- Asian Stocks Gain on China Recovery, Weaker Dollar: Markets Wrap
Asian equities climbed, aided by some encouraging signs in China’s economy and a retreat in the dollar.
The MSCI Asia Pacific Index rose 0.4%, its first gain this week, following data that showed China’s retail
sales expanded at the strongest pace in eight months and property prices fell at a slower pace. Japanese
benchmarks advanced about 0.8%, supported by weakness in the yen. US contracts slipped. - Dow drops 200 points as postelection rally sputters, Fed Chair Powell signals caution on rate cuts
U.S. stocks slid Thursday, as Federal Reserve Chair Jerome Powell signaled that the strength of the economy
could warrant some patience with future rate cuts. The Dow Jones Industrial Average slipped 207.33 points,
or 0.47%, to close at 43,750.86. The S&P 500 fell 0.6% to end at 5,949.17, while the Nasdaq Composite pulled
back 0.64% to 19,107.65. - Oil dips on oversupply concerns, heads for weekly loss
Oil prices edged down early on Friday as oversupply concerns and demand worries stemming from a stronger
dollar outweighed a steep draw in U.S. fuel stocks. Brent crude futures were down 30 cents, or 0.41%, at
$72.26 a barrel by 0105 GMT. U.S. West Texas Intermediate crude futures were down 25 cents, or 0.36%, at
$68.45. For the week, Brent is set to fall about 2.2% while WTI is set to decline 2.7%. U.S. crude inventories
last week rose by 2.1 million barrels, the Energy Information Administration (EIA) said on Thursday, much
more than analysts’ expectations for a 750,000-barrel rise. - Gold faces worst week in more than 3 years on bets of slower Fed easing
Gold traded little changed on Friday, but was set for its worst week in more than three years, hurt by a
stronger U.S. dollar amid expectations of fewer Federal Reserve rate cuts. Spot gold rose 0.1% to $2,569.69
per ounce by 0308 GMT after a five-session slide. It was down more than 4% for the week so far.
Bullion hit a two-month low in the previous session and has declined more than $220 from the record peak
hit last month. U.S. gold futures were up 0.1% at $2,574.50. - US Producer Price Index rises by 0.2%, aligning with forecasts
The latest Producer Price Index (PPI) report shows an actual increase of 0.2% in October, aligning with
forecasts. As a key economic indicator, the PPI measures changes in the prices manufacturers receive for
their goods, serving as an early signal of inflation trends that may impact consumer prices. This steady PPI
figure is encouraging for the US dollar, as the alignment with expectations suggests a stable inflation rate.
Such consistency supports a balanced economic outlook, which often strengthens the dollar by reinforcing
confidence in the currency’s stability. - Japan GDP expands by 0.3% in third quarter, snapping two quarters of year-on-year declines
Japan’s third-quarter real gross domestic product expanded 0.3% year on year, snapping two straight
quarters of year-on-year decline, according to government data released Friday. The GDP reading marked a
reversal from the revised 1.1% decline seen in the second quarter. The data comes against the backdrop of
the Bank of Japan raising rates from 0.1% to 0.25% in July, its highest level since 2008. Higher policy rates
generally cool the economy, and vice versa. The BOJ has stated that it will continue to raise rates if economic
activity and prices develop as expected. On a quarter-on-quarter basis, GDP rose 0.2%, in line with Reuters
poll estimates, but lower than the 0.5% growth in the second quarter. On an annualized basis, the economy
expanded 0.9%, beating estimates of a 0.7% expansion. However, this was a sharp decline from the 2.9% rise
in the quarter before. Should economic indicators fall into place, the BOJ said it could raise rates to 1% by the
second half of its 2025 fiscal year, starting from September 2025. - Powell says the Fed doesn’t need to be ‘in a hurry’ to reduce interest rates
Federal Reserve Chair Jerome Powell said Thursday that strong U.S. economic growth will allow policymakers
to take their time in deciding how far and how fast to lower interest rates. The economy is not sending any
signals that we need to be in a hurry to lower rates, Powell said in remarks for a speech to business leaders in
Dallas. The strength we are currently seeing in the economy gives us the ability to approach our decisions
carefully. - China retail sales beat forecasts in October while real estate slump worsens
China on Friday reported mixed economic data, including strong growth in retail sales, signaling that the
country’s recent stimulus push has already bolstered certain sectors of its flagging economy. Retail sales grew
by 4.8% year-on-year, the National Bureau of Statistics said Friday. That was above the 3.8% forecasted in a
Reuters poll, and a pickup from 3.2% growth in September. However, investment in real estate for the
January to October period fell by 10.3% from a year ago, steeper than the 10.1% drop seen in the January to
September period, as the country’s property slump worsens. - India’s central bank chief warns growing risk of global inflation returning
