- Asian Stocks Slip as Tech Drags, China Fluctuates: Markets Wrap
Stocks in Asia declined as investors weighed if the artificial intelligence rally still has room to run. Chinese
stocks fluctuated ahead of a press briefing on Thursday. MSCI’s Asia Pacific Index fell for a third session, with
chip stocks including SK Hynix Inc. and Samsung Electronics Co Ltd notching losses after tepid outlook from
key equipment supplier ASML Holding NV. Futures for US stocks edged higher, while those for European
equities slipped. Treasuries were steady during trading in Asia. - Dow closes 300 points lower, retreating from record; Nvidia drags down Nasdaq
Stocks tumbled Tuesday, taking a breather from their rally, as traders sifted through the latest corporate
earnings reports. The Dow Jones Industrial Average lost 324.80 points, or 0.75%, closing at 42,740.42. The 30-
stock average touched a fresh intraday record before sliding. The S&P 500 slipped 0.76% to end at 5,815.26,
and the Nasdaq Composite fell 1.01% to 18,315.59. ASML tanked 16% as chipmakers took a dive. The
company’s CEO warned of cautiousness among customers and said a recovery is more gradual than
previously expected. Nvidia and AMD shed 4.7% and 5.2%, respectively. The VanEck Semiconductor ETF
(SMH) dropped 5.4% for its worst day since Sept. 3. - Oil steadies after sharp falls as Middle East uncertainty persists
Oil rose in early Asian trade on Wednesday on continued uncertainty over conflict in the Middle East, after
falling as much as $5 this week to the lowest levels since early October on demand concerns. Brent
crude oil futures rose 24 cents, or 0.3%, to $74.49 a barrel by 0054 GMT. U.S. West Texas Intermediate
crude futures dropped 27 cents, or 0.4%, to $70.85 per barrel. Oil prices tumbled more than 4% to a near
two-week low on Tuesday due to a weaker demand outlook and after a media report said Israel would not
strike Iranian nuclear and oil sites, easing fears of a supply disruption. - Gold ticks up as Treasury yields slip; U.S. retail sales data in focus
Gold prices inched higher on Wednesday, as U.S. Treasury yields eased, while market participants waited for
more U.S. economic data to determine the number of interest rate cuts the Federal Reserve is likely to
deliver in the near term. Spot gold rose 0.3% to $2,667.97 per ounce by 0217 GMT, $17 shy of a record high
hit last month. U.S. gold futures gained 0.2% to $2,683.80. The 10-year Treasury yields slipped for a third
straight session, making zero-yield bullion more appealing. - Chinese Stocks Flirt With Correction as Investor Patience Wanes
Chinese stocks dipped after early fluctuations, in a sign of growing disappointment over the pace of stimulus
rollout. The CSI 300 Index was down 0.2% as of mid-day break after falling as much as 1.3% during morning
trading, which took declines from an Oct. 8 high to more than 10%. A gauge of Chinese shares listed in Hong
Kong gained around 0.7%, reversing an earlier loss. - Southeast Asia’s Central Banks Face Dueling Rate Calls
Three of Southeast Asia’s biggest economies will unveil monetary policy decisions from 3 p.m. Singapore time
today, influenced by everything from politics, inflation and currency volatility to geopolitical risks. Bank
Indonesia last month surprised markets with an early rate cut, but recent rupiah weakness means a majority
of analysts expect officials to hold. The Philippines central bank has strongly flagged it will keep lowering
rates. And the Bank of Thailand is expected to continue defying government calls to cut borrowing costs,
despite weak growth and inflation that’s below the bottom of its target range. - Xi’s Stronger Grip on Legislature Shows Lack of Checks on Power
As the world waits for China’s lawmakers to put a price tag on fiscal stimulus, one thing is increasingly clear:
Anything they produce will reflect the growing control of President Xi Jinping over all aspects of government
and society. Nearly 70% of laws made this year feature language explicitly affirming the party’s authority,
exploding from 4% in 2018, according to a Bloomberg News analysis of legislative records. While the majority
of such documents concern the running of state organs, national security or defense, others relate more
directly to risks in the economy. - Trump Defends Tariff Plan While Pressing for More Fed Influence
Republican presidential candidate Donald Trump defended his plans to overhaul the US economy through
dramatic tariff increases and more direct consultation with the Federal Reserve, arguing that his policies
would result in substantial growth despite projections that his agenda would fuel inflation and spike the
national debt. It’s going to have a massive effect, positive effect, Trump told Bloomberg News Editor-inChief John Micklethwait on Tuesday in an interview at the Economic Club of Chicago. - Israel Vows to Make Its Own Decision on How to Attack Iran
Israeli Prime Minister Benjamin Netanyahu asserted the country is free to act as it chooses in a counter-strike
against Iran after a report suggesting his government is heeding US pleas to keep nuclear and energy facilities
