- Asian Stocks Advance on Tech Rebound Ahead of Fed: Markets Wrap
Stocks in Asia advanced to follow Wall Street’s tech-led rebound from a selloff that shook global markets, as
focus turns to the Federal Reserve’s rate decision and US mega-cap earnings. Japanese, Australian and Indian
shares rose. Most other major markets in the region are closed for Lunar New Year holidays. Futures in
Europe climbed, while US contracts were steady after the S&P 500 rose 0.9% and Nasdaq 100 advanced 1.6%
on Tuesday, as Nvidia Corp. rallied 8.9% following the largest one-day value loss in history. Shares rebounded
after a rough start to the week, sparked by concerns over a cheap artificial intelligence-model from Chinese
startup DeepSeek. However, investors like Steve Cohen see the development as a boon for the industry.
Focus shifts to the Fed decision and Big Tech earnings, starting Wednesday. - S&P 500 rises, Nasdaq jumps 2% in recovery rally after Nvidia-led sell-off
Stocks climbed Tuesday, recovering some ground from a sell-off sparked by the emergence of
Chinese artificial intelligence startup DeepSeek that sent tech shares reeling. The S&P 500 advanced 0.92% to
6,067.70, with technology shares seeing the biggest gains among sectors. The Technology Select Sector SPDR
Fund (XLK) rose more than 2%, following a 4.9% loss on Monday. The Nasdaq Composite surged 2.03% to
19,733.59, following a 3.1% decline a day ago. The Dow Jones Industrial Average added 136.77 points, or
0.31%, to 44,850.35. - Oil prices steady as investors weigh impact of Trump tariffs
Oil prices steadied on Wednesday as investors weighed the impact of potential U.S. tariffs on Canadian and
Mexican imports, while largely shrugging off an increase in U.S. weekly crude inventory. Brent crude futures
fell 2 cents to $77.47 a barrel by 0132 GMT while U.S. crude futures were at $73.81 a barrel, up 4 cents, or
0.1%. Benchmarks fell to multi-week lows early this week as news of surging interest in Chinese startup
DeepSeek’s low-cost artificial intelligence (AI) model prompted concerns over energy demand to power data
centres, rattling the overall energy sector, while weak economic data from China further soured the demand
outlook. The White House said on Tuesday that U.S. President Donald Trump still plans to issue 25% tariffs on
Canada and Mexico on Saturday while weighing fresh tariffs on China. Trump did not immediately impose
tariffs on Monday as previously promised but said he was thinking about imposing 25% duties on imports
from Canada and Mexico on Feb. 1 over illegal immigrants and fentanyl crossing into the U.S. It remains
unclear how any new tariffs could affect oil imports to the U.S. from the countries. Canada supplied 3.9
million barrels per day of oil to the U.S. in 2023, roughly half of overall imports for the year, while Mexico
supplied 733,000 bpd, according to data from the Energy Information Administration (EIA). - Gold holds steady as investors eye Fed decision, Trump tariff moves
Gold prices were little changed on Wednesday as market participants awaited the U.S. interest rate verdict,
while the spotlight was also on President Donald Trump’s trade policies amid fresh tariff threats. Spot
gold held its ground at $2,762.49 per ounce, as of 0317 GMT. U.S. gold futures added 0.1% to $2,769.90.