Central banks have managed to engineer a soft landing, but there is still a risk of global inflation returning,
according to India’s central bank chief. Speaking in Mumbai, India, on Thursday at CNBC-TV18′s Global
Leadership Summit, Reserve Bank of India (RBI) Governor Shaktikanta Das said monetary policy from central
banks across the world had largely performed well in recent years. A soft landing has been ensured but risks
of inflation, as I speak to you here today, risks of inflation coming back and growth slowing down do remain,
Das said. India’s central bank chief warns growing risk of global inflation returning
Central banks have managed to engineer a soft landing, but there is still a risk of global inflation returning,
according to India’s central bank chief. Speaking in Mumbai, India, on Thursday at CNBC-TV18′s Global
Leadership Summit, Reserve Bank of India (RBI) Governor Shaktikanta Das said monetary policy from central
banks across the world had largely performed well in recent years. A soft landing has been ensured but risks
of inflation, as I speak to you here today, risks of inflation coming back and growth slowing down do remain,
Das said. - Britain’s car finance industry is in crisis with banks bracing for billions in payouts
Britain’s motor finance industry is in disarray, with analysts warning of worst-case scenarios similar in
magnitude to the country’s costliest consumer banking scandal. The crisis stems back to a landmark
judgement from the U.K.’s Court of Appeal in late October, when the court ruled it was unlawful for car
dealers to receive bonuses from banks providing motor finance, without getting the customer’s informed
consent. It has prompted comparisons to Britain’s payment protection insurance (PPI) scandal, which was
estimated to have cost banks more than £50 billion ($63.8 billion). - Bitcoin speculative fervor cools, traders await next Trump steps
The speculative frenzy around Bitcoin since Donald Trump’s US election victory is moderating both in the spot
and derivatives markets. The largest digital asset slid below $87,000 on Friday after Federal Reserve Chair
Jerome Powell said there was no need to hurry interest-rate cuts. That left the token about $6,500 below a
record high achieved on Wednesday. - Trump’s Win Gives Seoul Second Thoughts About Arms for Ukraine
Donald Trump’s election victory is prompting South Korea to rethink the possibility of sending weapons
directly to Ukraine, a decision that could have a big impact on the direction of the war. President Yoon Suk
Yeol’s government now has to consider the US president-elect’s stance as it looks at whether to change its
long-standing policy of not sending lethal aid to Kyiv, according to an official who asked not to be identified
as discussions are private and ongoing. - Siemens AG’s shares rose 4.5% to a record after the company said the boom in power hungry data
centers will drive demand for its transformers and grid technology in the coming year
Comparable revenue is expected to rise as much as 7% this fiscal year, after rising 3% in the 12 months
through the end of September, Siemens said. Siemens raised its dividend 11% to €5.20 per share. Siemens
has seen orders for its electrification products jump as the surge in artificial intelligence investments gave rise
to more data centers with massive energy requirements. The growth has helped offset weaker results for its
factory-automation business, which has seen orders drop amid an ongoing slump in China. Siemens net
income reached a record €9 billion in fiscal 2024. The continuing boom in digitalization and artificial
intelligence, the growing demand for higher resilience and the steps toward an all-electric and decarbonized
world offer tremendous opportunities for all our offerings, Siemens Chief Executive Officer Roland
Busch said. Revenues in Siemens’ key digital industries unit, which makes machines and systems to automate
manufacturing, fell 10% in the fiscal year through September. Chief Financial Officer Ralf Thomas said
Thursday that the unit will likely start to recover in the second half of fiscal 2025, and that thousands of job
cuts are planned. Siemens anticipates only moderate global economic growth in the current fiscal year as
risks, such as the prospect of rising trade tensions after Donald Trump’s election to the White House and the
collapse of Germany’s three-party coalition government, are rising. - Burberry shares gained 18.7% after the luxury-goods maker’s retail comparable sales for the first half
surpassed expectations, with analysts particularly positive on the new CEO’s strategy for the group
SECOND QUARTER RESULTS: Retail comparable sales -20%, estimate -21%. Asia Pacific comparable sales
28%, estimate -26.6%. EMEIA comparable sales -10%, estimate -16.7%. Americas comparable sales -18%,
estimate -21.2%. Mainland China comparable sales -27%, estimate -31.5%. FIRST HALF RESULTS: Retail
comparable sales -20% vs. +10% y/y, estimate -21.2%. Revenue GBP1.09 billion, -22% y/y, estimate GBP1.08
billion. Adjusted operating loss GBP41 million vs. profit GBP223 million y/y, estimate loss GBP46.4 million.
