- Stocks Drop as Traders Brace for Trump’s US Agenda: Markets Wrap
Asian stocks fell to the lowest level in almost two months on concerns US President-elect Donald Trump’s
proposed tariffs and picks for key administration positions may stoke inflation. Equity benchmarks in Japan
and Australia retreated, with a regional gauge dropping to the weakest level since Sept. 19. The Bloomberg
Dollar Spot Index was steady ahead of a report on US consumer-price inflation, while the yen approached the
key level of 155. - Dow falls more than 350 points, retreating from record as postelection rally takes breather
Stocks retreated on Tuesday as the major averages took a breather from their postelection run. The Dow
Jones Industrial Average pulled back 382.15 points, or 0.86%, to 43,910.98, while the S&P 500 dropped 0.29%
to close at 5,983.99. The Nasdaq Composite ended the session marginally lower, falling 0.09% to 19,281.40.
Both the tech-heavy Nasdaq and the S&P 500 snapped five-day win streaks. Key components of the so-called
Trump trade were among the most notable losers Tuesday. Small-cap stocks, which are viewed as a potential
beneficiary of Donald Trump’s return to the White House, were broadly under pressure, with the Russell
2000 dipping about 1.8%. Shares of Tesla, which have advanced about 31% since Election Day, sank more
than 6% on Tuesday, while Trump Media & Technology Group fell nearly 9%. The stock is down 10% since
Trump’s victory. - Oil prices hold ground after OPEC lowers demand outlook, China stimulus limit gains
Oil prices held near a two-week low on Tuesday after dropping about 5% over the past two sessions as
investors absorbed OPEC’s latest downward revision for demand growth, a stronger U.S. dollar and
disappointment over China’s latest stimulus plan. Brent futures rose 6 cents to close at $71.89 a barrel by,
while U.S. West Texas Intermediate (WTI) crude gained 8 cents to settle at $68.12 per barrel. On Monday,
both crude benchmarks settled at their lowest prices since Oct. 29. - Gold drifts higher, traders eye U.S. inflation print
Gold prices edged up on Wednesday as investors hunted for bargains after steep declines in the previous
session, while spotlight shifted to U.S. inflation print, which could shed more light on the Federal
Reserve’s monetary policy path. Spot gold rose 0.4% at $2,608.18 per ounce by 0200 GMT, after hitting its
lowest since Sept. 20 on Tuesday. U.S. gold futures was up 0.3% at $2,614.10. - India’s CPI inflation spikes to 14-month high of 6.2% in October
India’s year-on-year Consumer Price Index (CPI) inflation for October 2024 reached 6.21%, higher than CNBC
TV18’s poll estimate of 6% and significantly above September’s rate of 5.5%. The Reserve Bank of India
targets retail inflation at 4%, with tolerance level of two percentage points on either side. On a sequential
basis, inflation rose by 1.34% in October. The inflation rate was driven by a sharp rise in food prices, with the
Consumer Food Price Index (CFPI) reaching a provisional 10.87% in October, highlighting an intensified
pressure on household expenses. For rural and urban areas, CPI inflation came in at 6.68% and 5.62%,
respectively, while food inflation was reported at 10.69% for rural areas and a higher 11.09% for urban areas.
The surge in food costs was primarily led by rising prices of essential items such as vegetables, fruits, and oils
and fats, with top vegetables—tomatoes, onions, and potatoes—remaining costly throughout the month.