Last week, prices were trading near record-high levels but they fell over 1% on Monday as investors rushed to
liquidate bullion to offset losses triggered by a sharp pullback in technology stocks, spurred by DeepSeek’s
low-cost, low-power AI model. - Fed to Hold Rates Steady and Brace for Trump
Federal Reserve officials are expected to leave interest rates steady this week, giving themselves more time
to lower inflation and to assess how President Donald Trump’s policies will affect the economy. The break in
rate cuts would come after three straight reductions since September that lowered the Fed’s benchmark rate
by a full percentage point. Their target range is now 4.25% to 4.5%. - China’s Great Coupon Handout Far From Enough to Spur Consumption
As threats of a new trade war loom, China is seeking to boost domestic demand by dangling subsidies in front
of a nation of wary spenders. For 31-year-old Huihui Xu, that means she can finally afford a 6,700 yuan ($922)
La-Z-Boy armchair, the kind that comes with a retractable footrest. “Without the subsidy policy, I wouldn’t
think about making these purchases,” said Xu, who earns about 10,000 yuan a month in the southern city of
Shenzhen. Requesting the use of a nickname to discuss personal finances, the teacher said she bought over
50,000 yuan’s worth of appliances, including washing machines and refrigerators, with the government
footing nearly 20% of the bill. “I want to seize the opportunity.” - Trump Renews Universal Tariff Threat to ‘Protect Our Country’
President Donald Trump said he wants to impose across-the-board tariffs that are “much bigger” than 2.5%,
the latest in a string of signals that he’s preparing widespread levies to reshape US supply chains. “I have it in
my mind what it’s going to be but I won’t be setting it yet, but it’ll be enough to protect our country,” Trump
told reporters Monday night. Asked about a report that incoming Treasury Secretary Scott Bessent favored
starting with a global rate of 2.5%, Trump said he didn’t think Bessent supported that and wouldn’t favor it
himself. He said he wanted a rate “much bigger” than 2.5%. Trump spoke aboard Air Force One while he flew
back to Washington from a Florida speech where he pledged tariffs on specific sectors, including
semiconductors, pharmaceuticals, steel, copper and aluminum. He also strongly suggested he could also
impose them on automobiles from Canada and Mexico, countries he’s already threatened with 25% across
the board tariffs as soon as Feb. 1. - Japanese Starting to Feel Pain of BOJ Rate Hikes More Concretely
Japanese people are feeling the impact from higher interest rates at a more personal level, according to
analysis of social media activity following the central bank’s latest policy decision. After the Bank of Japan
raised borrowing costs for a third time under Governor Kazuo Ueda last week, about 80% of comments on
YouTube were negative and dominated by concerns about housing loans and inflation — issues that directly
affect people’s day-to-day lives. That’s according to analysis by Tomoki Fukuma, CEO of TDAI Lab, a startup
backed by Tokyo University that conducts sentiment analysis. Fukuma analyzed remarks on videos posted on
YouTube after Friday’s rate hike announcement, and compared them with equivalent comments in March
and July last year, when the BOJ also pushed up rates. Around 8,500 comments in total were analyzed,
Fukuma said. The results suggest that as time goes on, the BOJ’s rate increases are having a stronger impact
on people’s everyday lives, shifting from more abstract concepts to more concrete effects. While the effects
of rate hikes are yet to generate the kind of opposition that might give policymakers second thoughts about
taking action, the government and central bank will likely keep a close eye on public sentiment over rate
moves. - Australia inflation cools in Q4, opens door to rate cut
Australian consumer prices rose at the slowest pace in almost four years in the December quarter, while a
pullback in housing costs helped cool core inflation and open the door to a cut in interest rates as early as
next month. Wednesday’s benign price report saw markets price in an 80% probability the Reserve Bank of
Australia would cut the 4.35% cash rate by a quarter point when it next meets on Feb. 18. That would be the
first policy change in more than a year and the first easing since the depths of the pandemic. A fall in
borrowing costs would also be welcomed by the Labor government which faces a tough election this year.
Local bonds rallied in reaction, while the Aussie dollar dipped 0.3% to $0.6228. The data from the Australian
Bureau of Statistics showed the consumer price index (CPI) rose 0.2% in the fourth quarter, under forecasts
of a 0.3% increase. Some of the moderation was due to government rebates on electricity and other
subsidies, which will tend to reverse once they expire. Annual inflation dropped to 2.4%, from 2.8% the
previous quarter and a peak of 7.8% in late 2022, leaving it bang in the middle of the RBA’s 2-3% target band.
