- Asian Stocks Rise as Trump-Xi Call Boosts Optimism: Markets Wrap
Asian shares climbed after a conversation between Donald Trump and Xi Jinping raised hopes for easing US
China tensions. Equities advanced in regional markets from Australia to Japan and China. A gauge of major
Chinese firms listed in Hong Kong rose as much as 2.5%, after Trump described the pre-inauguration talk
between the two leaders as “very good.” US futures were marginally lower in Asia with Wall Street closed on
Monday for a holiday. A gauge of the dollar slipped, extending last week’s decline after snapping a six-week
rally. The stronger appetite for risk assets came after Trump and Xi discussed trade, TikTok and fentanyl,
which may set the tone for relations in the early days of the new administration. Adding to the brighter
mood, TikTok started restoring service in the US on Sunday as Trump said he would halt enforcement of a law
requiring the app’s Chinese owner to find a buyer for three months. - Dow surges more than 300 points, S&P 500 posts best week since period following Trump’s election
Stocks climbed Friday, as the three major averages posted their first weekly gain of the new year. The Dow
Jones Industrial Average added 334.70 points, or 0.78%, to end at 43,487.83. The S&P 500 gained 1% to
5,996.66, and the Nasdaq Composite advanced 1.51% to 19,630.20. Big tech stocks were higher on the day,
with shares of Tesla popping 3%. Chipmaking giant Nvidia jumped 3.1%, while Alphabet shares added more
than 1%. For the week, the Dow and S&P 500 advanced 3.7% and 2.9%, respectively. Both indexes posted
their biggest weekly advance since the week of the U.S. presidential election in November. The Nasdaq
climbed 2.5% week to date for its best one-week performance since early December. Those gains come after
investors received back-to-back reports showing inflationary pressures softening somewhat. The core
consumer price index rose less than expected year on year, and the producer price index also had a smaller
than-anticipated increase for December. The 10-year Treasury yield pulled back sharply as hopes for multiple
rate cuts this year rose. - Oil posts fourth week of gains as investors assess U.S. sanctions impact
Oil prices fell slightly on Friday but posted a fourth consecutive week of gains, as the latest U.S. sanctions on
Russian energy trade heightened expectations for oil supply disruptions. Brent crude futures lost 50 cents to
close at $80.79 per barrel. U.S. West Texas Intermediate crude futures dropped 80 cents to settle at $77.88 a
barrel. Oil prices gained more than 1% for the week. Last Friday, the Biden administration unveiled broader
sanctions targeting Russian oil producers and tankers. - Gold trims losses, investors await Trump’s inauguration speech
Gold cut early losses on Monday as investors looked forward to Donald Trump’s inauguration speech for
clarity on the incoming administration’s policies, which could offer further clues on the Federal
Reserve’s interest rate path. Spot gold was down 0.1% at $2,697.60 per ounce, as of 0300 GMT, after falling
0.5% earlier in the day. U.S. gold futures dropped 0.3% to $2,740.10. - Bank of Japan set to raise rates, Trump permitting
Bank of Japan Governor Kazuo Ueda will size up the need to raise interest rates on Friday amid heightened
expectations of a hike – and barring a market shock triggered by Donald Trump’s first few days in the White
House. While the rest of the central banking world has been focusing on the pace of cuts, especially those at
the Federal Reserve, Ueda and his board are still heading in the other direction as they look to gradually pull
Japan back in the direction of conventional policy settings. After decades of weak prices and feeble economic
growth, Japan appears close to achieving stable inflation with solid wage growth, enabling the BOJ to push
borrowing costs up toward levels seen in other major economies. Some 90% of economists surveyed by
Bloomberg this month said prices and economic conditions warrant an increase in rates from 0.25%. Of the
surveyed economists, about three-quarters expect the central bank to move this week. Overnight swaps on
Friday briefly showed a January rate hike almost fully priced in among traders. - Traders bet on more Bank of England rate cuts in 2025 after data shocks
Traders bet on more Bank of England rate cuts this year after weak retail sales data added to the latest
in a run of data surprises this week. Sales volumes fell 0.3% month-on-month in December, the Office
for National Statistics said Friday, versus the 0.4% increase forecast in a Reuters poll of economists.