Conversely, notable declines in inflation were observed in pulses, eggs, sugar, and spices. Housing inflation,
reported only for urban areas, rose marginally to 2.81% in October from 2.72% in September. The All-India
Electricity Index showed an inflation rate of 5.45% for October, slightly up from September’s 5.39%. Core CPI,
which excludes the volatile food and energy sectors, rose to a 10-month high of 3.7% in October, up from
3.5% in September. While CNBC-TV18’s poll had suggested a stabilisation at 3.6%. Economists project overall
inflation to ease in November, aided by a favourable base effect and a recent softening in vegetable prices. - Japan’s PPI rises 3.4% YoY in Oct, highest since mid-2023
Japan’s PPI rose from 3.1% yoy to 3.4% yoy in October, surpassing market expectations of 3.0% and marking
the highest annual increase since July 2023. On a monthly basis, PPI advanced by 0.2%, reflecting sustained
inflationary pressure within Japan’s production sector. The data also revealed a less pronounced decline in
Yen-based import prices, down -2.2% yoy compared to a -2.5% drop in September, signaling that import costs
may be stabilizing. This relative improvement aligns with a 4.3% mom increase in Yen’s exchange rate.
However, on a monthly scale, import prices saw a notable 3.0% rise after a -2.8% decrease in September. - A Guide to Trump’s Tariff Plans: Expect High Drama and a Bumpy Rollout
There will be tariffs. Extra-large ones on imports from China and medium-size ones for the rest of the world.
At least that’s what Donald Trump pledged on the campaign trail. But if there’s anything we learned during
his first presidency, it’s that this is a man who relishes chaos, pitting members of his cabinet against each
other or making sudden policy U-turns that catch even his closest advisers unawares. And that’s one reason
to be less pessimistic about the fresh wave of protectionism he’s promised to unleash on the world. To
Trump, who’s dubbed himself “Tariff Man,” import duties are magical, an instrument to achieve grand
strategic goals and also to score tactical wins against adversaries and even partners. If he had his way, the US
would hark back to a 19th century Gilded Age model of small government funded largely by tariffs rather
than income taxes in which American barons of industry, the Elon Musks of their time, built vast wealth
thanks to protectionism and the privilege of limited competition. - Barkin Says Fed in Good Place to Respond to Evolving Economy
Federal Reserve Bank of Richmond President Thomas Barkin said the economy is in a good place, which has
allowed the US central bank to lower borrowing costs. A strong but choosier consumer, coupled with a more
productive and better valued workforce has landed the economy in a good place, Barkin said Tuesday in
remarks prepared for a speech at the Baltimore Together Summit. The Fed is in position to respond
appropriately regardless of how the economy evolves, he said, with interest rates off their peak but still
above their historic lows. - Oil could plunge to $40 in 2025 if OPEC unwinds voluntary production cuts, analysts say
Oil prices may see a drastic fall in the event that OPEC+ unwinds its existing output cuts, said market
watchers. A decline to $40 a barrel would mean around 40% erasure off current crude prices. However, the
alliance is more likely to opt for a gradual unwinding early next year, compared to a full scale and immediate
one, the analysts said. - Trump Taps Huckabee as Israel Envoy, Plans Capitol Hill Trip
President-elect Donald Trump is nominating former Arkansas Governor Mike Huckabee to be the US
ambassador to Israel and appointing real estate investor Steve Witkoff as a special envoy to the Middle East,
tapping two key allies to help formulate and implement his policies for the region. Trump announced the
selections on Tuesday, praising Huckabee as someone who loves Israel, and the people of Israel and saying he
would work tirelessly to bring about Peace in the Middle East. - Canada Orders Ports to Restart as Labor Disputes Choke Trade
Prime Minister Justin Trudeau’s government directed an independent labor board to end lockouts at
Canada’s largest ports, as it did with railways in August, to stop an economic disruption in the country.
