- Asian Stocks Drop as Traders Rethink Rate Cuts: Markets Wrap
(Bloomberg) — Stocks in Asia opened broadly lower Friday as traders reassessed the path forward for interest rates, while equities in Hong Kong braced for further gains on bullish corporate results. Shares in Japan and Australia fell, while futures for Hong Kong pointed to early gains after the Golden Dragon index of US-listed Chinese companies rose 2.5% Thursday. - BOJ Leaves Bond Buying Amount Unchanged After a Cut on Monday
(Bloomberg) — The Bank of Japan left unchanged the amounts of debt purchases in its regular operations following a surprise cut on Monday. The central bank offered to buy the same amounts of debt due in one to 10 years and more than 25 years on Friday as those at the last operations. This followed a decrease in the purchase amount of notes maturing in five to 10 years. - Gold Steady as Markets Reassess Rate Path After Hawkish Fed speak
(Bloomberg) — Gold held Thursday’s loss, with traders reconsidering the future path for interest rates after Federal Reserve officials reiterated that US inflation needs to ebb further to warrant lower borrowing costs. Yields on US Treasuries climbed as Richmond Fed President Thomas Barkin and New York Fed’s John Williams signalled that borrowing costs needed to stay higher. - Israel’s War-Cabinet Rift Bursts Into Open Over Postwar Gaza
(Bloomberg) — Israeli Prime Minister Benjamin Netanyahu’s two war-cabinet partners are openly challenging his indecision over postwar Gaza — even siding with the US in pushing for Palestinian rule of the devastated coastal strip. Défense Minister Yoav Gallant said Israel should help establish a Palestinian governing body as an alternative to Hamas. - Fed Officials Suggest Interest Rates Should Stay High for Longer
(Bloomberg) — Several Federal Reserve officials said the central bank should keep borrowing costs high for longer as policymakers await more evidence inflation is easing, suggesting they’re not in a rush to cut interest rates. Cleveland Fed President Loretta Mester, New York Fed President John Williams and Richmond Fed President Thomas Barkin
. - BOJ May Raise Rates as Soon as June, Ex-Chief Economist Says
(Bloomberg) — The Bank of Japan may raise its benchmark interest rate as many as three more times this year, with the next move potentially coming as early as June given how much room there is to adjust its “excessively” easy settings, according to a former BOJ chief economist. - Yass-Allied Group Details Corporate Tax Cuts as 2025 Fight Looms
(Bloomberg) — An anti-tax advocacy group with ties to billionaire Jeff Yass and shipping magnate Richard Uihlein is jockeying for a fresh round of corporate levy cuts should Donald Trump win a second term in the White House. The Club for Growth Foundation, whose members have sparred with Trump advisers on economic policies, says its corporate tax cut plan. - Goldman Strikes $43 Billion Investing Deal for UPS Pension Funds
(Bloomberg) — Goldman Sachs Group Inc. clinched a $43 billion mandate to invest pension fund assets of parcel-delivery company UPS, in one of the largest deals of its kind. The investment mandate announced Thursday pushes Goldman, which manages some $325 billion of such pension assets, closer to its goal of surpassing rivals in the next three to five years. - Tepper Scoops Up Alibaba as Bargains Draw Hedge Funds to China
(Bloomberg) — Billionaire investor David Tepper loaded up on beaten-down Chinese stocks last quarter while reducing stakes in high-flying US tech firms, leading hedge fund managers who are slowly warming up to China amid a record gap in valuations between the two markets. - Snowflake Said to Be in Talks to Buy Reka AI for $1 Billion
(Bloomberg) — Snowflake Inc. is in talks to acquire startup Reka AI for more than $1 billion, expanding the software maker’s effort to offer generative AI capabilities, according to people familiar with the matter. Reka AI makes large language models software trained on massive swaths of the internet that can be used for a range of tasks. - Walmart shares surged 6.99% after an upbeat first quarter earnings results.
It reported a revenue of $161.51 billion, +6% YoY, beating estimates of $159.58 billion. The company also reported an adjusted earnings per share of 60 cents, beating estimates of 53 cents. Considering its results, Walmart forecasted its adjusted earnings per share at the high-end or slightly above $2.23 to $2.37 for the financial year. - Siemens shares fell 6.8% after the German industrial giant reported mixed earnings, with its key digital industries division missing already-low expectations. Siemens cut its full-year forecast for the unit, offsetting a guidance raise for the smart infrastructure division. The company also announced a deal to sell its large motor Innomotics business, confirming an earlier Bloomberg report.