Adjusted operating margin -3.8% vs. 15.9% y/y, estimate -4.53%. Adjusted loss per share 18.3p vs. EPS 42.1p
y/y, estimate loss/shr 13.4p. UBS (sell): Analyst Zuzanna Pusz says the 1H adj. EBIT loss was better than
expected: £41m versus UBS estimate £63m. Still, predicts disappointment regarding a lack of concrete
timeline for when financial targets will be achieved. - Walt Disney shares rose 6.2% on Thursday, after the media company reported fourth-quarter results
and gave a bullish outlook
FOURTH QUARTER RESULTS: Adjusted EPS $1.14 versus 82c y/y, estimate $1.10. Revenue $22.57 billion,
+6.3% y/y, estimate $22.47 billion. Total segment operating income $3.66 billion, +23% y/y, estimate $3.71
billion. Disney+ Core subscribers 122.7 million, estimate 119.85 million. Disney+ Core ARPU $7.30, estimate
$7.34. FIRST QUARTER FORECAST: Sees modest decline in Disney+ Core subscribers q/q. Sees content
sales/licensing and other operating income relatively in-line q/q. Sees experiences segment operating income
impact of about $130 million due to Hurricanes Helene and Milton and about $90 million due to Disney
Cruise Line pre-launch costs. 2025 YEAR FORECAST: Sees high-single digit adj. EPS growth, est. +4%. Sees cash
from operations about $15b. Sees CapEx about $8b. Targets $3b in buybacks. Sees double digit
entertainment operating income growth. Sees sports operating income +13% y/y. Sees experiences operating
income +6% to +8% y/y. 2026 YEAR FORECAST : Sees double-digit adj. EPS growth. Sees double-digit growth
in cash from operations. 2027 YEAR FORECAST: Sees double-digit adj. EPS growth. - Capri Holdings Ltd and Tapestry Inc. scrapped their $8.5 billion plan to merge after a court order froze
the proposed combination of the US fashion companies due to antitrust regulators’ objections
Tapestry, owner of the Coach and Kate Spade brands, and Capri, whose biggest brand is Michael Kors, said
they mutually decided to end the agreement as it was in the best interests of both companies. Shares of
Tapestry rose 12.8% and Capri shares erased earlier declines to advance 4.4%. The collapse of the deal
compounds problems at Capri, which earlier this month reported weak financial results, hurt by lower
revenue at Michael Kors. Sales at Versace, another key brand, also tumbled. Analysts have said
they think Capri may have to sell off some of its brands following the failed merger. Capri remains confident
in the company’s long-term future and will focus on its three key luxury brands, which also include Jimmy
Choo, according to John Idol, Capri’s chairman and chief executive officer. At the same time, during a call
with analysts on Thursday, Idol said we have always been open to conversations with any company that has
an interest in any of our assets. Tapestry is performing better. It raised its guidance for the year recently due
to better-than-expected revenue at Coach. The company also announced a $2 billion share repurchase
program on Thursday. Tapestry Chief Executive Joanne Crevoiserat said that the company would make stock
buybacks an immediate priority if the deal failed. - Solar Stocks Rebound from Post-Election Selloff
Solar stocks, which have sold off in the wake of President-elect Trump’s victory last week, are rebounding on
Thursday in New York, with Enphase Energy and First Solar among leaders in the S&P 500. The Invesco Solar
ETF (TAN) is up as much as 3.5% and on pace for its biggest gain since before Election Day; the exchange-
traded fund closed Tuesday at its lowest since June 2020. Volume picked up and shares gained after Reuters
reported that Trump’s transition team is focused on nixing the $7,500 consumer tax credit on electric
vehicles. Among solar shares up at least 10% are Sunnova Energy, Sunrun, Array Technologies and SolarEdge
Technologies.
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