Labor Minister Steven MacKinnon announced that he has invoked his authority under the Canada Labor Code
and forced the matter to the Canada Industrial Relations Board, requesting it to order the parties to go back
to work, resume operations and enter into an arbitration process to resolve the dispute. - Trump Picks Musk, Ramaswamy for Government Efficiency Effort
President-elect Donald Trump picked Tesla CEO Elon Musk and biotech company founder Vivek Ramaswamy,
a former Republican presidential candidate, to lead an effort to cut spending, eliminate regulations and
restructure federal agencies. Trump said in a statement Tuesday night that Ramaswamy and Musk, the
wealthiest person in the world, who oversees six companies, would lead what the president-elect called
the Department of Government Efficiency, or DOGE. The group’s mandate is to streamline government
bureaucracy, the president-elect said. - India’s Swiggy sees shares jump about 8% on debut after country’s second-largest IPO this year
Shares of Indian food delivery giant Swiggy rose nearly 8% on their trading debut Wednesday after its IPO
became the country’s second largest this year. The company raised 113.27 billion Indian rupees ($1.34
billion) in its IPO that closed Monday, pricing its shares at 390 rupees apiece. The IPO was reportedly
oversubscribed more than three times, according to Indian business outlet Mint. The listing comes close on
the heels of Hyundai Motor India’s 278.56 billion rupee IPO in October, India’s largest ever IPO by amount
raised. The shares allocated to qualified institutional buyers were subscribed more than six times, according
to Mint, while the portion given to retail investors was 114% subscribed. - Bitcoin rally cools after more than 30% jump since Trump victory
A surge in Bitcoin has paused as traders assess the remaining market impact of President-elect Donald
Trump’s rhetorical support for crypto. The digital asset is up about 32% in the wake of Trump’s Nov. 5
election victory, hitting a record of $89,968 on Tuesday, based on data compiled by Bloomberg. It changed
hands at $88,500 as of 9:13 a.m. Wednesday in Singapore. - Rivian-Volkswagen joint venture deal rises to up to $5.8 billion, VW cars expected as early as 2027
Volkswagen Group has increased its planned investment in an announced joint venture with electric vehicle
maker Rivian Automotive ahead of the operations launching Wednesday. The companies in a joint press
release Tuesday said the size of the deal is now up to $5.8 billion, an increase from an initial investment of up
to $5 billion, with the first VW models to use Rivian’s software and electrical architecture arriving as early as 2027.
Shares of Rivian were up by more than 6% during after-hours trading. The increase in investment was a
result of the companies pulling ahead some potential future capital from VW, as well as changes in the deal’s
structure, including in equity investment, officials said Tuesday during an investor call. - Nissan Enters New Era of Turmoil as Effissimo Takes Stake
Nissan Motor Co.’s rapid decline has drawn the attention of one of the most influential activist investors in
Japan, adding a fresh dose of uncertainty to the automaker’s turnaround plans. A fund controlled by
Effissimo Capital Management Pte, which has a history of pushing for change in Japan, has taken a stake in
Nissan just days after cratering profit and sales induced by an outdated lineup, pricey dealer incentives and
lack of hybrids in North America forced the Japanese carmaker to slash jobs and production. The big question
is whether Chief Executive Officer Makoto Uchida, who pledged to add 27 new electrified vehicles by 2030,
can deliver a turnaround or be forced to make more drastic changes by an influential outsider. - Bayer AG shares fell 13.9% after the German conglomerate cut profit guidance for this year and said
earnings will probably fall in 2025
The key takeaway is that 2025 may be looking a bit worse across business segments than the street has been
modelling, Barclays analyst Emily Field wrote. The company now expects sales to decline as much as 3% this
year at its agriculture unit, hurt by low prices for products including the controversial weedkiller Roundup.
Growth will also be slower than previously predicted at the consumer health division. At the pharmaceutical
business, sales growth will likely reach the high end of its flat-to-3% range, thanks to the strong performance
of new drugs like cancer treatment Nubeqa and kidney medicine Kerendia. They should help offset the sales
decline of blockbuster blood thinner Xarelto, which is facing patent expiry. The erosion this quarter was more
rapid than anticipated, JPMorgan analyst Richard Vosser said. For 2025, Bayer expects earnings to decline,
hurt by the rising generic competition for Xarelto and regulatory challenges at its crop protection business.
