- Asian Currencies Hit Two-Decade Low, Stocks Mixed: Markets Wrap
A gauge of Asian currencies hit its lowest in almost two decades against the dollar and equities fluctuated,
with gains from a buoyant chip sector countered by declines in Japanese stocks. Benchmarks in Taiwan and
South Korea advanced, helped by SK Hynix Inc. and other technology firms after Microsoft Corp.’s plan to
spend $80 billion on data centers stoked interest. Hon Hai Precision Industry Co., the assembly partner to
Nvidia Corp. and Apple Inc., rallied after the company also known as Foxconn reported better-than-expected
revenue. Japan’s Topix dropped, with Nippon Steel Corp. declining after US President Joe Biden blocked the
company’s planned $14.1 billion takeover of United States Steel Corp. US equity futures pointed to a weaker
open on Wall Street later in the day. The up-and-down action in Asian stocks suggests investors are wary of
piling on more risk due to looming US-China trade tensions. While monetary policy easing, Beijing’s stimulus
measures, and AI-driven optimism may power gains, tariffs threaten to undermine momentum. - S&P 500, Nasdaq snap five-day losing streak, but still close lower on the week
Stocks closed higher Friday as Wall Street recovered following a shaky start to the new year. The S&P
500 closed up 73.92 points, or 1.26%, at 5,942.47, and the Dow Jones Industrial Average advanced 339.86
points, or 0.8%, to end the day at 42,732.13. The Nasdaq Composite gained 340.88 points, or 1.77%, to close
at 19,621.68. Tech stocks were a bright spot for the market on Friday. Chip giant Nvidia climbed 4.7%, while
server maker Super Micro Computer jumped 10.9%. Those stocks could benefit from continued spending on
artificial intelligence, as will Constellation Energy and Vistra, with shares up 4% and 8.5%,
respectively. Microsoft announced Friday that it would spend $80 billion on AI-enabled data centers in fiscal
2025, and power producers have been boosted by the trend. The rally on Friday was broad, though some of
the best performers were also big winners during last year’s rally. - Oil hovers at highest since Oct on cold weather, China stimulus
Oil prices hovered at their highest since October on Monday as investors eyed the impact on global fuel
demand from colder weather in the Northern Hemisphere and Beijing’s economic stimulus measures.
Brent crude futures rose 15 cents, or 0.2%, to $76.66 a barrel by 0125 GMT after settling on Friday at its
highest since Oct. 14. U.S. West Texas Intermediate crude gained 22 cents, or 0.3%, at $74.18 a barrel after
closing on Friday at its highest since Oct. 11. Beijing is cranking up fiscal stimulus to revitalize the faltering
economy, announcing on Friday that it will sharply increase funding from ultra-long dated treasury bonds in
2025 to spur business investment and consumer-boosting initiatives. Also, its central bank said on Friday it
will cut banks’ reserve requirement ratio and interest rates at a proper time. Last year, slowing economic
growth and a transition to cleaner fuels in its transport sector weighed on crude imports and fuel demand in
China, the world’s largest oil importer and No. 2 consumer. - Gold set for weekly rise; eyes on Fed, Trump’s 2025 policies
Gold prices inched higher on Monday, supported by a softer dollar, while investors awaited a slew of U.S.
economic data including the December nonfarm payrolls report for further guidance on the Federal
Reserve’s interest rate stance. Spot gold rose 0.2% to $2,643.69 per ounce by 0229 GMT. U.S. gold
futures climbed 0.1% to $2,656.80. - Canada’s Trudeau Is Likely to Resign This Week, Globe Says
Justin Trudeau is expected to announce his resignation as leader of Canada’s Liberal Party this week, the
Globe and Mail reported, a move that would trigger a contest to replace him as prime minister. Trudeau has
been under pressure from elected lawmakers in his party to quit for months. That has only intensified since
Chrystia Freeland, his finance minister, stepped down on Dec. 16, saying she and the prime minister were at
odds on policy. - Trump Haunts Central Banks Primed for Wary Rate Cuts in 2025
Global central bankers are poised to cut borrowing costs further in 2025, but only warily and with a keen eye
on the policies of incoming US President Donald Trump. While almost all major economies should see
monetary easing during the coming year, the pace is likely to slow. - Biden Decision on US Steel Deal Followed Divide in His Orbit
Two weeks after the US election, hundreds of allies gathered at the White House to soothe Joe Biden in
defeat. Tracking the closed-door bash for clues was a group rarely interested in the routine preening of
Washington: arbitrage traders. The traders, who buy and sell the stock of companies in the middle of mergers
and acquisitions, and investors were hanging on every event for a clue to the fate of the sale of United States
Steel Corp., a hallowed but humbled American giant, to Japan-based Nippon Steel Corp. - Fed’s Kugler, Daly say job not done on inflation
Two Federal Reserve policymakers on Saturday said they feel the U.S. central bank’s job of taming inflation is
not yet done, but also signaled they do not want to risk damaging the labor market as they try to finish that
job. The remarks, from Governor Adriana Kugler and San Francisco Fed President Mary Daly, highlight the
delicate balancing act facing U.S. central bankers this year as they look to slow their pace of rate-cutting. The
Fed lowered short-term rates by a full percentage point last year, to a current range of 4.25%-4.50%. - China Services Gauge Rises to Highest Since May on Stimulus
China’s services activity expanded at the fastest pace since May, a private survey showed, signaling improving
domestic demand after Beijing’s stimulus blitz. The Caixin China services purchasing managers’ index rose to
52.2 in December from 51.5 the previous month, according to a statement released by Caixin and S&P Global
on Monday. The median forecast of economists surveyed by Bloomberg was 51.4. A reading above 50 points
to expansion. - Sam Altman says OpenAI ‘losing money’ on pro subscriptions
OpenAI CEO Sam Altman said that the company is losing money on its pro subscription services, claiming that
