Tech Lifts Asian Equities, Yen Falls After Rally: Markets Wrap
(Bloomberg) — Stocks in Asia rose Thursday as a tech-fueled rally on Wall Street spread across the region, supported by expected Federal Reserve rate cuts next week. Equities in Japan and South Korea advanced, with the Topix up the most in almost a month. A region-wide gauge of tech stocks rose more than 1%.
S&P 500 rises, Nasdaq closes 2% higher in rebound from inflation report rout
Stocks rose Wednesday in a bout of volatile trading, as investors weighed what the latest U.S. inflation data means for Federal Reserve policy. Tech shares led a rebound from steep session lows. The S&P 500 gained 1.07% to close at 5,554.13. Wednesday marked the first time since October 2022 that the broad market index dropped 1% on an intraday basis and then closed higher by more than 1%. The 30-stock Dow added 124.75 points, or 0.31%, to end at 40,861.71. At its low, the blue-chip index lost as much as 743.89 points. The Nasdaq Composite added 2.17%, wiping out its earlier losses to close at 17,395.53.
Oil prices flat as lower demand signs outweigh U.S. hurricane impact
Oil prices were flat on Thursday as concerns about lower demand erased the gains from the previous session spurred by Hurricane’s Francine’s impact on output in the U.S., the world’s biggest crude producer. Brent crude futures for November were up 24 cents, or 0.34% at $70.86 a barrel. U.S. crude futures for October were up 20 cents, or 0.30%, at $67.52 at 0044 GMT. Both contracts rose by over $1, or more than 2%, in the previous session as offshore platforms in the U.S. Gulf of Mexico were shut and refinery operations on the coast disrupted by Hurricane Francine’s landfall in southern Louisiana on Wednesday.
Gold falls as CPI data dampens talk of oversized U.S. rate cut
Gold prices fell on Wednesday as the dollar and Treasury yields firmed after U.S. inflation data prompted investors to scale back expectations of an oversized rate cut from the Federal Reserve next week. Spot gold was down 0.1% at $2,513.19 per ounce. U.S. gold futures settled mostly unchanged at $2,542.40. U.S. consumer prices rose only slightly in August, but underlying inflation showed some stickiness, which could dissuade the Fed from delivering a half-point interest rate cut next week.
Hong Kong Revises Market Sounding Rules to Put Burden on Banks
(Bloomberg) — Hong Kong’s securities watchdog plans to publish market sounding guidelines by year-end, revising its previous draft by cutting back on prescriptive rules following feedback from market participants, according to people familiar with the matter. The Securities and Futures Commission guidelines will narrow their scope to mostly publicly listed securities.
Core US Inflation Picks Up, Damping Odds of Outsize Fed Cut
(Bloomberg) — Underlying US inflation unexpectedly picked up in August on higher prices for housing and travel, undercutting the chances of an outsize Federal Reserve interest-rate cut next week. The so-called core consumer price index, which excludes food and energy costs, increased 0.3% from July, the most in four months, and 3.2% from a year ago.
UK Economy Stagnates for Second Month in Setback for Starmer
(Bloomberg) — The UK economy stagnated for a second month in July, suggesting that a rapid recovery from recession is now losing momentum in a blow for Prime Minister Keir Starmer. Gross domestic product was unchanged after flatlining in June, the Office for National Statistics said Wednesday. Economists were forecasting a 0.2% increase.
Japan’s Producer Inflation Slows for First Time in Eight Months
(Bloomberg) — Inflation as measured by Japan’s producer prices slowed for the first time in eight months as the cost of energy-related items fell. The measure of input prices for Japanese firms gained 2.5% from a year earlier in August, the Bank of Japan reported Thursday. The result missed economists’ expectations of a 2.8% gain.
RBNZ Seen Cutting Rates Further, Faster Than It Says It Will
(Bloomberg) — New Zealand’s central bank will cut interest rates further and faster than it says it will as the economy contracts and inflation slows, according to investors and some economists. The Reserve Bank, which embarked on an easing cycle last month, will take its Official Cash Rate to 2.5% by mid-2026 from 5.25% today.
