-wing populist Javier Milei, who became Argentina’s new president on Monday night. The country is in financial trouble and Milei’s election promises include dropping the peso in favor of the US dollar, closing the central bank and cutting public spending – as well as privatizing the state’s oil company.

Argentina has suffered from sky-high inflation for several years. In October, the price increase was 142.7 per cent.

On Monday, the Buenos Aires Stock Exchange was closed due to a public holiday. On Friday last week, before the election results were clear, the YPF share rose ten percent in Argentina.

Interest appetite

Long-term interest rates have fallen significantly in the last month. This is attributed, among other things, to weaker inflation than expected. On Friday, however, interest rates rose slightly and they ticked up somewhat further on Monday. But that was before the $16 billion auction of 20-year US government bonds opened.

The sale stopped at 4.78 per cent, one measly basis point lower than the interest rate in the pre-sale which is set after the announcement of the auction, but before the issue. Demand was not strong, but investors were more than willing to buy, writes Bloomberg News.

Wall Street players continue to closely monitor these debt auctions after the US government offered an unusually high premium when it sold 30-year bonds at the start of the month, according to the news agency.

The auction did not have a very large, but definitely immediate, impact on the market. The US ten-year interest rate fell in a short time from 4.46 per cent to 4.41 per cent. It also had an immediate impact on the stock market and helped send the key indices up.

– Solid alternative

Principal Asset Management believes that the mantra that interest rates should be higher for a longer period seems to be justified and points to the “unsustainable” state in which the US fiscal policy finds itself, which leads to a significant increase in the issuance of US government bonds, combined with demand challenges.

“Government bonds offer extremely attractive yields. While the potential for returns may be limited in view of the impending economic slowdown, the assurance of a fixed income on government bonds makes them a solid option for investors who prioritize stability into an uncertain 2024,” writes the management company, according to Bloomberg.

Earlier, interest rate strategist Althea Spinozzi at Saxo had written that the markets were worried that today’s auction would be a repeat of the lukewarm 30-year auction. Then the primary traders, the investment banks that set prices and volumes and are counterparties to the issuers, had to buy close to a quarter of the volumes that were issued. That is almost twice as much as what they have had to absorb on average since the start of the year on that type of paper, according to Spinozzi.

Primary traders must buy the bonds that other bidders do not take in the auctions.

“Therefore, an increase in their share is synonymous with weakened demand,” she wrote in a note ahead of the auction.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For further terms see here.