people were using it much more than expected. “Insane thing: we are currently losing money on OpenAI pro
subscriptions! People use it much more than we expected,” Altman said in a post on the social media site X
on Sunday evening. OpenAI had in December launched a new subscription tier called ChatGPT Pro, which
offers users nigh-unlimited access to ChatGPT tools for $200 a month. The subscription also provides
exclusive access to a model called o1 pro mode that uses more computing power to provide answers. Apart
from pro, OpenAI has a $20 monthly subscription for access to ChatGPT’s latest model. The company also
provides free access to the AI tool. ChatGPT was one of the fastest-growing applications in terms of users,
seeing over a 100 million users within months of its launch in late-2022. But a slew of media reports over the
past year underscored OpenAI’s unprofitability, as the Microsoft-backed AI giant burnt through cash with
rapidly increasing operational costs- tied largely to the high amounts of processing power required to run its
flagship AI models. While OpenAI does generate steady revenue from its subscription services, especially
through enterprise deals, its operational costs have largely overshadowed its income. A New York Times
(NYSE:NYT) report in September said the firm was set to clock a loss of $5 billion in 2024, against revenues of
$3.7 billion. The firm had in October completed a $6.6 billion funding round that valued the AI giant at $157
billion. Tech giants including Microsoft Corporation (NASDAQ:MSFT) and NVIDIA Corporation
(NASDAQ:NVDA) had participated in the round. - Trump urges Congress to pass his agenda in a single, massive bill
President-elect Donald Trump on Sunday urged his fellow Republicans in Congress to combine his priorities
into one massive bill that would cut taxes, bolster border security and increase domestic energy production.
Trump said Republicans could cover the cost – which could amount to trillions of dollars – by raising tariffs on
imported goods. “Republicans must unite, and quickly deliver these Historic Victories for the American
People. Get smart, tough, and send the Bill to my desk to sign as soon as possible,” he wrote on his Truth
Social platform. - Alcoholic beverage stocks fell in Europe and the US after the US Surgeon General, Vivek Murthy,
outlined the direct link between alcohol consumption and heightened cancer risk, and called for warning
labels
Alcohol is responsible for about 100,000 cases of cancer and 20,000 cancer deaths annually in the US, Murthy
says. Drinking increases risk at least seven types of cancer including cancers of the breast, colorectum,
esophagus, liver, mouth, throat, and voice box (larynx), regardless of the type of alcohol. “Alcoholic-beverage
companies like Constellation Brands serving the $321 billion US market are at greater risk of consumer
backlash tied to possible cancer-warning labels if regulators act on the US surgeon general’s recommendation
to carry them,” wrote Bloomberg Intelligence analyst Kenneth Shea. That said, Shea says he’s “skeptical that
such a warning label mandate will be enacted in the near term, given the political changes in Washington and
the incoming Trump administration’s pro-business stance. - Stellantis shares fell 3.5% as some EV models that had previously received US tax credits for electric
vehicles and plug-in hybrids failed to make it into the new list under tougher rules
Stellantis models including two plug-in hybrid Jeep sport utility vehicles that previously received as much as
$3,750 are now ineligible. The reclassification, part of President Joe Biden’s Inflation Reduction Act, tightens
domestic sourcing requirements for battery parts and the raw materials used to build them. The number of
EVs and plug-in hybrids that currently qualify for a credit is 18 models, down from 22 last year. - Adobe Inc (ADBE US)
Spanish banks lead a decline in European banking stocks, with the country’s lenders seen as more sensitive
than euro-area peers to falling interest rates and bond yields. Santander fell 1.4% amid concern that
upcoming rate cuts from the European Central Bank will pressure the banks’ lending income. - Constellation Energy and Vistra rose after President Joe Biden loosened some safeguards on a tax
credit worth billions of dollars for hydrogen production, a move which Evercore ISI called “a step in the
right direction” for nuclear power providers
The tax credit created by President Joe Biden’s signature climate law now includes a carve-out, sought by
companies including Constellation Energy, that will benefit some existing nuclear power plants, according
to final rules released by the Treasury Department. Constellation shares gained 4% and Vistra +8.5%. “We are
pleased to see that the U.S. Treasury Department has changed course and that the final rule allows a
significant portion of the existing merchant nuclear fleet to earn credits for hydrogen production,”
Constellation president and CEO Joe Dominguez said. - Rivian shares soared 24.5% Friday after the company reported production for the fourth quarter that
beat the average analyst estimate
FOURTH QUARTER RESULTS: Production 12,727 vehicles, estimate 11,458. Vehicles Delivered 14,183,
estimate 13,402. “We believe the beat reflects improved consumer awareness as Rivian continues to
establish its position as a key EV OEM for North America,” Benchmark analysts led by Mickey Legg wrote.
Adds that production is no longer constrained by supply chain shortages, boosting confidence in growth
trajectory. Maintains buy rating, PT $18. - United States Steel shares fell 6.5% after President Joe Biden blocked the sale of the steelmaker to
Japan’s Nippon Steel
“Despite Japan being both a close ally and the largest foreign investor in the US, we view the deal’s demise as
a clear deterrent for foreign entrants interested in buying entry into the US steel market,” JPMorgan analyst
Bill Peterson wrote. Biden’s block of the takeover means US Steel “must now demonstrate the fruits of its $4
billion strategic investment program,” Bloomberg Intelligence analyst Richard Bourke wrote. Says the
program had attracted “steel industry suitors” and the company must “demonstrate that it will close the
performance gap across the cycle and compete effectively against Nucor and Steel Dynamics”.