Crucially, a key measure of core inflation, the trimmed mean, increased by just 0.5% in the fourth quarter,
the smallest rise since mid-2021. The annual pace slowed to 3.2%, helped by an easing in the cost of buying,
building and renting homes. The central bank also likes to look at core inflation over two quarters annualised,
and that was down at 2.6%. - Alibaba releases AI model it claims surpasses DeepSeek-V3
Chinese tech company Alibaba (BABA) on Wednesday released a new version of its Qwen 2.5 artificial
intelligence model that it claimed surpassed the highly-acclaimed DeepSeek-V3. The unusual timing of the
Qwen 2.5-Max’s release, on the first day of the Lunar New Year when most Chinese people are off work and
with their families, points to the pressure Chinese AI startup DeepSeek’s meteoric rise in the past three
weeks has placed on not just overseas rivals, but also its domestic competition. “Qwen 2.5-Max outperforms
almost across the board GPT-4o, DeepSeek-V3 and Llama-3.1-405B,” Alibaba’s cloud unit said in an
announcement posted on its official WeChat account, referring to OpenAI and Meta’s most advanced open
source AI models. The Jan. 10 release of DeepSeek’s AI assistant, powered by the DeepSeek-V3 model, as well
as the Jan. 20 release of its R1 model, has shocked Silicon Valley and caused tech shares to plunge, with the
Chinese startup’s purportedly low development and usage costs prompting investors to question huge
spending plans by leading AI firms in the United States. But DeepSeek’s success has also led to a scramble
among its domestic competitors to upgrade their own AI models. - Starbucks (NASDAQ:SBUX) Exceeds Q4 Expectations
Coffeehouse chain Starbucks (NASDAQ:SBUX) reported revenue ahead of Wall Street’s expectations in Q4
CY2024, but sales were flat year on year at $9.40 billion. Its GAAP profit of $0.69 per share was 3.7% above
analysts’ consensus estimates. Starbucks (SBUX) Q4 CY2024 Highlights: Revenue: $9.40 billion vs analyst
estimates of $9.32 billion (flat year on year, 0.9% beat); EPS (GAAP): $0.69 vs analyst estimates of $0.67 (3.7%
beat); Adjusted EBITDA: $1.63 billion vs analyst estimates of $1.50 billion (17.3% margin, 8.4% beat);
Operating Margin: 11.9%, down from 15.8% in the same quarter last year; Free Cash Flow Margin: 14.7%,
down from 19% in the same quarter last year; Locations: 40,576 at quarter end, up from 38,587 in the same
quarter last year; Same-Store Sales fell 4% year on year (5% in the same quarter last year) (slight beat vs
expectations of down 5% year on year); Market Capitalization: $113.6 billion. “While we’re only one quarter
into our turnaround, we’re moving quickly to act on the ‘Back to Starbucks’ efforts and we’ve seen a positive
response,” commented Brian Niccol, chairman and chief executive officer. Started by three friends in
Seattle’s historic Pike Place Market, Starbucks (NASDAQ:SBUX) is a globally-renowned coffeehouse chain that
offers a wide selection of high-quality coffee, beverages, and food items. Traditional fast-food restaurants are
renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items.
Their reputations for on-the-go consumption make them favored destinations for individuals and families
needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are
unhealthy and made with inferior ingredients, a battle that’s especially relevant today given the consumers
increasing focus on health and wellness. Reviewing a company’s long-term sales performance reveals insights
into its quality. Any business can have short-term success, but a top-tier one grows for years. - Qorvo (NASDAQ:QRVO) Surprises With Q4 Sales, Stock Jumps 14.9%
Communications chips maker Qorvo (NASDAQ: QRVO) announced better-than-expected revenue in Q4
CY2024, but sales fell by 14.7% year on year to $916.3 million. Guidance for next quarter’s revenue was
better than expected at $850 million at the midpoint, 1.2% above analysts’ estimates. Its non-GAAP profit of
$1.61 per share was 33.2% above analysts’ consensus estimates. Qorvo (QRVO) Q4 CY2024 Highlights:
Revenue: $916.3 million vs analyst estimates of $903.3 million (14.7% year-on-year decline, 1.4% beat);
Adjusted EPS: $1.61 vs analyst estimates of $1.21 (33.2% beat); Adjusted Operating Income: $177.9 million vs
analyst estimates of $140.2 million (19.4% margin, 26.9% beat); Revenue Guidance for Q1 CY2025 is $850
million at the midpoint, above analyst estimates of $840.2 million; Adjusted EPS guidance for Q1 CY2025 is $1
at the midpoint, above analyst estimates of $0.86; Operating Margin: 5.8%, up from -3.9% in the same
quarter last year; Free Cash Flow Margin: 19.2%, down from 43.4% in the same quarter last year; Inventory
Days Outstanding: 114, up from 105 in the previous quarter; Market Capitalization: $8.28 billion. Bob
Bruggeworth, president and chief executive officer of Qorvo, said, “Qorvo is executing on a broad set of
strategic initiatives to expand margin, generate strong free cash flow, and increase shareholder value. During
the December quarter, we continued to successfully support our largest customer, who represented
approximately 50% of sales. Within our Android 5G product portfolio, we are narrowing our focus to the
higher-value flagship and premium tiers, where customers value Qorvo’s differentiated products. In HPA, we
had record Defense & Aerospace quarterly revenue and expect continued strength in the March quarter. As
we continue to execute on our growth and diversification strategy, we expect HPA and CSG to deliver double
digit growth in fiscal 2025 and next fiscal year.” - World’s largest luxury group LVMH posts better than feared full-year sales
The world’s largest luxury company LVMH on Tuesday reported better-than-expected full-year sales, in the
strongest sign yet of a potential turnaround in the high-end sector. The owner of brands including Louis
Vuitton, Moët & Chandon and Hennessy posted revenues of 84.68 billion euros ($88.27 billion) for 2024,
versus the 84.38 billion euros forecast by LSEG analysts. The full-year figure equates to organic growth of 1%
versus the previous year, the company said. Sales also rose more than expected in the fourth quarter to
December, after falling for the first time since the pandemic in the three months prior. The growth was led by
consumers in Europe, the U.S. and Japan, while the group cited continued weakness in the wider Asia region.
