Asia shares wobble on China angst; long-end US bond yields rise with dollar
Weak China markets dragged broader Asian shares lower on Thursday, while longer-dated U.S. bond yields rose alongside the dollar as investors assessed the monetary policy and inflation outlook in the world’s largest economy. Bitcoin steadied above $90,000 after having surpassed that level in the previous session, turbocharged by Donald Trump’s return to the White House and the view that his administration will be a boon for cryptocurrencies.
Dow, S&P 500 close little changed Wednesday as postelection rally falters
The S&P 500 and the Dow Jones Industrial Average ended Wednesday’s session near the flatline as the postelection rally lost some steam. Traders also contemplated a key inflation report that was in line with expectations. The S&P 500 inched higher by 0.02% to close at 5,985.38, while the 30-stock Dow ticked up 47.21 points, or 0.11%, to 43,958.19. The blue-chip index added as much as 230 points earlier on Wednesday. The Nasdaq Composite ended the day with a 0.26% decline and closed at 19,230.74.
Oil prices dropped slightly early on Thursday on expectations of higher global production amid forecasts for weak demand growth, while a firmer dollar also kept a lid on prices. Brent crude futures were down 6 cents, or 0.08%, at $72.22 a barrel by 0133 GMT. U.S. West Texas Intermediate crude (WTI) futures were down 13 cents, or 0.19%, at $68.30. The U.S. Energy Information Administration has slightly raised its expectation of U.S. oil output to an average 13.23 million barrels per day (bpd) this year, or 300,000 bpd higher than last year’s record of 12.93 million bpd, and up from 13.22 million bpd forecast earlier.
Gold declines to 8-week low on stronger dollar, yields
Gold fell for a fifth straight session on Thursday to hit its lowest level in eight weeks, pressured by a stronger U.S. dollar and rising Treasury yields amid uncertainty over the pace of the Federal Reserve’s interest rate cuts. Spot gold was down 0.6% at $2,559.39 per ounce, as of 0244 GMT, after hitting its lowest since Sept. 19 earlier in the session. U.S. gold futures fell 0.9% to $2,564.00. The U.S. dollar advanced to a one-year high, making gold more expensive for overseas buyers, while Treasury yield rose to its highest since July.
US Inflation Stays Firm for Third Month With 0.3% Core CPI Gain
US inflation remained firm in October, underscoring the ongoing risks Federal Reserve officials face in trying to bring price pressures fully under control. The so-called core consumer price index, which excludes food and energy costs, increased 0.3% for a third month, Bureau of Labor Statistics figures showed Wednesday. Over the last three months it rose at a 3.6% annualized rate, marking the fastest pace since April, according to Bloomberg calculations. Economists see the core gauge as a better indicator of the inflation trend than the overall CPI.
Trump tariffs, and possible exemptions, could provide opportunities for Britain
President-elect Donald Trump’s proposed trade tariffs could prove boon for the U.K., with analysts pointing to potential exemptions, economic upswings and the likely resumption of trade deal talks. I suspect there is some ground for the U.K. to agree some kind of concession [or] carve-out, should the U.S. place tariffs on imports from the U.K., Capital Economics’ Paul Dales told CNBC. The U.S. is the U.K.’s largest trading partner, but unlike China and the EU, the trade gap between the two is far smaller.
Scholz Advisers Slash German Growth Forecast for Next Year
Germany’s economy will hardly grow next year as underlying problems add to cyclical weakness, according to Chancellor Olaf Scholz’s independent panel of experts. Gross domestic product is set to increase by just 0.4% in 2025, the Council of Economic Experts predicted in a twice-yearly report published Wednesday in Berlin. While other forecasters have also scaled back earlier growth projections, that’s just a fraction of the 1.1% predicted by the government a month ago. In May, the advisers still anticipated a pickup in growth to 0.9% next year after slight expansion in 2024. That latter prediction has been revised to foresee a contraction of 0.1%.
US Sees Wider Budget Gap at Fiscal Year Start on Health Spending
The US budget deficit widened further at the start of the fiscal year, driven primarily by higher spending on health and defense as a surge in debt-interest costs slowed. The gap for the month of October was $121 billion after adjusting for calendar differences, Treasury Department data released Wednesday showed. That’s an 89% jump from October last year, though only 22% higher after accounting for distortions from an influx of deferred tax revenue in 2023, an official said.
Bitcoin briefly tops $93,000 for the first time as investors digest postelection gains, inflation data
Bitcoin rose above $93,000 for the first time on Wednesday, adding to its postelection rally, as traders pored through October inflation data. The price of the flagship cryptocurrency was last higher by more than 1% at $91,201.09. At one point, it briefly rose to a fresh record of $93,469.08. Traders were digesting the most recent consumer price index, which showed prices increased 0.2% in October, bringing the 12-month inflation rate up to 2.6%. That was in line with expectations. Bitcoin, which has recently benefited from a big postelection rally across risk assets, is seen by many investors as a hedge against potential fiscal policy that could spark inflation.