off its target list to limit the risk of escalation. We listen to the opinions of the United States, but we will
make our final decisions based on our national interests, Netanyahu’s office said Tuesday. - ASML Holding NV’s shares plunged 15.6% after it booked only about half the orders analysts expected,
a startling slowdown for one of the bellwethers of the semiconductor industry
The company, which makes the world’s most advanced chipmaking machines, lowered its guidance for 2025
and reported bookings of €2.6 billion ($2.8 billion) in the third quarter, missing an average estimate of €5.39
billion by analysts. It now appears the recovery is more gradual than previously expected. This is expected to
continue in 2025, which is leading to customer cautiousness, ASML Chief Executive Officer Christophe
Fouquet said. The weak results were amplified by the company mistakenly releasing its financial results a day
earlier than scheduled. The chip industry is experiencing strangely uneven times. In areas such as artificial
intelligence accelerators, companies like Nvidia can’t keep up with demand. But in other sectors, including
automotive and industrial, it’s in a prolonged slump with customers cutting back orders because they have
too much inventory. Intel Corp. is cutting expenses in a restructuring that includes delays to planned factories
in Germany and Poland, while memory chipmakers such as Samsung Electronics Co. and SK Hynix Inc. are also
being careful with spending. - Ericsson AB shares rose 10.8% to their highest in two years after the telecom equipment company’s
deal with AT&T Inc. helped push third-quarter earnings above analysts’ estimates
Adjusted earnings before interest and taxes were 7.3 billion kronor ($699 million), the company said. That
compared to an average of 5.6 billion kronor forecast by analysts. North American sales grew by 55% year
over year, helped by strong deliveries related to our recent AT&T contract win, Chief Executive Officer Börje
Ekholm said. Sales in Europe were also growing amid an otherwise very challenged market for network
technology, he added. Ericsson has weathered a difficult telecom equipment market for the past several
quarters as operators scaled back or delayed their network investments. The company responded with
aggressive cost-cutting measures, including slashing thousands of jobs, which, along with securing a $14
billion contract with AT&T last December, has won investor confidence. Chief Financial Officer Lars
Sandström said that sales this quarter were exceptionally high after exceptionally low sales at the start of the
year. He expects them to stabilize over the next few quarters. - Johnson & Johnson reported stronger-than-expected third-quarter earnings, driven by surging sales of
the cancer medicine Darzalex
The company however, lowered its full-year guidance to account for a medical device acquisition. J&J is
working to maintain growth as it faces the loss of exclusivity for the psoriasis treatment Stelara. Biosimilar
copies of the drug entered the European market this summer, and US launches are expected early next year.
Still, the company has been bolstered by new approvals expanding the use of its cancer and immunology
medicines. Adjusted profit was $2.42 a share, surpassing Wall Street’s average estimate of $2.19.
Pharmaceutical revenue rose almost 5%, exceeding expectations by more than $400 million, with sales of
myeloma treatment Darzalex surging over 20%. Demand for the medicine is growing because it’s increasingly
being used to treat newly diagnosed patients, Joe Wolk, J&J’s chief financial officer, said. A few years ago, he
said it was more often used after other treatments failed, a smaller market. The drug is part of the equation
in terms of how we are going to overcome Stelara loss of exclusivity next year, he said. Shares rose 1.5%. - UnitedHealth Group shares fell 8.1% after its forecasts for 2024 and 2025 fell short of investors’
expectations
The company hasn’t issued an early outlook that missed Wall Street’s view for years. The forecast reflects
persistent hurdles, including rising medical expenses and stricter federal reimbursement rules that are
cutting into revenue. UnitedHealth said it sees around $30 a share for the top end of its adjusted 2025
earnings outlook. Analysts were expecting $31.16 a share on average. We anticipate stepping out for 2025
more conservatively than is typical, Chief Executive Officer Andrew Witty said, noting the company will give
detailed guidance in December. He cited lower payments from the US government’s Medicare insurance
program for the elderly, state Medicaid program cuts and increasing medical costs broadly for the lowerthan-expected forecast. Higher medical costs first emerged in the middle of last year, as people who deferred
care during the Covid pandemic returned for surgeries and tests. At the same time, the Biden administration
proposed a series of changes to the Medicare Advantage program to curb practices insurers used to boost
revenue. UnitedHealth is the largest seller of private versions of the program. Witty said the company will
have to further cut operating expenses and more tightly manage medical costs in response.
