- Asian Stocks Rise After US Inflation Backs Fed Cut: Markets Wrap
Asian stocks rose Thursday after US equities snapped a two-day slide on benign inflation data that supported
expectations of a Federal Reserve interest-rate cut this month. Japanese and Hong Kong stocks led gains in
the region, with the MSCI Asia Pacific index on pace for the highest close in over a month. The rally was
driven by technology names after the Nasdaq 100 surged to a record high on Wednesday. US stock futures
edged lower. - Nasdaq surges for first close above 20,000, lifted by Alphabet shares
The Nasdaq Composite surged Wednesday after November’s inflation report met economists’ projections,
clearing the way for the Federal Reserve to cut interest rates again at its December meeting next week.
The tech-heavy index rose 1.77% to end at 20,034.89 and post an all-time high and a closing record. The
broad market S&P 500 gained 0.82% to close at 6,084.19. The Dow Jones Industrial Average was the outlier,
falling 99.27 points, or 0.22%, to 44,148.56. - Oil little changed as demand weakness offsets sanctions-driven supply risks
Oil prices were little changed in early Asian trade on Thursday as forecasts of weak demand and a higher
than-expected rise in U.S. gasoline and distillate inventories stemmed gains from an additional round of
European Union sanctions that threatened Russian oil flows. Brent crude futures were down 5 cents at
$73.47 a barrel at 0141 GMT. U.S. West Texas Intermediate crude futures fell 11 cents to $70.18. Both
benchmarks rose over $1 each on Wednesday. OPEC cut its demand growth forecasts for 2025 for the fifth
straight month on Wednesday and by the largest amount yet. - Gold advances as inflation data fuels Fed rate cut optimism
Gold gained on Wednesday after an inflation print came in line with expectations, boosting the likelihood of a
Federal Reserve rate cut next week, while investors awaited U.S. Producer Price Index (PPI) data for further
direction on monetary policy. Spot gold climbed 1% to $2,719.40 per ounce. U.S. gold futures rose 1.4% to
$2,756.4. The U.S. consumer prices rose 0.3% on a monthly basis in November, data from the Labor
Department showed. Annually, it climbed 2.7% after increasing 2.6% in October. Economists polled by
Reuters had forecast the CPI rising 0.3% and advancing 2.7% year-on-year. - US Inflation in Line With Forecasts Solidifies Bets on Fed Cut
US consumer prices rose at a firm pace in November that was in line with expectations, solidifying
expectations for the Federal Reserve to cut interest rates next week. The so-called core consumer price
index, which excludes food and energy costs, increased 0.3% for a fourth straight month, Bureau of Labor
Statistics figures showed Wednesday. From a year ago, it rose 3.3%. - BOJ Is Said to See Little Cost to Waiting for Next Rate Hike
Bank of Japan officials see little cost to waiting before raising interest rates while still being open to a hike
next week depending on data and market developments, according to people familiar with the matter. Even
if the BOJ decides to wait until January or a while longer, authorities see it as not entailing a huge cost
because signs point to limited risk that inflation might overshoot, the people said. At the same time, some
officials are not against a rate hike at this meeting if it is proposed, according to the people. The yen
weakened against the dollar following the report, after some whipsawing. It briefly hit 152.82 against the
greenback around 10:25 p.m. in Tokyo, after earlier trading at around 151.60. It was moving at around
152.10 to the dollar Thursday morning. - China’s monetary shift signals economic worries, but bazooka-style stimulus is unlikely, experts say
Chinese government in 2008 had unleashed a historically large monetary stimulus in response to the global
financial crisis, Gabriel Wildau, managing director of Teneo said. Potential monetary easing leeway is much
more limited than 15 years ago, said Tao Wang, head of Asia economics and chief China economist at UBS
Investment Bank. The People’s Bank of China cut its benchmark 1-year lending rate by a total of 156 basis
points and the cash reserves ratio by 1.5 percentage points during the 2008 easing cycle. - European Central Bank heads for last rate cut of year, but jumbo move seems off the table
The European Central Bank is widely expected to deliver a 25-basis-point rate cut on Thursday, rather than a
jumbo 50-basis-point move previously thought to be on the table. Economists nevertheless say downside
risks to the euro zone economy and the inflation picture have both increased, set to send the central bank on