Japan’s Leadership Race Is Wide Open as Party Elders Retreat
(Bloomberg) — Japan’s ruling party leadership race formally kicks off Thursday with the weakened grip of party elders enabling a record number of candidates to enter a wide-open contest to steer the nation through a critical period of transition. Nine lawmakers have declared an intention to contest the Sept. 27 Liberal Democratic Party presidential election.
China Development Bank Aviation Unit Buys 80 Airbus A320neos
(Bloomberg) — China Development Bank Financial Leasing Co. agreed to buy 80 Airbus SE jets in the A320neo lineup to increase the proportion of more fuel-efficient next-generation aircraft in its fleet. The planes, which would be the second-largest order by an airline or lessor for Airbus aircraft this year, are due to delivered between 2030 and 2032.
Intel Has No Easy Options After Long, Stinging Fall From Grace
(Bloomberg) — A slow-motion disaster at one of the most important companies in the modern technology industry is reaching a pivotal moment this week. Over three days of meetings that began Tuesday, Intel Corp.’s board has been weighing how to move forward after an Aug 1. earnings report in which Intel showed disappointing growth.
Biden Is Urged to Reconsider $14 Billion US Steel Takeover
(Bloomberg) — Nippon Steel Corp. is mounting a last-ditch push to muster support for its $14.1 billion takeover of United States Steel Corp., a deal opposed by President Joe Biden, Vice President Kamala Harris and ex-President Donald Trump. Biden and Harris want the company to remain domestically owned while Trump has flatly said he’d block it.
Novartis shares fell 1.4% after being downgraded to neutral from buy at Bank of America Global Research, which cited a slower catalyst path to year-end
The firm says its prior Buy thesis, predicated on both expected earnings beats and underappreciated Phase III data catalysts, has unfolded as expected. Novartis has slower catalysts in the second half of 2024 as well as some risks, the analyst wrote. BofA sees tail risk from a potentially imminent Kisqali patent litigation outcome that could see up to 18% earnings downside to 2023 estimates in a worst-case scenario. PT lowered to CHF110 from a Street-high CHF120.
Inditex sales jumped at the start of the third quarter as the Zara owner’s popular fashion ranges and nimble operations helped it cope better with the poor weather and choppy consumer demand
Shares rose 4.5% after the world’s biggest publicly traded clothes retailer reported an 11% growth in sales, excluding foreign-exchange movements, for the five weeks to Sept. 8. This was higher than growth in the second quarter, the company said. Unseasonable weather across various parts of Europe in early June kept shoppers away from retailers, leaving many with unsold stock piles. Inditex rival Hennes & Mauritz SE cited that as a reason for its poorer sales performance. Eurostat data across the eurozone showed general retail sales fell 0.3% in July after months of growth. Inditex, which also owns the brands Massimo Dutti and Pull & Bear, has avoided the pitfalls of rivals as its tightly managed supply chain has allowed it to quickly get fresh products in and out of stores, making it more agile on both fashion trends and potential headwinds. Europe was the company’s strongest region in the latest period with solid growth, particularly in its home market of Spain. Sales were softer in Asia and the US though. Operating profit in the first half also came in higher than expected, rising 12% to €3.6 billion. Analysts had estimated €3.5 billion.
UniCredit SpA built a 9% stake in Commerzbank AG and plans to enter into talks with the lender, raising the possibility of a takeover that could reshape Europe’s banking landscape
The Italian bank acquired 4.5% from the German government, with the rest bought on the market, it said Wednesday, confirming a Bloomberg report. That makes it the second-largest shareholder behind Germany, which has announced plans to exit its holding. Commerzbank shares surged 15.7% as UniCredit said it will seek authorization to raise its stake further to maintain flexibility, though any such move would depend on the investment meeting its financial parameters. UniCredit already owns a large bank in Germany known as HypoVereinsbank. Any takeover of Commerzbank would turn the Italian lender into a powerful force in corporate banking and retail banking in Europe’s largest economy. Commerzbank this week announced that CEO Manfred Knof won’t seek a new term when the current one runs out at the end of next year.
