Asian Stocks Take a Breather After Three-Day Rally: Markets Wrap
(Bloomberg) — Stocks in Asia snapped a three-day winning streak, mirroring a halt in Wall Street’s rally as investors’ risk appetite cooled ahead of Federal Reserve Chair Jerome Powell’s Jackson Hole speech on Friday. Shares fell in Japan and South Korea, shrugging off improving exports data, after the US benchmark ended an eight-day gain.
Stocks ticked lower on Tuesday, ending a winning streak as investors failed to build on the market’s recent recovery rally. The Dow Jones Industrial Average slid 61.56 points, or 0.15%, to 40,834.97. The S&P 500 slid 0.2% to 5,597.12, while the Nasdaq Composite shed 0.33% to 17,816.94. Tuesday’s declines snapped eightday winning streaks for the S&P 500 and Nasdaq, the first positive periods of that length for each since late. If the S&P 500 had finished Tuesday up, it would have marked its longest winning streak since 2004. Meanwhile, the Dow notched its first negative day in the last six. Despite Tuesday’s moves, the major averages have bounced back and market volatility has tumbled since the start of the month. The CBOE Volatility Index, or VIX, was last under 16 after topping 65 on Aug. 5. That was also the day that the S&P 500 suffered its worst session since 2022 amid a global market sell-off sparked by a weak July jobs report and an interest rate hike in Japan.
Oil prices down on swelling U.S. crude stocks, easing Middle East tensions
Oil prices slipped on Wednesday on estimates showing swelling U.S. crude inventories and expectations that tensions in the Middle East were easing following a tour of the region by mediators. Brent crude futures fell 9 cents to $77.11 a barrel by 0001 GMT. U.S. West Texas Intermediate crude lost 10 cents at $73.07 per barrel. U.S. crude oil stocks were seen rising last week by 347,000 barrels, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline and distillate stocks, however, fell by 1.043 million barrels and 2.247 million barrels respectively, according to the sources. The United States is the world’s biggest producer and consumer of oil, and growing inventories point to oversupply that could hinder prices.
Gold holds below record high as investors await clarity on Fed cuts
Gold prices were trading below record high levels on Wednesday after a rally fueled by Western fund inflows and U.S. rate-cut optimism, as investors braced for minutes of the Federal Reserve’s latest meeting for clarity on the depth of cuts. Spot gold was up 0.1% at $2,517.38 per ounce, as of 0238 GMT, after hitting an all-time high of $2,531.60 on Tuesday. U.S. gold futures rose 0.2% to $2,555.20. Gold has gained about $460 or 22% so far this year, with geopolitical tensions and uncertainty created by the upcoming U.S. Presidential elections and prospective rate cuts set to help power the precious metal to even loftier levels.
Tiger Cub Goel Closes $11 Billion Firm, Citing Health Issues
(Bloomberg) — David Goel, who worked for hedge fund titan Julian Robertson before launching Matrix Capital Management 25 years ago, is shuttering his $11 billion firm and returning client cash. Goel told clients in a letter that he made the decision to close his hedge fund due to health problems, according to people familiar with the matter who asked not to be identified.
Hedge Fund Rotation Out of Mag 7 Stocks Helped Navigate Selloff
(Bloomberg) — Reduced positions in most of the magnificent seven stocks excluding Apple Inc. and Amazon.com Inc. helped hedge funds withstand volatility during the equity market selloff earlier this month, according to Goldman Sachs Group Inc.’s hedge fund trend monitor report.
JD.com Drags China Tech Shares Lower on Walmart’s Planned Exit
(Bloomberg) — Chinese tech stocks slumped early Wednesday after a string of negative news related to the country’s consumption space hit peers trading in the US. The Hang Seng Tech Index fell 2.8% at the open, as JD.com Inc. plunged 11% following Walmart Inc.’s stake sale plan. Its shares in the US fell nearly 10% in post market trading.