SECOND QUARTER RESULTS: Net income EU2.20 billion, -38% y/y, estimate EU1.69 billion. Comparable revenue 0%, estimate +2.06%. Revenue EU19.16 billion, -1.3% y/y, estimate EU19.54 billion. Orders EU20.45 billion, -13% y/y, estimate EU21.07 billion. Free cash flow EU1.34 billion, -43% y/y. YEAR FORECAST: Still sees EPS before purchase price allocation EU10.40 to EU11, estimate EU10.45. Still sees comparable revenue +4% to +8%, estimate +4.61%. Sees Digital Industries comparable revenue -4% to -8%, saw 0% to +3%, estimate -2.27%. - Meta shares fell 1.7% after the European Union opened a probe into the company over concerns its algorithms are illegally exploiting the weakness of children to get them addicted to Facebook and Instagram.
Thierry Breton, the EU’s internal market commissioner, announced the probe under the bloc’s tough new Digital Services Act, after preliminary checks revealed a raft of potential red flags such as the creation of so-called rabbit holes, which suck young users deeper and deeper into often inappropriate material on social media. He said EU watchdogs aren’t convinced Meta has done enough “to mitigate the risks of negative effects to the physical and mental health of young Europeans on its platforms.” The EU will also examine Meta’s age verification tools, as well as whether Facebook and Instagram’s levels of privacy, safety and security for young people are sufficient, Breton added. - Fed’s Kashkari Says Rates Likely On Hold for a ‘While Longer’
(Bloomberg) — Federal Reserve Bank of Minneapolis President Neel Kashkari repeated the central bank likely needs to keep interest rates at the current level for “a while longer,” and questioned how much they’re restraining the US economy. “The biggest uncertainty in my mind is how much downward pressure is monetary policy putting on the economy. - Yen Rebounds as Cooling US CPI Weighs on Dollar, Treasury Yields
(Bloomberg) — The yen extended gains in Asian trading on Thursday after rallying 1% overnight as traders ramped up bets that the Federal Reserve will ease monetary policy this year on signs US inflation pressures were easing. Japan’s currency strengthened beyond the 154 level for the first time since May 7, rising to as high as 153.6 per dollar. - Deere shares fell 4.7% after the farm machinery maker lowered its full-year net income forecast. Analysts said the guidance signals a gloomy outlook for production in the second half of the fiscal year.
SECOND QUARTER RESULTS: EPS $8.53 vs. $9.65 y/y. Net income $2.37 billion, -17% y/y, estimate $2.16 billion. Net sales $13.61 billion, -15% y/y, estimate $13.2 billion. YEAR FORECAST: Sees net income $7.0 billion, saw $7.50 billion to $7.75 billion, estimate $7.53 billion. Jefferies (buy): “Guidance implies a very aggressive F2H downshift in production and earnings,” analyst Stephen Volkmann writes. The guidance sets a lower bar for the 2025 fiscal year and “focuses on avoiding inventory build,” which are reasons for investors to support the new outlook, the analyst wrote. - HSBC falls 3% amid reports that top shareholder Ping An is looking to trim its stake
Citing people familiar with the matter, Bloomberg said that “one option an internal team at the Chinese insurance giant is considering is further share sales, similar to the $50 million sale it disclosed last week.”
Ping An has butted heads with HSBC’s management in recent years, most notably supporting a shareholder motion in 2023 that sought to spin off its Asia business and establish fixed dividends. - Dow futures are little changed after blue-chip average touches 40,000 for first time
Futures tied to the Dow Jones Industrial Average traded near flat Friday, after the preceding session brought much fanfare, with the blue-chip average briefly touching the key 40,000 milestone for the first time. Futures connected to the 30-stock index dipped 21 points. S&P 500 futures and Nasdaq 100 futures also both traded near their flatlines. - Asia-Pacific markets mostly fall as investors assess key economic data from China
Asia-Pacific markets mostly fell Friday, as investors assessed key China data to gauge the state of the world’s second-largest economy. Data from China showed retail sales rose by 2.3% in April from a year earlier. The reading was less than the 3.8% increase forecast by a Reuters poll, and slower than the 3.1% pace reported in March. Mainland China’s CSI 300 index fell 0.20% after the data. - Reddit soars after announcing OpenAI deal that allows use of its data for training AI models
Reddit shares neared a record in extended trading on Thursday after the company announced a partnership with OpenAI. The deal will allow the ChatGPT maker to train its artificial intelligence models on Reddit content. OpenAI previously announced a similar deal with Google.
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