- Asian Stocks Drop on Inflation Risk, China Fears: Markets Wrap
Stocks in Asia followed their US peers lower after Treasuries slumped on bets the Federal Reserve will delay
cutting interest rates and concerns about China’s stuttering economy sapped sentiment. MSCI’s gauge of
regional equities slipped 0.6%. heading for its biggest one-day drop in more than two weeks. China’s
benchmark stock index slid to the lowest since September with investors concerned government stimulus
measures will fail to revive the economy. The S&P 500 sank more than 1% Tuesday as a report on US service
providers showed inflation hitting the highest since early 2023. - Dow falls more than 170 points, Nasdaq loses nearly 2% as Nvidia leads tech sell-off
Stocks fell Tuesday as strong economic data raised questions about the possibility of Federal Reserve rate
cuts later this year, leading to a spike in Treasury yields. Declines across major tech stocks also dragged the
market lower. The S&P 500 dipped 1.11% to close at 5,909.03. The Dow Jones Industrial Average lost 178.20
points, or 0.42%, and ended at 42,528.36. The Nasdaq Composite slid 1.89% to 19,489.68. The major
averages traded higher earlier in the day before rolling over. Data released Tuesday by the Institute for
Supply Management reflected faster-than-expected growth in the U.S. services sector in December, adding to
concerns about stickier inflation. Bond yields rose on the data, adding onto the recent climb in yields fuelled
largely by bets that the incoming administration’s tariff plans could boost inflation. The 10-year Treasury
yield was last up more than 7 basis points at 4.693% and earlier hit an intraday high of 4.699%, its highest
level since April. - Oil prices up on tighter OPEC supply, U.S. jobs data
Oil prices rose on Wednesday as supplies from Russia and OPEC members tightened, while data showing an
unexpected increase in U.S. jobs openings pointed to expanding economic activity and consequent growth
in oil demand. Brent crude was up 32 cents, or 0.42%, to $77.37 a barrel at 0135 GMT. U.S. West Texas
Intermediate crude rose 42 cents, or 0.57%, to $74.67. Oil output from the Organization of the Petroleum
Exporting Countries fell in December after two months of increase, a Reuters survey showed. Field
maintenance in the United Arab Emirates offset a Nigerian output hike and gains elsewhere in the group.
In Russia, oil output averaged 8.971 million barrels a day in December, below the country’s target, Bloomberg
reported. On the economic front, job openings rose in the United States in November and the number of
layoffs was low, while workers were reluctant to quit, the Job Openings and Labor Turnover Survey
showed. Oil prices rise with economic growth. - Gold inches lower as U.S. yields, dollar rise on strong data
Gold prices edged lower on Wednesday, pressured by higher U.S. Treasury yields and a stronger dollar after
data suggested the Federal Reserve might slow the pace of rate cuts this year. Spot gold slipped 0.1% to
$2,648.16 per ounce, as of 0308 GMT. U.S. gold futures fell 0.1% to $2,662.30. - Euro zone inflation rose to 2.4% in December, meeting expectations
Annual inflation in the euro zone rose for a third straight month to reach 2.4% in December, statistics agency
Eurostat said Tuesday. The preliminary reading was in line with the forecast of economists polled by Reuters
and marked an increase from a revised 2.2% print in November. Core inflation held at 2.7% for a fourth
straight month while services inflation nudged up to 4% from 3.9%. This won’t stop the [European Central
Bank] from cutting interest rates further, said Jack Allen-Reynolds, deputy chief euro zone economist at
Capital Economics. “The high level of services inflation is partly due to temporary effects that should fade this
year.” - UK’s long-term borrowing costs hit highest level since 1998
U.K. borrowing costs ticked higher on Tuesday, after an auction of 30-year Treasury gilts brought yields on
the long-term bonds hit their highest level in almost three decades. By 2:02 p.m. London time, the yield on
the 30-year gilt, a U.K. government bond, climbed 3 basis points to 5.212%, its highest level since the late
1990s. The move came after the U.K. Debt Management Office auctioned off £2.25 billion ($2.83 billion)
worth of gilts with a 30-year maturity and a coupon of 4.375% at a minimum yield of 5.194%, representing a
discount over the bond’s face value. The yield on 20-year gilts added 3 basis points to trade at 5.153%.