Walmart Seeks $3.74 Billion From Selling Its JD.com Stake
(Bloomberg) — Walmart Inc. is seeking to raise as much as $3.74 billion by selling its stake in Chinese ecommerce firm JD.com Inc., ending an eight-year partnership in a key retail arena now plagued by an economic downturn and intense competition. The US retailer is offering 144.5 million shares in a $24.85 to $25.85 price range, people familiar with the matter said.
China’s PBOC Dials Back Support for Yuan as Currency Steadies
(Bloomberg) — China’s central bank set its daily reference rate for the yuan broadly in line with expectations for the first time in more than a year, a sign it’s loosening its tight grip for the managed currency. The People’s Bank of China set the so-called fixing at 7.1307 per dollar on Wednesday, just seven pips away from the estimates in a Bloomberg survey of analysts.
Japan’s July Exports Jump as Weak Yen Inflates Shipments Value
(Bloomberg) — Japan’s exports rose at a faster pace in July, largely reflecting the yen’s drop to a 38-year low last month. Exports gained 10.3% from a year ago led by chip parts and cars, accelerating from 5.4% in the previous month, the Ministry of Finance reported Wednesday. The result was broadly in line with the median economist estimate of a 11.5% increase.
Obama Takes Stage as Harris Surge Stirs Nostalgia for 2008
(Bloomberg) — With former President Barack Obama headlining Tuesday’s second night of the Democratic National Convention, nominee Kamala Harris and her supporters are hoping to recapture the same electoral magic. Delegates in Obama’s hometown of Chicago spent the week reveling in a race that’s once again competitive.
Lynch, Others Feared Dead by Coast Guard After Two Days at Sea
(Bloomberg) — After two days of search-and-rescue efforts, British tech entrepreneur Mike Lynch, Morgan Stanley International chairman Jonathan Bloomer and four others were feared dead aboard the sunken wreckage of a luxury yacht off the coast of Sicily.
Fed Confronts Up to a Million US Jobs Vanishing in Revision
(Bloomberg) — US job growth in the year through March was likely far less robust than initially estimated, which risks fueling concerns that the Federal Reserve is falling further behind the curve to lower interest rates. Goldman Sachs Group Inc. and Wells Fargo & Co. economists expect the government’s preliminary benchmark revisions on Wednesday.
Bond Traders Amassing Historic Level of Risk on Rate-Cut Bets
(Bloomberg) — Bond traders are taking on a record amount of risk as they bet big on a Treasury market rally fueled by expectations the Federal Reserve will embark on its first interest-rate cut in more than four years. The number of leveraged positions in Treasury futures has risen to an all-time high ahead of the central bank’s annual economic symposium in Jackson Hole.
Sahm Rule Was Triggered in July, Others Were Earlier: Economics
(Bloomberg Economics) — The rise in the US unemployment rate in July’s jobs report triggered the Sahm rule, an indicator with a good track record for identifying recessions, ushering in a bout of market turbulence. But other gauges have already been signaling economic weakness, most of the recession indicators Bloomberg Economics has examined have been triggered, some as early as last year.
BOJ Research Notes Indicate Interest Rate Hike Is Still on Table
(Bloomberg) — The Bank of Japan released a pair of research papers highlighting the persistence of inflationary pressure in the economy, indicating there is still a case to be made for another interest rate hike. The notes released Tuesday highlight the potential impact of the nation’s chronic labor shortage on wages and the shift in corporate behavior.
Stocks Halt Big Rally Driven by Momentum Guys
(Bloomberg) — Stocks struggled to make headway, following a furious rally that put the market within a striking distance of its all-time highs. A drop in equities interrupted what would have been the S&P 500’s longest winning streak in 20 years. In stark contrast to the extreme negative momentum during the panic selling of early August, euphoria has taken hold.
Bronfman Bids $4.3 Billion for Control of Paramount Global
The media executive and Seagram Co. spirits heir is offering to buy National Amusements Inc., the Redstone family holding company that owns the majority of Paramount’s voting stock, for about $2.4 billion, including liabilities, according to the person, who asked to not be identified because they weren’t authorized to speak.
