- Asian Stocks Fall as China Support Disappoints: Markets Wrap
Asian shares slipped after China’s planned debt swap program looked insufficient to some investors and data
showed persistent deflationary pressures. A gauge of the region’s equities dropped over 1% Monday, with
Hong Kong and mainland Chinese stocks down in early trade. Benchmarks also declined in South Korea and
Australia. US futures edged higher after the S&P 500 rose 0.4% on Friday. - Dow tops 44,000 for first time, S&P 500 closes at record high to cap election week rally
The stock market climbed to another round of records on Friday, as the Dow and S&P 500 wrapped up their
best week in a year after Donald Trump’s election win. The Dow Jones Industrial Average rose 259.65 points,
or 0.59%, to close at 43,988.99. The blue chip average traded above 44,000 for the first time ever during the
session. The S&P 500 gained 0.38% to close at 5,995.54, after briefly trading above 6,000 for its own
milestone. The tech-heavy Nasdaq Composite lagged, up just 0.09% to 19,286.78, but set an intraday record
high as well. All three averages finished the week at record closing levels. It was a strong week across the
board for equities, due in large part to Wednesday’s huge rally following Trump’s victory. The S&P 500
finished up 4.66% for the week, as the Dow was higher by 4.61%. Both indexes notched their best week since
November 2023. The Nasdaq outdid even those moves, toting a 5.74% advance, while the small-cap
benchmark Russell 2000 surged 8.57%. - Oil slips as U.S. storm threat eases, China stimulus disappoints
Oil prices extended declines on Monday as the threat of a supply disruption from a U.S. storm eased and
after China’s stimulus plan disappointed investors seeking fuel demand growth in the world’s No.
2 oil consumer. Brent crude futures dropped 19 cents, or 0.3%, to $73.68 a barrel by 0104 GMT while U.S.
West Texas Intermediate crude futures were at $70.13 a barrel, down 25 cents, or 0.4%. Both benchmarks
fell more than 2% last Friday. Beijing’s stimulus package announced at the National People’s Congress (NPC)
standing committee meeting on Friday fell short of market expectations, IG market analyst Tony Sycamore
said in a note, adding that its murky forward guidance hinted at only modest stimulus for housing and
consumption. - Gold logs biggest weekly fall in over five months on dollar strength
Gold prices dropped on Friday, logging their steepest weekly decline in over five months, pressured by a
stronger dollar and as markets absorbed the implications of Donald Trump’s victory and its potential impact
on U.S. interest rate expectations. Spot gold fell 0.8% to $2,684.03 per ounce as of 01:40 p.m. ET (1840 GMT)
and posted a 1.8% weekly decline. U.S. gold futures settled 0.4% lower at $2,694.80. The dollar index gained
0.6%, marking a weekly gain. - US Inflation Progress Gets Harder in Last Mile Down
US inflation probably moved sideways at best in October, highlighting the uneven path of easing price
pressures in the home stretch toward the Federal Reserve’s target. The core consumer price index due on
Wednesday, which excludes food and energy, likely rose at the same pace on both a monthly and annual
basis compared to September’s readings. The overall CPI probably increased 0.2% for a fourth month, while
the year-over-year measure is projected to have accelerated for the first time since March. - China Price Growth Stays Near Zero as Deflation Persists
China’s consumer inflation was anemic in October while factory-gate prices continued falling, suggesting the
government’s latest round of stimulus is far from sufficient to free the economy from the grip of deflation.