Yields on gilts with shorter maturity terms also moved higher on Tuesday. The U.K.’s 10-year gilt yields gained
3 basis points to trade at 4.641%, while yields on the 2 and 5-year gilts were slightly higher in the early
afternoon. - China Boosts FX Support as Yuan Heads Toward Policy Red Line
China stepped up its support for the yuan as the managed currency weakened toward a policy no-go area —
the edge of its allowed trading range against the dollar. The central bank set a daily reference rate that was
stronger than analyst estimates by the most since April on Wednesday, with the currency approaching a
record low offshore this week. State-owned banks continued to scale back their yuan lending in Hong Kong,
making it costlier for investors to build short positions, traders said. The moves suggest China is not yet ready
to let go of its tight grip on the currency, despite pressure coming from a yawning interest-rate discount to
the US, looming tariff threats and a sluggish local economy. Beijing fears disorderly capital outflows that can
result in a panic selloff of yuan-denominated assets and derail an already lackluster recovery. - US Blacklist of China’s Tech Giants Risks Faster Decoupling
The US’s latest move to expand its list of Chinese military companies risks doing more than tanking the shares
of some of its most valuable companies: It also threatens to accelerate decoupling of the world’s biggest
economies. The Biden administration on Monday added Tencent Holdings Ltd., the world’s largest gaming
publisher, and Contemporary Amperex Technology Co. Ltd., a key battery supplier to Tesla Inc., to its list of
“Chinese military companies”, firms it says are working directly or indirectly with the People’s Liberation
Army, or contributing significantly to China’s industrial base. - Aviation industry faces a slew of challenges , problems that will take years to resolve
The aviation industry is bracing for another year of difficulties, as delivery delays at Boeing and supply chain
problems are set to continue into 2025, say aviation consultants. Sunday marked one year since a door panel
blew off a Boeing 737 Max 9 operated by Alaska Airlines, an event that reignited a firestorm of questions
about Boeing’s quality and safety standards. Since then, the company has instituted a series of changes,
including mandatory workforce training and increased inspections, according to a company statement
published Friday. Boeing also said it improved its “Speak Up” system to encourage employees to report
workplace concerns. But that’s not enough, Mike Boyd, president and co-founder of aviation consulting firm
Boyd Group International, told “Squawk Box Asia” Monday. - Nvidia shares fell 6.2% on Tuesday, retreating from record highs after the chipmaker’s CEO unveiled a
number of new chips, software and services related to artificial intelligence
Stifel (buy, PT $180): “Nvidia’s announcements today are significant, but long-tailed,” meaning they will have
minimal impact to Stifel’s model over the near term. The developments are “further deepening the
company’s competitive moat and positioning around potentially multi-billion dollar advancements tied to AI
agents, robotics, autonomous vehicles, graphics and PC and edge-device inferences in the coming years”.
Benchmark Co. (buy, PT $190): CEO Jensen Huang “made several technically interesting announcements that
together further extend the company’s hardware and software industry leadership”. However, “we believe
many investors were hoping for more concrete progress updates on the ramp of Blackwell and some input as
to the company’s progress with its next generation GPU platform. - Tesla fell 4.1% in the wake of a Bank of America downgrade to neutral from buy
Since the firm’s previous upgrade in April of last year, news flow and investor sentiment have “shifted more
positively” and catalysts around future growth drivers have been “more fully recognized,” most notably for
Robotaxi, Bank of America’s analyst wrote. Execution risk remains high and the stock is now trading at a level
that captures much of the firm’s long-term base case for potential from core autos, robotaxi, Optimus, and
energy generation and storage, the analyst added. - Micron Technology Inc (MU US)
Micron shares built on gains from Monday, rising 2.7% on Tuesday. This week’s bump came after Nvidia CEO
Jensen Huang said it’s sourcing Micron’s G7 memory for Nvidia’s new AI-powered graphic processing units. - Moderna Inc (MRNA US)
The pharmaceutical stock rallied 11.7%. Moderna is one of few drugmakers currently developing a vaccine
for bird flu, a disease that’s been pushed in the spotlight after the U.S. recorded its first human death. U.S.
health officials confirmed the first American death caused by the H5N1 bird flu.The death in Louisiana could
spur more federal funding for the vaccines’ development, or purchase orders if the vaccines succeed in
testing and are authorized by regulators. A vaccine could be given to at-risk people such as farm workers,
hunters or bird hobbyists. - Samsung’s profit misses estimates after AI chip missteps hurt business
Samsung Electronics Co.’s quarterly profit missed estimates, reflecting a costly effort to claw back market
share in the pivotal AI chip and smartphone arenas. Korea’s largest company reported preliminary operating
profit of 6.5 trillion won ($4.5 billion) for the December quarter, falling short of analysts’ average projection
for 8.96 trillion won. Revenue came to 75 trillion won, just shy of estimates. Its shares fell as much as 1.3%
Wednesday morning in Seoul before recouping losses. Investors had braced for disappointing results from an
electronics conglomerate falling further behind rivals SK Hynix Inc. and Micron Technology Inc. in the
lucrative AI arena. Samsung has struggled to get its latest products certified by Nvidia Corp., allowing SK
Hynix in particular to carve out a larger slice of the market for the high-bandwidth memory that AI
accelerators depend on. - Enphase microinverters selected for Belgian nuclear site project
Enphase Energy, Inc. (NASDAQ:ENPH), a global energy technology company valued at $9.64 billion, has
announced its IQ8 Microinverters will be used in a 2.2 megawatt (MW) solar project at the Belgoprocess
radioactive waste facility in Dessel, Belgium. According to InvestingPro analysis, while the company’s stock
has declined 38% over the past year, its current valuation suggests potential upside based on their
proprietary Fair Value model. The installation, led by Earth, a prominent Belgian installer of Enphase
products, will incorporate 4,000 IQ8HC Microinverters across four rooftops, with an expansion plan to
increase capacity to 6-8 MW in the future. The selection of Enphase for this significant project was based on
the safety of its AC-based system architecture, cybersecurity emphasis, and the high reliability and
performance of its products. The project is expected to be completed by 2026 and is set to become the
largest Enphase project worldwide. InvestingPro data shows the company maintains strong financial health
with a current ratio of 4.16, indicating robust liquidity to support such large-scale projects. Belgoprocess,
specializing in the safe management of radioactive waste from various sources, including medical and
industrial activities as well as nuclear power production, has emphasized the importance of safety and
reliability in their partnership with Enphase and Earth. Wim Van Laer, CEO of Belgoprocess, expressed
confidence in the microinverters for ensuring safer, long-term operation and the ease of future expansion.
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