Japan is ramping up efforts to revive its once dominant chip industry
Japanese Prime Minister Shigeru Ishiba has announced a plan that will provide support worth 10 trillion yen ($65 billion) or more by fiscal 2030. The funding is part of efforts to revitalize the country’s semiconductor industry through it’s state-backed chip venture, Rapidus, and by onshoring facilities from leading chipmakers.
Yields on New China Dollar Bonds Fall Below Treasuries in Debut
China just borrowed dollars in global credit markets at essentially the same cost as the country that prints them, and traders immediately drove the yields on the bonds down even further. The Asian nation raised $2 billion from three- and five-year notes that yield just one and three basis points over similar-maturity Treasuries, respectively. Then once trading kicked off Thursday, spreads tightened to about 24 and 25 basis points under Treasuries, traders said. That adds to signs of strong demand that stood out throughout the debt sale process. Bids for the $2 billion deal surpassed $40 billion, 20 times what was on offer, according to a person familiar with the matter.
Cisco Systems Inc., the biggest maker of computer networking equipment, delivered better-than expected quarterly results and an upbeat outlook for the current period, but a conservative annual forecast brought a muted reaction from investors
Sales will be $55.3 billion to $56.3 billion in fiscal 2025, which runs through July, Cisco said. Though that was an uptick from its previous outlook, the midpoint of the range fell short of the $55.9 billion that analysts predicted. The concerns weighed on the shares in afterhours trading, with the stock falling 3.2%. Sales will be $13.75 billion to $13.95 billion in the fiscal second quarter, which ends in January, the company said. That compares with an average analyst estimate of $13.74 billion. Cisco is seeing a strong rebound in spending by corporations across all sectors and geographies, CFO Herren said. It’s also benefiting from spending on the machinery needed to support AI computing. The company is well ahead of its $1 billion target for orders from the biggest data center operators for that type of gear, he said. But the US federal government, Cisco’s biggest customer, is a weak spot. The change in administrations and the nature of federal budgeting means that some projects aren’t being greenlit, Herren said. Still, Cisco is confident that the orders will return quickly once a new budget is in place. Sales declined 6% to $13.8 billion in the first quarter, which ended Oct. But that was better than the $13.77 billion estimated by analysts. The revenue growth expected in the current period would be the first gain in a year.
David Einhorn revealed a new position in agriculture equipment company CNH Industrial NV, whose shares rose 8.5% afterhours
The stock can double in the next couple years, the billionaire founder of Greenlight Capital said Wednesday at the CNBC Delivering Alpha Conference. The company makes equipment such as tractors and combines, and Einhorn joked that he wouldn’t be revealing the long position while riding farming equipment. He recently announced an investment in Peloton while working out on the exercise bike. It’s exactly the kind of situation that absolutely nobody cares about right now, because it’s cheap and the news over the next period of time probably isn’t going to be very good, Einhorn said, pointing to low agriculture prices and equipment being in a down cycle. Greenlight has also increased its bets on inflation, anticipating that President-elect Donald Trump’s immigration policies will boost prices, Einhorn said. The swift outcome of the election came as a surprise to Einhorn, but he said the decisive victory benefits political stability. While he continues to view the stock market as overvalued, Einhorn doesn’t see the market crashing anytime soon.
Space Stocks Get a Lift From Rocket Lab’s Record Earnings Rally
AST SpaceMobile, Planet Labs and Intuitive Machines are among space-related stocks outperforming Wednesday in New York trading after Rocket Lab USA’s upbeat earnings and outlook. Shares of RKLB surged as much as 54%, an intraday record. ASTS climbed as much as 29% to reach their highest since Sept. 4. The developer of a space-based cellular broadband network, a rival to SpaceX’s Starlink, is tentatively set to give its quarterly update Thursday after the close.
Snowflake shares rose 4.2% Wednesday, after the software company hosted its annual Build conference, where it introduced product updates that analysts were encouraged by
Barclays (equal weight, PT $142): The firm left the event more positive around Snowflake’s pace of innovation and ability to capture value of the rapidly evolving genAI space. The progress supports SNOW’s accelerated pace of innovation under its new CEO and strengthens its position as a multi-faceted data platform. KeyBanc Capital Markets (overweight, PT $150): The firm is encouraged by continued progression of the AI roadmap, as well as newly disclosed commentary that ‘thousands’ of enterprises are leveraging Cortex AI. Truist Securities (buy, PT $210): From an AI perspective, we continue to view the company’s footprint in cloud data warehousing as providing a favorable competitive position and see the investments that they have made in the AI product over the last year as driving a more competitive offering.