The consumer price index rose 0.3% from a year earlier, the National Bureau of Statistics said Saturday,
compared with a 0.4% gain in the previous month. The median forecast of economists surveyed by
Bloomberg was for the reading to stay unchanged from September. Core CPI, which excludes volatile food
and fuel prices, increased 0.2%. Producer inflation slid for a 25th straight month, with a 2.9% drop on year,
more than the 2.5% decrease predicted by economists. - Japan’s PM Ishiba Faces Vote to Keep Job Ahead of Trump Meet
Japan’s parliament is set to elect a prime minister Monday in a mid-afternoon vote that’s likely to
keep Shigeru Ishiba in the job despite a national election setback, as the premier prepares for an
expected meeting with US President-elect Donald Trump later this month. Ishiba’s Liberal Democratic Party
and its coalition partner Komeito lost their majority in the lower house of parliament in the Oct. 27 election,
but the parties almost certainly have enough votes to reappoint Ishiba as prime minister in a runoff vote due
to divisions in the opposition camp. - China consumer prices rise slowest in 4 months, despite stimulus
China’s consumer prices rose at the slowest pace in four months in October while producer price deflation
deepened, even as Beijing doubled down on stimulus. The country’s top legislative body on Friday approved a
10 trillion yuan ($1.4 trillion) package to ease local government hidden debt burdens. Some investors had
hoped it would directly inject money into the world’s second-biggest economy instead. - Richemont’s profit slumped in the first half as the Swiss luxury group’s watchmaking division suffered
from falling demand in China
The Cartier owner reported a 12% drop in operating profit to €2.2 billion for the six months through
September, below the €2.47 billion estimate of analysts. Sales were stable at constant exchange rates,
slightly missing expectations. Richemont’s jewelry division proved resilient, while the watchmakers weighed
heavy on the results, Bernstein analyst Luca Solca said. Shares fell 6.6%. Sales growth in the US, Europe and
Japan was offset by an 18% drop in the Asia Pacific region, which includes China, where sales fell 27%.
Chairman Johann Rupert said Chinese demand for pricey goods will take longer to recover, and is particularly
hitting its watch brands. Sales of expensive timepieces dropped by 16% during the period, a steeper decline
than analysts had expected. Jewelry sales met estimates, growing 4% at constant exchange rates, but the
company said limited price increases weren’t enough to offset a rise in input costs and raw materials such as
gold. - A breakneck rally in Tesla shares on Friday catapulted the electric-vehicle maker’s market value back
over the trillion-dollar mark, as investors bet that Donald Trump’s return to the White House can be a
positive force for Elon Musk’s company
Shares of the company closed up 8.2% Friday, taking Tesla’s market value to about $1.03 trillion. It is once
again among seven companies in the S&P 500 Index with that status. The last time Tesla shares traded above
that level was in April 2022. The stock’s sharp positive reaction is more a reflection of Elon Musk’s prominent
role within the Trump campaign, and likely a reminder of Tesla as the ‘original meme stock,’ with Tesla
trading up alongside crypto, Barclays analyst Dan Levy wrote. The benefits to Tesla of a Trump win are not as
obvious at first glance, Barclays’ Levy added. With EV policy potentially de-emphasized and possible
elimination of EV purchase credits, it would be negative to Tesla’s US vehicle sales. It’s unclear whether
Trump’s win will mean any material gains for the EV-maker, particularly in light of Trump’s skepticism of
electric vehicles. But that lack of clarity hasn’t been enough to deter the Tesla believers. Tesla’s call option
volume surged to a single-day record on Friday as investors piled in to bullish bets on the stock, with more
than 4.7 million contracts trading. Implied volatility for calls surged at one point to the highest level above
puts since early 2021, amid the buying frenzy. - Fortinet shares rallied 10% to a record high after the network security software provider reported third
quarter adjusted earnings per share above the average analyst estimate
THIRD QUARTER RESULTS: Adjusted EPS 63c, estimate 52c. Billings $1.58 billion, +6.1% y/y, estimate $1.57
billion. Revenue $1.51 billion, +13% y/y, estimate $1.48 billion. Adjusted operating margin 36.1% vs. 27.8%
y/y, estimate 31.2%. FOURTH QUARTER FORECAST: Sees adjusted EPS 58c to 62c, estimate 52c. Sees revenue
$1.56 billion to $1.62 billion, estimate $1.59 billion. Sees billings $1.90 billion to $2.00 billion, estimate $2