Kroger Sells $10.5 Billion of Bonds to Fund Albertsons Buy
(Bloomberg) — Kroger Co. sold $10.5 billion of notes on Tuesday to help fund its acquisition of fellow grocer Albertsons Cos. in one of the biggest corporate bond deals of the year. The supermarket chain issued the bonds in seven parts, according to a person with knowledge of the matter.
Tech war: upcoming Huawei chip unit event stokes speculation over breakthrough
A conference scheduled next month by Huawei Technologies’ secretive chip design unit HiSilicon has fanned speculation that a sanctions-busting breakthrough may be announced, triggering a surge in some China-listed tech stocks.
Market Chatter: Arbitration Panel to Review Value of Hess’s Guyana Assets in Exxon-Chevron Dispute
An arbitration panel will examine the hidden value of Hess’s, HES, oil assets in Guyana in a dispute between Exxon Mobil, XOM, and Chevron, CVX, Reuters reported on Tuesday, citing people familiar with the matter.
Microchip Technology Inc. said that its servers were breached by an unauthorized party, forcing the chipmaker to shut down some of its systems and scale back operations
The company, which supplies chips to the US defense industry, detected suspicious activity involving its information technology systems on Aug. 17, according to a regulatory filing on Tuesday. The company determined two days later that certain servers and some business operations had been breached. The company promptly took additional steps to address the incident, including isolating the affected systems, shutting down certain systems, and launching an investigation with the assistance of external cybersecurity advisers, Microchip said in the filing. That has caused its operations to run at less than normal levels, affecting its ability to fill orders, the Chandler, Arizona-based chipmaker said.
Keysight Technologies shares are up 9.1% in extended trading, after the measurement instruments company reported third-quarter results that beat expectations. It also gave a forecast that is ahead of the analyst consensus at the midpoint of the range
FOURTH QUARTER FORECAST: Sees revenue $1.25 billion to $1.27 billion, estimate $1.25 billion, Bloomberg Consensus; Sees adjusted EPS $1.53 to $1.59, estimate $1.54 THIRD QUARTER RESULTS: Adjusted EPS $1.57 vs. $2.19 y/y, estimate $1.35; Communications Solutions revenue $847 million, -7.7% y/y, estimate $830.5 million; Electronic Industrial Solutions revenue $370 million, -20% y/y, estimate $364.8 million.
Netflix Inc. shares hit their first record in nearly three years as investors continue gravitating toward the streaming-video company while its strategy to improve profitability plays out
Shares of the Los Gatos, California-based company rose as much as 3.3% on Tuesday, taking out a high that had stood since November 2021, the peak of its Covid-era success. In a sign of its growing advertising might, the company earlier on Tuesday disclosed a more than 150% increase in upfront ad sales commitments compared to 2023. Investors are really embracing Netflix’s strategy, said Daniel Morgan, senior portfolio manager at Synovus Trust. The Netflix story used to be that it was spending a ton on content, have negative free cash flow, and that it would issue debt. It isn’t doing that anymore, and that’s made a huge difference. It is really ahead of the pack here, and being rewarded for that consistency. The record represents a remarkable turnaround for the stock, which at one point lost more than 75% of its value from its 2021 peak.
Shares of Eli Lilly & Co. gain as much as 3.4%, after the drugmaker said its weight-loss drug, Zepbound, helped cut the risk of diabetes by about 94% in obese and pre-diabetic patients in a three-year study
Analysts note that Lilly’s reduction data is better compared to Novo Nordisk’s semaglutide data. Diabetes device makers are slumping on the news; Dexcom -3.3%, Tandem Diabetes -3.4%, Insulet -4.0% Barclays, Carter Gould, overweight, PT $1,025: Says the impressive reduction for tirzepatide betters the historical semaglutide benchmarks and strengthens the case for tirzepatide as best in class; this is an impressive result and argues strongly in favor of treatment in pre-diabetic individuals while also making the case for tirzepatide’s best in class status as this notably beat out historical benchmarks from semaglutide.