Shares in Neste fell 9.5% after the Finnish energy company cut its guidance for renewable products as sales prices took a hit from lower diesel prices amid a weak biofuels market in Europe
The biofuels market leader and oil-refining company said that it now expects sales volumes from its renewable products business to be around 3.9 million metric tons for the full year with a possible variation of 5%, and an average comparable sales margin between $360 and $480 per ton. The previous guidance was for 4.4 million tons with a variation of 10% and a sales margin of $480-$580 a ton. The downgrade is a result of a substantial decrease in diesel price during the third quarter, hampering sales prices of Neste’s renewable products, it said. Stable waste and residue feedstock prices and soft renewable product market-price premiums also hurt sales prices.
Bank of America Corp.’s quarterly results for investment banking will come in lower than some on Wall Street expected, while the sales and trading business is on track to increase by low single digits, according to Chief Executive Officer Brian Moynihan
Investment banking revenue will be about $1.2 billion for the third quarter, flat with the same period a year ago, Moynihan said at the Barclays Global Financial Services Conference. Some analysts had expected results closer to $1.5 billion from the second-largest US bank, or a rise of about 16.5%. The mix of transactions is not as favorable to us, so we’ll be fine, but it’s going to fall off this quarter, Moynihan said. In contrast, sales and trading will be up low-single-digits and flat compared to the prior quarter, Moynihan said. That’s a very strong performance, strongly reflecting investments we made a few years ago in capabilities across fixed income, and building back the equities business, he said.
The Kamala Harris-Donald Trump debate made waves in the health sector as shares of big insurers including Humana and UnitedHealth Group fell Wednesday
Investors feel less optimistic about the Medicare business after Harris’s strong performance in Tuesday night’s debate, says Sarah James, an analyst with Cantor Fitzgerald. The Biden administration has curtailed certain billing practices that boosted payouts to Medicare plans, and Medicare Advantage rates for next year came in lower than investors had expected. Investors believe a Republican win would likely result in higher payments to the companies, James said. UnitedHealth, parent of the biggest Medicare insurer, fell 1.5%, while shares of Humana, the second-largest, dropped 5.3%. On the other side, Democrats are seen as pushing for increased health-insurance coverage, and investors generally see a Harris victory as a positive for Medicaid and the Affordable Care Act plans often called Obamacare. Companies with strong positions in those businesses, such as Centene, saw their shares rise on Wednesday. Meanwhile, a group of green-energy stocks traded higher following the debate. First Solar, Enphase Energy and Sunrun shares all rose. It has been a tough year for the industry, with the Invesco Solar ETF down 29%, as high interest rates making it more expensive to finance the installation of solar panels weighed on demand.
Lithium stocks rallied as UBS says Chinese battery giant Contemporary Amperex Technology Co. (CATL) curtailed production at its Jiangxi operation
Asian lithium miners also saw their shares surge earlier on Wednesday following speculation of CATL halting production. According to our channel checks with several contacts, CATL finally decides to suspend its lithium lepidolite operation in Jiangxi after a meeting on 10 September, UBS analysts led by Sky Han wrote. After making a loss for two months in lithium business and continuous downside risk on lithium price, we finally see normal supply response from a marginal-cost producer, Ms. Han wrote. CATL’s suspension of lithium operation in Jiangxi will lead to 8% or 5-6kt LCE production cut of China monthly Li2CO3 production, and help rebalance the supply with demand. It’s not the first time for us to hear CATL to cut/suspend lithium production in Jiangxi. Although the previous news turned out to be speculation, we get higher conviction this time.
Samsung Electronics Co Ltd
Samsung Electronics Co Ltd shares dropped as much as 2.1% to the lowest since May 2023, down for a seventh straight session. The company also planned to cut up to 30% of its overseas staff in some divisions which would be implemented by the end of this year and would impact jobs across the Americas, Europe, Asia and Africa.