a faster course of monetary loosening in 2025. Macro forecasts broadly are citing high uncertainty around
the policies of U.S. President-elect Donald Trump. - India’s ReNew Energy offered to be taken private in $2.82 billion deal
Some of the biggest investors in ReNew Energy Global have offered to take the company private, filings to
the U.S. Securities And Exchange Commission show, in a deal that values the clean power generator at $2.82
billion, according to Reuters calculations. Major shareholders Canada Pension Plan Investment Board, UAE
based Masdar, ReNew Chairman Sumant Sinha and a unit of the Abu Dhabi Investment Authority have
offered to buy shares in India’s second largest clean energy generator at $7.07 each. The consortium has
collective voting rights of 64% in ReNew, which is India’s second biggest renewable energy firm after Adani
Green.The offer represents an 11.5% premium to ReNew’s closing price of $6.34 on Nasdaq on Dec. 10. The
valuation is based on a total of 398.61 million diluted shares outstanding as of Aug. 15, according to the
company’s website. Shares of ReNew closed 17.7% higher at $7.46 on the Nasdaq on Wednesday, 5.5%
above the offer price. ReNew operates 10.3 gigawatts of solar, wind, hydro and hybrid projects across India.
Its stock had lost nearly 18% of its value this year before the offer was made. - Budget deficit swells in November, pushing fiscal 2025 shortfall 64% higher than a year ago
The U.S. budget deficit swelled in November, putting fiscal 2025 already at a much faster pace than a year
ago when the shortfall topped $1.8 trillion, the Treasury Department reported Wednesday. For the month,
the deficit totaled $366.8 billion, 17% higher than November 2023 and taking the total for the first two
months of the fiscal year more than 64% higher than the same period a year ago on an unadjusted basis. The
increase came despite receipts that totaled $301.8 billion, about $27 billion more than last November.
Outlays totaled $668.5 billion, or nearly $80 billion more from a year ago. The increase in red ink brought the
national debt to $36.1 trillion as the month drew to a close. On an adjusted basis, the deficit was $286 billion
and has totaled $544 billion year to date, an increase of 19%. - Auto giants endured a torrid time of it this year and few expect 2025 to be much better
Automakers have struggled to come to terms with a series of headwinds, including a lack of affordable
models, a slower-than-anticipated rollout of charging points, intense competition from China, tougher carbon
regulations and the prospect of targeted U.S. tariffs. It is against this backdrop, analysts say, that the industry
will be bracing for a bumpy ride next year. Unfortunately, we believe the industry is likely to head into
another year of volatility and headwinds across regions, analysts at Deutsche Bank said in a research note. - Alphabet shares rose 5.5% Wednesday, building on Tuesday’s gain of 5.6%
The rally is coming amid excitement over a major development in quantum computing through the use of
Google’s Willow quantum chip. BofA affirmed a buy rating and $210 price target on the stock, writing that
advancements with Willow, which illustrate that Alphabet remains at the leading edge of technology
innovation, are important for stock sentiment. Over the long term, quantum innovation has the potential to
create a significant tech moat for Alphabet, and in the near term, we think that Google‘s innovation with
[Tensor Processing Units] could be underappreciated, as TPU advancements could accelerate the training and
inference of Google‘s own AI models while improving cost efficiency versus peers. Scotiabank also sees this as
significant, as without quantum computing many future applications of AI won’t be feasible. Investors and
companies alike tend to underestimate the industry-changing impacts that quantum computing can have,
especially regarding data privacy and security, as well as crypto. Sector outperform rating, PT $212. - Tesla shares rose 5.9% on Wednesday amid a rally on expectations that the company’s self-driving
business will get a boost under a Trump presidency
After largely languishing behind its mega-cap technology peers for most of 2024, Tesla shares have climbed
sharply since late October, lifted first by better-than-expected third-quarter results and then the expectation
that Donald Trump’s election win could be positive for the company. Tesla’s CEO Elon Musk was an avid
supporter of Trump during the US presidential election and is leading an effort to slash at least $2 trillion