“Cautious spending” dominated during the holiday period, said Nicholas Found, head of commercial
content at consultancy Retail Economics, adding that the figures showed the continued impact of the
cost-of-living crisis on consumer behavior. Following the Friday release, markets priced in a total of more
than 75 basis points worth of interest rate cuts throughout 2025 from the BOE’s current key rate of
4.75%. That compares to around 65 basis points of cuts expected on the previous day, though this then
eased back toward 70 basis points later on Friday. The central bank next meets Feb. 6, when a quarter
point cut is widely expected. The disappointing retail data adds to the dim economic picture in the U.K.
and to the challenges facing Finance Minister Rachel Reeves, who has made rebooting growth and
cutting the country’s debt to GDP ratio her main focus as she enters her first full year in office.
Earlier this week, the ONS announced that the U.K. economy grew by just 0.1% in November and
stagnated over a three-month timeframe. Inflation meanwhile cooled more than expected to 2.5%, also
boosting market bets on the extent of BOE rate cuts this year after 2024′s half-percentage point
reduction. - The BRICS bloc is growing and Trump’s tariff threat isn’t expected to put off aspiring members
China could step in to ease the pain of any potential U.S. trade measures against BRICS members, according
to David Lubin, senior research fellow at Chatham House. Trump’s tariff threat is conditional on BRICS
dethroning the U.S. dollar as the world’s most widely used trade currency, which could prove to be a tall
order for the alliance. The lack of a concrete allied strategy and action from BRICS members raises doubts
over whether it will be considered a threat to the U.S., with Pantheon Macroeconomics’ Duncan Wrigley. - Chinese investments in the U.S. have plummeted since Trump’s first term. The trend is unlikely to
reverse
Chinese companies won’t likely step up investments in the U.S. under the incoming Trump administration,
analysts said. “That’s probably the last thing on Trump’s mind, is trying to incentivize [Chinese companies] to
invest here,” said Rafiq Dossani, an economist at U.S.-based think tank RAND. Chinese investment deals in
the U.S. have slowed drastically since Trump’s first term, according to the latest American Enterprise Institute
data. - EV, hybrid sales reached a record 20% of U.S. vehicle sales in 2024
Sales of all-electric vehicles and hybrid models reached 20% of new car and truck sales in the U.S. for the first
time last year — marking a landmark year for “green” vehicles but coming at a slower pace than many had
previously anticipated. Auto data firm Motor Intelligence reports more than 3.2 million “electrified” vehicles
were sold last year, or 1.9 million hybrid vehicles, including plug-in models, and 1.3 million all-electric models.
Traditional vehicles with gas or diesel internal combustion engines still made up the majority of sales, but
declined to 79.8%, falling under 80% for the first time in modern automotive history, according to the data.
Regarding sales of pure EVs, Tesla continued to dominate, but Cox Automotive estimated its annual sales fell
and its market share dropped to about 49%, down from 55% in 2023. The Tesla Model Y and Model 3 were
estimated to be the bestselling EVs in 2024. Following Tesla in EV sales was Hyundai Motor, including Kia, at
9.3% of EV market share; General Motors at 8.7%; and then Ford Motor at 7.5%, according to Motor
Intelligence. BMW rounded out the top five at 4.1%. The EV market in the U.S. is highly competitive: Of the
68 mainstream EV models tracked by Cox’s Kelley Blue Book, 24 models posted year-over-year sales
increases; 17 models were all new to the market; and 27 decreased in volume. - India is staring at an ‘oil shock’ as U.S. sanctions on Russian crude loom
India’s days of buying cheap Russian oil could be over. Sweeping sanctions by the U.S. against Russia’s energy
companies and operators of vessels that transport oil will complicate Indian efforts to keep importing cheap
Russian crude and could push up inflation in Asia’s third-largest economy, analysts said. The country could be
looking at a potential oil shock, said Bob McNally, president of Rapidan Energy Group. “India will be more
affected than China by sanctions, since India imports much greater amount of its oil from Russia than China,”
he told CNBC. Last Friday, the U.S. Treasury announced sanctions on two Russian oil producers, along with
183 vessels which are primarily oil tankers that have been shipping barrels of Russian crude. At present,
tankers sanctioned by the U.S. are still permitted to offload crude oil until March 12. The South Asian
nation imported a significant 88% of its oil needs between April and November 2024, little changed from a
year earlier, according to government data. Around 40% of those imports came from Russia, data from trade
intelligence firm Kpler showed. Out of the newly sanctioned 183 tankers, 75 of them have transported
Russian oil to India in the past, according to data provided by Kpler. Just last year alone, the 183 sanctioned
tankers transported around 687 million barrels of crude, of which 30% were shipped to India. “Most of these
barrels went to Indian refiners and, hence, the impact will likely be largest there,” BNP Paribas’ senior
commodities strategist Aldo Spanier said in a research note following the sanctions. The new U.S. sanctions
were deeper and broader than foreseen by markets, and the disruptions are expected to amplify, Spanier
added. India’s Ministry of Petroleum and Natural Gas did not respond to a CNBC request for comment. - Hamas frees hostages, Israel releases Palestinian prisoners on day one of ceasefire
Hamas released three Israeli hostages and Israel released 90 Palestinian prisoners on Sunday, the first day of
a ceasefire suspending a 15-month-old war that has devastated the Gaza Strip and inflamed the Middle East.