Palo Alto Networks shares rose 4.5% on Tuesday after the network security software company gave a quarterly profit outlook that beat Wall Street’s expectations. It also authorized an additional $500 million for share repurchases
FOURTH QUARTER RESULTS: Adjusted EPS $1.51, estimate $1.41; Revenue $2.19 billion, +12% y/y, estimate $2.16 billion; Product revenue $480.5 million, -5.3% y/y, estimate $493.6 million; Subscription and Support revenue $1.71 billion, +18% y/y, estimate $1.67 billion; Deferred revenue $5.54 billion, +19% y/y, estimate $5.64 billion; R&D expenses $494.8 million, +19% y/y, estimate $473 million; Remaining performance obligations $12.7 billion, +20% y/y, estimate $12.69 billion. The board of directors authorized an additional $500 million for share repurchases, increasing the remaining authorization for future share repurchases to $1 billion, expiring December 31, 2025. FIRST QUARTER FORECAST: Sees adjusted EPS $1.47 to $1.49, estimate $1.43, Bloomberg Consensus; Sees revenue $2.10 billion to $2.13 billion, estimate $2.11 billion.
Lowe’s cuts full-year outlook as it expects weaker home improvement sales
Lowe’s on Tuesday cut its full-year forecast, as the retailer’s quarterly sales declined and it projected weak home improvement spending in the second half of the year. The company said it now projects total sales of between $82.7 billion and $83.2 billion for the full year, compared with the $84 billion to $85 billion that it previously expected. It said it expects comparable sales to fall by 3.5% to 4%, compared with its prior forecast of a decline of 2% to 3%. It anticipates adjusted earnings per share will be about $11.70 to $11.90, compared with the prior outlook of between $12 and $12.30.
Medtronic shares rise as much as 3.4% to their highest level since March after the medical device maker lifted the lower end of its forecasts for adjusted profit and organic revenue growth for the full year
Citi calls the FY1Q results and the guidance raise a nice surprise. FIRST QUARTER RESULTS: Adjusted EPS $1.23 vs. $1.20 y/y; Revenue $7.92 billion, +2.8% y/y; Cardiovascular revenue $3.01 billion, +5.5% y/y, estimate $2.93 billion, Bloomberg Consensus; Medical Surgical revenue $2.00 billion, -2.1% y/y, estimate $2.44 billion; Neuroscience revenue $2.32 billion, +4.4% y/y, estimate $2.3 billion; Diabetes revenue $647 million, +12% y/y, estimate $614.9 million; Adjusted gross margin 65.9% vs. 66.4% y/y, estimate 65.5%; Adjusted operating margin 24.4% vs. 24.8% y/y, estimate 24.4% 2025 YEAR FORECAST: Sees adjusted EPS $5.42 to $5.50, saw $5.40 to $5.50; Sees organic revenue +4.5% to +5%, saw +4% to +5%; The company’s guidance represents FY25 diluted non-GAAP EPS growth in the range of 4 to 6%.
Fabrinet, FN, Q4 Earnings and Revenues Surpass Estimates
Fabrinet, FN, came out with quarterly earnings of $2.41 per share, beating the Zacks Consensus Estimate of $2.25 per share. This compares to earnings of $1.86 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 7.11%. A quarter ago, it was expected that this company that assembles optical, electro-mechanical and electronic devices for other companies would post earnings of $2.12 per share when it actually produced earnings of $2.39, delivering a surprise of 12.74%.
The world’s largest steel industry is going through a winter amid a supply glut and weak demand
China steel rebar prices are down over 20% year to date at 3,208 Chinese yuan, $450, per ton, data from financial information provider Wind showed. Chinese demand has been a major disappointment for metals across the board, said Sarbin Chowdhury, head of commodities analysis at BMI. Prices of China iron ore, the key material for steel, have plunged over 28% so far this year, according to FactSet data.
Shein sues Temu over copyright infringement, alleges rival loses money on every sale
Shein has sued Temu for copyright infringement as it fends off similar allegations from a host of brands and independent artists. In a civil complaint, the Chinese-linked fast-fashion player accused Temu of routinely stealing its designs and alleged an employee stole confidential trade secrets. Shein alleged that Temu loses money on each sale it makes and uses trademark infringement to make up for the losses.