from the federal budget. - Shares of US health-care companies that own pharmacy benefit management units fell on Wednesday
after lawmakers drafted legislation that would force prescription drug middlemen to divest pharmacies
they own. Leerink Partners says that while the bill is unlikely to pass, it would be the farthest-reaching
attempt to intervene on PBMs’ operating model
UnitedHealth fell 5.6% while Cigna and CVS Health fell 5.6% and 6.1% respectively. Evercore ISI, Elizabeth
Anderson: Says the report comes as the most recent in a long series of government initiatives to further
regulate PBMs given rising cost burdens to patients and the fact that purchasing prescription drugs is one of
voters’ most frequent interactions with their healthcare coverage. Sees report as incremental in its bi
partisan nature but with a low probability of passing as Congress is in the process of wrapping up its current
session. Notes headline risk for now, but a higher chance in 2025 that is still less than 50% likely. Leerink
Partners, Michael Cherny: Says the potential legislation is unlikely to gain traction, although it is hard to
dismiss outright. Says even with more support and attention, a breakup of PBMs would likely be quite
challenging to execute. We do not think the new proposed legislation materially increases the risk of
meaningful FTC/Congressional action at this point, although SOME regulation passing at some point would
not be shocking. - Adobe Inc. fell 9.3% in afterhours trading after giving a disappointing annual sales outlook,
underscoring anxieties that the creative software company may lose business to emerging artificial
intelligence-based startups
Revenue will be about $23.4 billion in the fiscal year ending in November 2025, the company said. Earnings,
excluding some items, will be $20.20 a share to $20.50 a share. Analysts, on average, estimated sales of $23.8
billion and adjusted profit of $20.52 a share. Adobe, known for its software for creative professionals, has
been adding generative AI features to its applications, such as embedding its proprietary model, Firefly, into
products like Photoshop. The company unveiled an AI tool to create videos during its annual user conference
in October, which has been integrated into editing app Premiere and is slowly rolling out to the wider public.
The software maker will soon introduce a new higher-priced Firefly offering, which includes video models,
David Wadhwani, who leads the company’s creative business, said. A closely watched metric of new creative
software business, digital media net new annual recurring revenue, will increase 11% in the fiscal year, in line
with estimates. Factored into guidance is an ongoing strategy to introduce new tiered subscription offerings
and add-ons, Chief Financial Officer Dan Durn said. Adobe’s outlook may be conservative due to the
uncertain pace at which AI usage may take root, wrote Anurag Rana, an analyst at Bloomberg Intelligence.
Investors have voiced recurring anxieties that AI-based creative tools from firms like OpenAI or Runway AI
could take market share from Adobe. - SpaceX valuation surges to $350 billion as company buys back stock
The valuation of Elon Musk’s SpaceX hit $350 billion based on a secondary share sale, CNBC confirmed on
Wednesday. SpaceX and investors agreed to buy stock from insiders in a $1.25 billion purchase offer at $185
a share, according to copies of the offer obtained by CNBC. SpaceX’s soaring valuation, ranking well above
U.S. defense contractors and among the top 25 in the S&P 500 by market cap, comes as the company
furthers its dominant position in the space industry. - Healthcare stocks fall as lawmakers push for bill to break up drug middlemen
Shares of companies owning pharmacy benefit managers fell on Wednesday after the introduction of a
bipartisan bill that would force health insurers or drug middlemen to divest their pharmacy businesses.
CVS Health (NYSE:CVS)’s Caremark, Cigna (NYSE:CI)’s Express Scripts and UnitedHealth Group (NYSE:UNH)’s
Optum control the majority of pharmacy benefit management (PBMs) in the US, while their parent
companies also operate health insurance businesses. Shares of all three companies were down between 4.8%
to 5.5% after the Wall Street Journal first reported news of the bill. The bill, sponsored by U.S. Senators
Elizabeth Warren, a Democrat, and Josh Hawley, a Republican, will force companies owning health insurers
or pharmacy benefit managers to divest their businesses operating pharmacies within three years.
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