The truce allowed Palestinians to return to bombed-out neighborhoods to begin rebuilding their lives, while
relief trucks delivered much-needed aid. Elsewhere in Gaza, crowds cheered Hamas fighters who emerged
from hiding. Fireworks were launched in celebration as buses carrying the Palestinian prisoners arrived in
Ramallah on the West Bank, where thousands of people waited to welcome them. Those freed from Israeli
prisons included 69 women and 21 teenage boys from the West Bank and Jerusalem, according to Hamas.
In Tel Aviv, hundreds of Israelis cheered and wept in a square outside the defense headquarters as a live
broadcast from Gaza showed three female hostages getting into a Red Cross vehicle surrounded by Hamas
fighters. The Israeli military said Romi Gonen, Doron Steinbrecher and Emily Damari had been reunited with
their mothers and released a video showing them in apparent good health. Damari, who lost two fingers
when she was shot the day she was abducted, smiled and embraced her mother as she held up a bandaged
hand. “I would like you to tell them: Romi, Doron and Emily an entire nation embraces you. Welcome home,”
Prime Minister Benjamin Netanyahu told a commander by phone. - TSMC is confident its CHIPS Act funding will continue under Trump, says CFO Wendell Huang
U.S. President-elect Donald Trump has accused Taiwan of “stealing” his country’s chip industry. But Taiwan’s
biggest chip company is confident the Trump administration will continue funding its projects in the U.S.
Taiwan Semiconductor Manufacturing Co has been promised $6.6 billion under the Joe Biden
administration’s CHIPS and Science ACT to help build three cutting-edge chip fabrication plants in Arizona as
part of U.S. efforts to onshore chip manufacturing. Speaking to CNBC’s Emily Tan in an exclusive interview,
TSMC Chief Financial Officer Wendell Huang said the funding was expected to continue to roll in gradually
under Trump as the fabrication plants pass construction and production milestones. “As a matter of fact, in
the fourth quarter, we already received the first batch of government support,” Haung said, revealing the
contract chip manufacturer had got $1.5 billion in funds. Following some production delays, the first
fabrication plant in Arizona started producing advanced chips in the fourth quarter of last year, Huang
said. He added that the construction of two plants in Arizona was on track, with the second expected to
be operational in 2028. TSMC’s first investment in Arizona was announced in May 2020, with the company’s
total investment in the its three projects there eventually standing at over $65 billion. - Intel Shares Jump on Report It’s an Acquisition Target
Intel Corp. shares jumped as much as 9.5% Friday morning after a report on a technology news site said the
beleaguered chipmaker is an acquisition target. SemiAccurate, a tech-focused newsletter founded by Charlie
Demerjian, said it was “read an email about a company trying to acquire Intel, whole” and that the “mystery
company has the resources to pull it off.” The report did not name the firm potentially interested in buying
Intel. Once the world’s dominant chipmaker, Intel has struggled in recent years to keep up in a competitive
and fast-changing industry. Last month, Chief Executive Officer Pat Gelsinger was forced out after the board
lost confidence in his plans to turn around the iconic company. Its stock fell 60% last year, and the shares are
only now back at their level from early December. Its market valuation is about $90 billion. Buyers have
circled Intel even before Gelsinger’s ouster and takeover speculation has accelerated since then. Qualcomm
Inc. approached Intel to discuss a potential acquisition before eventually cooling on the idea, Bloomberg
reported last year. Arm Holdings Plc similarly inquired about possibly buying Intel’s product division, but was
told the business wasn’t for sale, Bloomberg reported in September. - SLB Stock Jumps on Earnings. AI Is the ‘X Factor’ for Energy-Tech Industry
SLB stock climbed Friday after the energy-technology provider reported fourth-quarter revenue and earnings
that beat Wall Street’s expectations. SLB reported revenue of $9.28 billion and adjusted earnings of 92 cents
a share for the quarter ended Dec. 31, topping FactSet consensus estimates of $9.18 billion and 90 cents a
share. Full-year revenue of $36.29 billion and adjusted earnings of $3.41 a share were in line with