UnitedHealth also lowered the top end of its 2024 forecast by 25 cents a share, bringing the midpoint of the
range below analysts’ average view. - Bank of America shares rose 0.55% after the bank’s third-quarter net interest income topped analysts’
estimates
THIRD QUARTER RESULTS: Net interest income $13.97 billion, estimate $13.9 billion. Trading revenue
excluding DVA $4.94 billion, estimate $4.57 billion. FICC trading revenue excluding DVA $2.94 billion,
estimate $2.77 billion. Equities trading revenue excluding DVA $2.00 billion, estimate $1.81 billion. Wealth &
investment management total revenue $5.76 billion, estimate $5.63 billion. EPS 81c vs. 90c y/y. Standardized
CET1 ratio 11.8%, estimate 11.9%. RBC Capital Markets’ Gerard Cassidy: A team of analysts led by Cassidy
said third-quarter results were driven by better-than-expected noninterest income, net interest income and a
lower-than-expected provision for credit losses. Rates outperform; PT $46. - Goldman Sachs shares fluctuated between gains and losses on Tuesday after third quarter results.
Some analysts point to strength across core franchises; others note losses associated with the GM card
JPMorgan (overweight): Analyst Kian Abouhossein says this is a strong set of results with strength across key
core franchises. Notes that results are strong compared to the more cautious guidance given at a September
conference. Third-quarter equity sales and trading revenues of $3.5 billion were particularly impressive, and
puts the bank well ahead of peers reporting so far with a large margin on an ongoing basis. Also notes that
FICC revenues are down 12% year-on-year, compared with JPMorgan estimates of -15%, while Platform
Solutions pretax losses of $559 million were slightly higher than JPMorgan estimates. Investment-banking
fees backlog increased quarter on quarter, driven by an increase in advisory. - Citigroup fell 5.1% as analysts noted that net interest income and net interest margins fell slightly
short. RBC flags higher-than-expected expenses and effective tax rate
THIRD QUARTER RESULTS: Markets revenue $4.82 billion, estimate $4.6 billion. FICC sales & trading revenue
$3.58 billion, estimate $3.54 billion. Equities sales & trading revenue $1.24 billion, estimate $1.03 billion.
Banking revenue $1.60 billion, estimate $1.54 billion. Investment banking revenue $934 million, estimate
$874.5 million. Net interest income $13.36 billion. Revenue $20.32 billion. EPS $1.51. Common equity Tier 1
ratio 13.7%, estimate 13.7%. YEAR FORECAST: Sees adjusted expense $53.5 billion to $53.8 billion, saw about
$53.5 billion to $53.8 billion. Still sees adjusted revenue about $80 billion to $81 billion. Vital Knowledge: Net
interest income and net interest margins both fell a bit short of street expectations, says analyst Adam
Crisafulli ($13.36B/2.33% vs. the Street $13.52/2.39%). However, the investment bank made up for this with
advisory/underwriting revenue and equity trading beating street estimates. The prior 2024 revenue guide is
unchanged at $80-81B while they now see expenses near the upper-end of the prior $53.5-53.8B range,
Crisafulli adds. - Charles Schwab Corp. shares jumped 6.1% after reporting earnings per share that topped analyst
estimates and curbing some of its expensive debt
The company said adjusted earnings per share for the third quarter were 77 cents, beating analyst forecasts.
Adjusted net income for the period was $1.5 billion, up slightly on the prior year. Schwab’s client
transactional cash sweep, which took a hit when customers shuffled funds in search of better-yielding
options, climbed $9.2 billion sequentially, helping the firm reduce costly bank supplemental funding by $8.9
billion. Some might refer to it as an inflection point, though time will tell, Schwab’s outgoing Chief Executive
Officer Walt Bettinger said. Schwab is emerging from what it called one of its most challenging years in
decades last year, as steep interest rate hikes took their toll on its businesses. Customers had yanked their
deposits from Schwab’s bank in search of higher-yielding alternatives, causing the company to seek out more
expensive funding sources. Higher rates also saddled the company with paper losses as the value of its bond
investments took major hits. - Alibaba’s international arm says its new AI translation tool beats Google and ChatGPT
Chinese e-commerce giant Alibaba’s international arm launched an updated version of its artificial
intelligence-powered translation tool that, it says, is better than products offered by Google, DeepL and
ChatGPT. The product supports 15 languages: Arabic, Chinese, Dutch, English, French, German, Italian,
Japanese, Korean, Polish, Portuguese, Russian, Spanish, Turkish and Ukrainian. The idea is that we want this
AI tool to help the bottom line of the merchants, because if the merchants are doing well, the platform will
be doing well, Kaifu Zhang, vice president of Alibaba International Digital Commerce Group and head of the
business’ artificial intelligence initiative, told CNBC.