Those issues include the phasing out of insecticide Movento in the European Union and a delayed approval
for the soy crop herbicide Dicamba. We don’t expect that this approval will come in time for the 2025 season,
CEO Bill Anderson said. So this is basically kind of a one year hit for us. The CEO has implemented across-the
board cost-cutting measures, including reducing headcount by some 5,500 people so far this year. - Vodafone Group Plc reported disappointing service revenue in Germany, its biggest market, after
regulators barred some bundling of TV packages with rent and the telecommunications company lost
millions of customers
Vodafone had warned that it would lose millions of customers after Germany barred housing associations
from bundling TV packages with rent. The company said it ended up losing more than half of its households
on such contracts, retaining 4 million out of 8.5 million before the change. Service revenue fell 6.2% in the
quarter ending in September. That compared to the average 6.1% decline forecast
from analysts. Vodafone’s shares dropped 8.2%. The company’s other markets helped boost overall sales in
the first half of the year. Service revenue rose 1.7% to €15.1 billion in the half ending in September, in line
with estimates. Organic service revenue in Africa, which accounts for almost a fifth of the company’s total,
rose 9.9% in the half. Vodafone was able to raise prices in South Africa and interest in the company’s financial
services app, Vodafone Cash, helped add users in Egypt. Profit rose to €1.22 billion in the first half from a loss
of €155 million in the same period a year earlier. Adjusted earnings before interest, taxes, depreciation and
amortization after leases declined less than 1% to €5.4 billion, in line with estimates. - Elliott Investment Management has built a $5 billion-plus position in Honeywell International Inc. and
is pushing the industrial giant to pursue a break up
The activist investment firm wants Honeywell to separate into two standalone companies, one focused on
aerospace and the other on automation, according to a statement on Tuesday. In a letter to Honeywell’s
board, Elliott partner Marc Steinberg and managing partner Jesse Cohn wrote that uneven execution,
inconsistent financial results and an underperforming share price have hurt the company’s record of value
creation over the last five years. We believe these challenges have a clear cause and a straightforward
solution, Steinberg and Cohn wrote. The conglomerate structure that once suited Honeywell no longer does,
and the time has come to embrace simplification. Shares in Honeywell rose 3.8%. The investment is the
largest ever in a single stock by Elliott. It’s now among the top five shareholders in Honeywell. - Shopify shares are up 21% after the e-commerce company reported third-quarter results that beat
expectations and gave a strong outlook. Analysts singled out the company’s free cash flow margins as
especially positive
THIRD QUARTER RESULTS: Revenue $2.16 billion, +26% y/y, estimate $2.12 billion. Gross merchandise
volume $69.72 billion, +24% y/y, estimate $67.78 billion. COMMENTARY: Sees 4Q Rev. Growing at Mid-to
High-Twenties Percentage. Sees 4Q Free Cash Flow Margin Similar to 4Q 2023. Sees 4Q Revenue to Grow at A
Mid-to-High-Twenties % Y/Y. Sees 4Q Opex as Percentage of Revenue 32% to 33%. Sees 4Q Gross Profit up at
A Y/Y Rate Similar to Q3. Scotiabank (sector perform, PT $80): Free cash flow was impressive, and SHOP is
adding more GMV from international and Enterprise where it’s still early for monetization, suggesting more
upside to come as its product set matures in these markets. - Spotify Technology SA reported third-quarter growth in subscribers and profit margins, saying lower
marketing and personnel costs helped the music streaming service overcome a tough climate for
advertising
Paying subscribers grew to 252 million, beating analysts’ estimates of 250.1 million. Total monthly active
users increased to 640 million, also exceeding estimates. The company is showing the benefits of wo
rkforce cuts taken late last year, along with the tailwind from continued growth. Its gross margin, a measure
of profitability, widened to 31.1%, topping expectations, and its operating income surged to €454 million.
Revenue for the quarter increased 19% to €3.99 billion, missing the €4.03 billion average estimate though.
Advertising revenue increased 6%, held back by low prices in its music business and podcasts. Shares of
Spotify rose 6.6% in afterhours trading after the results were announced. This quarter, Spotify predicts active
monthly users will increase to 665 million, above estimates, while paying subscribers grows to 260 million.
Revenue this period will be €4.1 billion, compared with estimates of €4.26 billion. The company also projects
gross margin will widen to 31.8%
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