expectations. SLB stock was up 7.4% to $44.11 on Friday. The company said its board approved a 3.6%
increase to its quarterly dividend and that it entered into accelerated share repurchase transactions to
acquire $2.3 billion of its common stock. It said that positions it to increase total return to shareholders to at
least $4 billion in 2025 from $3.3 billion in 2024. “While upstream investment growth will remain subdued in
the short term due to global oversupply, we anticipate the oil supply imbalance will gradually abate,” CEO
Olivier Le Peuch said in a news release. “Global economic growth and a heightened focus on energy security,
coupled with rising energy demand from AI and data centers will support the investment outlook for the oil
and gas industry throughout the rest of the decade.” SLB was known as Schlumberger Ltd. until 2022, when it
underwent a corporate rebranding. The change was meant to reflect its transition from an oilfield services
company to a global technology company, SLB said. The company has less exposure to the U.S. and more to
stronger international markets, such as the Middle East. International revenue grew 12% in 2024, led by the
Middle East and Asia, which achieved record revenues. Le Peuch also noted that revenue from the company’s
Digital & Integration arm rose 10%, with accelerated adoption of the company’s digital solutions marking
what he called a milestone year. - Eli Lilly stock target cut, retains Buy rating on growth potential
On Friday, Guggenheim analysts revised their price target for Eli Lilly (NYSE:LLY) shares, reducing it to $973.00
from the previous $995.00, while reiterating a Buy rating on the stock. According to InvestingPro data, the
stock currently trades at a P/E ratio of 81.85, indicating a premium valuation relative to its peers. Analyst
targets range from $580 to $1,250, reflecting diverse views on the company’s growth potential. The
adjustment comes as Eli Lilly provided clarity on its 2024 guidance and announced its 2025 revenue
expectations, which are anticipated to range between $58 billion and $61 billion. This forecast aligns closely
with Guggenheim and consensus estimates of approximately $58.3 billion and $58.5 billion, respectively.
The company’s strong financial health is evidenced by its impressive 80.91% gross profit margin and 27.41%
revenue growth over the last twelve months. The company’s fourth-quarter earnings for 2024 are expected
to draw significant attention, with a particular focus on the comprehensive 2025 financial guidance. Analysts
predict that profit and loss trends will likely mirror those seen in previous years. Moreover, assumptions
regarding the performance of the diabetes drug tirzepatide in 2025 will be scrutinized, especially concerning
international markets and the dynamics of access and stocking. Eli Lilly’s near-term pipeline developments
are also under the spotlight, especially the Phase 3 results for the drug orforglipron, which are due to start
being reported in late second quarter of 2025. With a market capitalization of $682 billion and a beta of 0.41,
Eli Lilly demonstrates relative stability compared to the broader market. - Qorvo Stock Soars as Starboard Value Takes Stake in Chipmaker
Qorvo (QRVO) shares jumped 11% Friday when hedge fund Starboard Value made a significant investment in
the maker of radio frequency and power semiconductors. In a regulatory filing, Qorvo reported Starboard
held 7.29 million shares of the company, a 7.7% stake.1 At yesterday’s closing price of $73.59, the ownership
is valued at about $536 million. Qorvo has struggled of late. In October, shares plunged 25% to their lowest
level since the beginning of the COVID-19 pandemic in 2020 when the firm posted a surprising second
quarter loss and warned it faced a continued business slowdown. At the time, CFO Grant Brown explained
that changing consumer cellphone buying habits reduced demand. Brown added that the company was
“taking appropriate actions, including factory consolidation and operating expense reductions as well as
focusing on opportunities that align with our long-term profitability objectives.” Neither Qorvo nor Starboard
Value immediately responded to an Investopedia request for comment. Even with today’s advance, shares of
Qorvo are down almost 20% in the past year.
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