billion. Sees adjusted operating margin 33% to 34%, estimate 29.5%. YEAR FORECAST: Sees billings $6.43
billion to $6.53 billion, saw $6.40 billion to $6.60 billion, estimate $6.52 billion. Sees adjusted EPS $2.20 to
$2.28, estimate $2.06. Sees revenue $5.86 billion to $5.92 billion, saw $5.80 billion to $5.90 billion, estimate
$5.86 billion. Sees adjusted operating margin 32.9% to 33.9%, saw 30% to 31.5%, estimate 31.1%. Raymond
James analyst Adam Tindle (outperform, PT $95): Sees sizable up-sell opportunity as Fortinet remains the
market share leader and can expand its value proposition into cloud form factors (SASE). Notes margins are
at all-time highs, but billings are implied to decelerate in 4Q and this metric has continued its topsy-turvy
trend. Expects company will give more color on an unprecedented forced refresh cycle in FY26 that should
drive growth expectations higher at an upcoming analyst day. - CNH Industrial NV, one of the world’s biggest farm machinery makers, plans to cut production further
as dealer inventories remain too high amid a slumping farm economy. Shares fell 8.3% Friday
The owner of brands including Case IH and New Holland reduced its sales outlook as it reported third-
quarter earnings that missed the average analyst estimate. The move comes after rival AGCO Corp. lowered
its outlook earlier this week, also citing high inventories. Market leader Deere & Co. will report earnings later
this month. Crop prices have been hovering near the lowest levels since 2020, prompting farmers to buy
fewer tractors and implements. Dealer inventories remain elevated and will require additional efforts to align
with retail demand, Chief Executive Officer Gerrit Marx said, adding that the company will adjust production
levels and make other quality-improving efforts. CNH said its agriculture sales this year will fall by 22% to
23%, down from an earlier forecast of a 15% to 20% decline. With demand for construction equipment also
limited, CNH said it’s permanently closing a production facility in Burlington, Iowa, that makes rough-terrain
forklift trucks and other machinery. The company will instead assemble machines at other CNH plants in the
US and Europe. - Cloudflare shares fell 4.6% Friday after the infrastructure software company’s forecast for fourth
quarter revenue fell short of consensus
THIRD QUARTER RESULTS: Adjusted EPS 20c vs. 16c y/y, estimate 18c. Revenue $430.1 million, +28% y/y,
estimate $423.8 million. Adjusted gross margin 78.8% vs. 78.7% y/y, estimate 78.6%. FOURTH QUARTER
FORECAST: Sees adjusted EPS 18c, estimate 17c. Sees revenue $451.0 million to $452.0 million, estimate
$455.6 million. Sees adjusted operating income $57.0 million to $58.0 million. YEAR FORECAST: Sees adjusted
EPS 74c, saw 70c to 71c, estimate 71c. Sees revenue $1.66 billion to $1.66 billion, saw $1.66 billion to $1.66
billion, estimate $1.66 billion. Sees adjusted operating income $220.0 million to $221.0 million, saw $196.0
million to $198.0 million. RBC analyst Matthew Hedberg (outperform, PT $99): Views the results as a solid
quarter ahead of expectations, but notes some US deals slipped which impacted results and guidance. Lowers
CY25 revenue estimate in the spirit of being conservative based on sales capacity, pool of funds traction and
delayed impact from pushed deals in 3Q 24. Highlights the $7 million Workers AI deal as evidence NET
remains one of the few early AI beneficiaries. - Singapore Airlines shares fall as much as 6% as profit nearly halves amid intensifying competition
Shares of Singapore Airlines dropped after the city-state’s flag carrier reported a fall of almost 50% in net
profit for the April to September period, citing lower yields and growing competition. As markets opened on
Monday, the stock fell 6.2%, before later recovering to trade lower at a 3.57% loss. SIA maintained an interim
dividend of 10 Singapore cents a share despite the reduction in profit. However, SIA’s management said it will
not hold back on expansion just because of competition. - Bitcoin tops record $80,000 as Trump nears sweep of US Congress
The price of bitcoin has risen above $80,000 (£62,000) for the first time ever, after Donald Trump’s decisive
victory in the US election last week. It comes as the Republicans are edging closer to overall control of
Congress after having already secured the presidency and a majority in the Senate. On the campaign trail the
president-elect pledged to make the US the crypto capital of the planet. The value of world’s biggest
cryptocurrency has now risen by more than 80% this year.
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