- Asian Stocks Rise as Traders Shrug Off Hawkish Fed: Markets Wrap
(Bloomberg) — Asian stocks tracked US peers higher as the Federal Reserve’s cautious outlook on interest rates did little to alter Wall Street’s bets on cuts. Equity benchmarks rose in Australia and South Korea, while futures for Hong Kong stocks pointed to markets opening higher on Thursday. Japanese shares were mostly flat.
- Bond Market Splits from Fed Again by Betting on 2024 Rate Cuts
(Bloomberg) — Bond traders loaded back up on interest-rate-cut bets — and even the pushback coming out of the Federal Reserve did little to shake their conviction. Policymakers kept rates steady at a more than two-decade high and dialled back their forecasts to pencil in just one quarter-point rate cut by year end, about half of what markets are pricing in.
- Blinken Casts Doubt on Cease-Fire Hopes After Hamas Responds
(Bloomberg) — Secretary of State Antony Blinken cast fresh doubt on the prospects that Israel and Hamas would agree to a cease-fire proposal put forward by the US, saying some of the militant group’s latest demands were unacceptable. Blinken offered the downbeat assessment after meeting senior leaders in Qatar, who along with Egyptian officials have mediated indirect talks between the two sides in a bid to end the war, which began when Hamas stormed into Israel on Oct. 7.
- Macron Says He Won’t Quit If His Party Loses French Election
(Bloomberg) — French President Emmanuel Macron said he won’t resign if his party suffers a poor result in a snap parliamentary election as he appealed to voters not to succumb to the “fever of the extremists.” French bonds tumbled on Tuesday following a report that the president had discussed resigning if he suffers a second big defeat in succession with investors on edge about a potential takeover by Marine Le Pen’s far-right National Rally.
- Fed Signals One Rate Cut This Year, But Keeps Door Open to Two
(Bloomberg) — Federal Reserve officials dialled back their expectations for interest-rate cuts this year, though Chair Jerome Powell kept the door open for more as he emphasized the new forecasts represented a conservative approach. Policymakers’ updated economic projections, published after a two-day policy meeting in Washington on Wednesday, showed they expected to lower borrowing costs only once in 2024 instead of the three reductions pencilled in previously, according to their median estimate.
- Inflation slows in May, with consumer prices up 3.3% from a year ago
The consumer price index showed no increase in May as inflation slightly loosened its stubborn grip on the U.S. economy, the Labor Department reported Wednesday. The CPI, a broad inflation gauge that measures a basket of goods and services costs across the U.S. economy, held flat on the month though it increased 3.3% from a year ago, according to the department’s Bureau of Labor Statistics.
- Mexico Prepays Dollar Bond Due 2025 in Bid to Calm Markets
(Bloomberg) — Mexico paid off a dollar bond due next year in a bid to calm a selloff triggered by the ruling party’s sweeping victory in this month’s election. The government called the $894 million outstanding on a note due April 2025, part of $4 billion worth of refinancings it is carrying out for upcoming maturities, according to a statement from the Finance Ministry.
- BOJ to Mull Bond Buying Cuts as July Hike Hints Sought: Guide
(Bloomberg) — The Bank of Japan is widely expected to consider reducing its bond purchases at this week’s policy meeting, with investors also alert for any signals on the prospects for an interest rate hike next month. Governor Kazuo Ueda’s policy board will hold its benchmark rate in a range between 0 and 0.1% at the Friday conclusion of its two-day gathering, according to all but one economist surveyed by Bloomberg. More than a half said the bank will slow the pace of bond buying from roughly ¥6 trillion ($38.2 billion) per month.
- Russia Leads Adversaries Looking to Sway Vote, US Officials Warn
(Bloomberg) — A growing number of US adversaries, led by Russia, are looking to influence the 2024 presidential election through for-hire commercial firms and the use of generative artificial intelligence, American officials said Wednesday. Russia poses the most serious threat in this election cycle, according to Office of the Director of National Intelligence officials who asked not to be identified discussing non-public assessments.
- Activist Hedge Fund Fined for Secret Payments to Researcher
(Bloomberg) — A sweeping US probe of activist short sellers has yielded its first notable punishment, while offering a rare glimpse into controversial collaborations between bearish researchers and hedge funds that place big bets against companies. The Securities and Exchange Commission fined affiliated money managers Anson Funds Management and Anson Advisors Inc. a total of $2.25 million on Tuesday, accusing them of hiding payments to an unidentified publisher of bearish research.
- Two London Hedge Fund Giants Said to Explore Abu Dhabi Outposts
(Bloomberg) — Two of London’s biggest hedge funds are considering plans to open offices in Abu Dhabi, bolstering the city’s status as an emerging hub for financial firms. Marshall Wace and Capula Investment Management have held talks with Abu Dhabi authorities to potentially expand operations into the emirate, according to people with knowledge of the matter who asked not to be identified because the details are private.
- Apple overtook Microsoft in market capitalization on an intraday basis on Wednesday, although the stock faded in the last hour of trading, preventing the iPhone maker from closing above the software giant in size.
Shares of Apple closed up 2.9%, well off their session high of 6.3%; Microsoft ended with a gain of 1.9%. Based on closing prices, Apple’s market cap of $3.267 trillion is slightly under Microsoft’s at $3.278 trillion. Apple hasn’t closed above Microsoft in size since January. Recent strength in Apple followed an event focused on AI, which fuelled hopes that customers will pay up for the next generation of iPhones. The stock has also been supported by a positive quarterly report in early May, when Apple also announced the largest stock buyback program in US history at $110 billion.
- Lululemon shares fell 2.6%, erasing an earlier advance, after Jefferies analyst Randal Konik said a recent visit to a UK store revealed “ample discounting,” adding to view that “performance has peaked and competition is rising.”
Konik visited a location in Battersea; the store had a “Summer Sale” with “ample discounting” in both Men’s and Women’s and across several product categories/sizes, the analyst writes. In addition, there was “significant inventory” outside of Lululemon’s core colours, which suggests to him that “fashion risk remains elevated”. Konik rates LULU with an underperform, PT $240. LULU has 26 buys, 8 holds and 4 sells; with an avg. PT $402: according to data compiled by Bloomberg.
- Broadcom Inc., a chip supplier for Apple Inc. and other big tech companies, rallied 14.6% in afterhours trading after its latest results and annual forecast topped estimates, lifted by robust demand for artificial intelligence products.
Second-quarter profit was $10.96 a share, excluding some items, the company said. That compared with an average estimate of $10.80. Revenue rose to $12.5 billion, compared with a projection of $12.1 billion. Sales in the full fiscal year, which runs through October, will be about $51 billion, the company said. Analysts had projected about $50.6 billion. The race to build artificial intelligence systems has benefited semiconductor companies like Broadcom, even though they don’t sell the highly prized AI chips made by Nvidia Corp. Broadcom offers a range of components that are used in computing and networking — including ones that are vital to data centres — giving it a boost from the trend. Broadcom’s acquisition of VMware also bolstered results, Chief Executive Officer Hock Tan said. Revenue from AI products alone reached a record $3.1 billion in the period, Tan said. Total AI sales for fiscal 2024 will be more than $11 billion, Tan predicted. And non-AI chip revenue, which had been sluggish recently, bottomed out in the second quarter. It is “likely to recover modestly for the second half of fiscal ’24,” he said. The company also announced a 10-for-1 stock split, effective July 15.