“In 2024, amid an uncertain environment, LVMH showed strong resilience. This capacity to weather the
storm in highly turbulent times — already illustrated on many occasions throughout our Group’s history — is
yet another testament to the strength and relevance of our strategy,” Bernard Arnault, chairman and CEO of
LVMH, said in a statement. The results were driven by particularly solid performance in its selective retailing
unit, which includes Sephora, as well as perfume and cosmetics. The group’s critical fashion and leather
goods, and wine and spirits segments, however, continued to lag. Speaking during a presentation shortly
after the release, Arnault noted a substantial decline in the company’s cognac and spirits sales, but said he
expects a recovery within two years as a new team takes over. He added that, despite ongoing geopolitical
and macroeconomic uncertainties, the group’s outlook for 2025 was “starting well,” according to a
translation. The French luxury goods giant is seen as a bellwether for the wider luxury industry, which has
faced significant pressure over recent years amid declining China sales and broader macroeconomic
headwinds. - Critical chip firm ASML posts fourth-quarter sales and profit beat
Dutch semiconductor equipment maker ASML on Wednesday reported better-than-expected net sales and
profit results for the fourth quarter. Here’s how ASML did versus LSEG consensus estimates for the fourth
quarter: Net sales: 9.26 billion euros versus 9.07 billion euros expected; Net profit: 2.69 billion euros versus
2.64 billion euros expected. ASML suffered losses during a global tech sell-off earlier in the week after
Chinese startup DeepSeek’s low-cost AI application triggered questions over competitiveness and U.S.
leadership in the sector. - CrowdStrike Stock Hits Record High Following DeepSeek Cyberattack
CrowdStrike Holdings (CRWD) was the S&P 500’s second-best-performing stock Tuesday afternoon as it and
other cybersecurity companies were boosted by news of a cyberattack on Chinese artificial
intelligence startup DeepSeek. DeepSeek, which torpedoed technology stocks Monday as investors digested
its claim that its AI assistant runs on less-advanced chips and at a lower cost than those of U.S. rivals like
OpenAI, temporarily restricted new registrations Tuesday following “large-scale malicious attacks” on its
services. The attacks may have lifted investor enthusiasm for the cybersecurity sector, with CrowdStrike
shares gaining almost 10% to become the top-performing Nasdaq Composite stock. CloudFlare (NET) shares
jumped 10% in afternoon trading, while Zscaler (ZS) gained almost 7%, CyberArk (CYBR) rose more than 4%,
and Palo Alto Networks (PANW) added more than 2%. - Italy’s Mediobanca rejects Monte dei Paschi’s ‘destructive’ 13-billion-euro takeover bid
Tuscany’s bailed-out Monte dei Paschi unexpectedly launched a 13-billion-euro all-share takeover proposal
for Mediobanca. Monte dei Paschi, which required state rescue in 2017 after years of battering losses, has
long been the poster child of trouble in the Italian banking sector. Monte dei Paschi’s investors include
Mediobanca shareholders such as business tycoon Francesco Gaetano Caltagirone, a key ally of the
administration of Giorgia Meloni, and Delfin — the holding company of late billionaire Leonardo del Vecchio.
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