- Japanese Stocks Tumble, Selloff in Tech Extends: Markets Wrap
(Bloomberg) — Japanese stocks plunged for a second day on expectations for further monetary tightening in the country, exacerbating a global selloff following weak US economic data and tech earnings. The Topix benchmark index fell as much as 5.7%, as the yen traded near its strongest since March to weigh on Japan’s export-oriented economy. - Dow closes nearly 500 points lower Thursday as investors’ recession fears awaken
Stocks sold off Thursday, with the Dow Jones Industrial Average tumbling nearly 500 points, as investors’ fears over a recession surfaced. The Dow dropped 494.82 points, or 1.21%, to end at 40,347.97. At its session lows, the 30-stock index lost 744.22 points, or about 1.8%. The S&P 500 shed 1.37% to end at 5,446.68, while the Nasdaq Composite slipped 2.3% to 17,194.15. The Russell 2000 index, the small-cap benchmark that has rallied lately, dropped 3%. - Oil Heads for Weekly Drop as Demand Woes Offset Middle East Risk
(Bloomberg) — Oil headed for a fourth weekly drop as demand concerns in the world’s two biggest economies overshadowed heightened geopolitical risk. Brent crude traded near $80 a barrel after dropping by 1.6% on Thursday, while West Texas Intermediate was below $77. Factory gauges in the US and China both showed a contraction on Thursday. - Gold prices set for weekly gain with U.S. payrolls data on tap
Gold prices firmed on Friday and were set for a weekly gain, driven by prospects of a Fed rate cut in September and rising tensions in the Middle East, while market participants awaited U.S. nonfarm payrolls data for further direction. Spot gold was up 0.2% at $2,451.07 per ounce, as of 0243 GMT, and has gained more than 2% for the week. U.S. gold futures climbed 0.6% to $2,495.60. - Real Deal NY: Howard Lutnick hosting Trump fundraiser in Hamptons
Cantor Fitzgerald chief executive Howard Lutnick is gathering 100 guests in the Hamptons on Friday in the hopes of raising over $10 million for Donald Trump, Bloomberg reported. The real estate and investment banker is reportedly co-hosting the get-together with former hedge fund manager John Paulson and president of 1789 Capital Omeed Malik. - Treasury Two-Year Yields Slide to 14-Month Low Before Payrolls
(Bloomberg) — The policy-sensitive two-year Treasury yields dropped to the lowest level since May 2023 as traders fixated on upcoming jobs data for clues on the magnitude of US interest-rate cuts. The two-year yield fell as much as four basis points to 4.11%, as an increase in unemployment claims and softer manufacturing readings. - Russia Releases US Reporter in Major Swap for Kremlin Agents
(Bloomberg) — Russia freed Wall Street Journal reporter Evan Gershkovich as well as jailed Kremlin critics in the largest prisoner exchange with the West in decades, in return for a prized assassin sought by President Vladimir Putin. “Now, their brutal ordeal is over and they’re free,” US President Joe Biden said at a White House appearance with family members. - Harris’ Overambitious Immigration Plan Sets Up Trump Attacks
(Bloomberg) — Kamala Harris’ effort to tackle the root causes of migration is now one of her biggest liabilities as she seeks the presidency. As vice president she had a broad, if ambitious, mandate to tackle problems contributing to a surge in migration from Central America to the US: Fight corruption; lure investment and strengthen the rule of law. - US Jobs Report to Show More Softening with Unemployment Steady
(Bloomberg) — Forecasters anticipate a monthly report on US employment will show moderating job and wage growth in July, underscoring an ongoing softening in the labor market. Payrolls probably rose by 175,000 last month following June’s 206,000 increase, according to the median estimate in a Bloomberg survey. - Most BOJ Watchers Rethink Pace of Hikes After Ueda’s Hawkishness
(Bloomberg) — Most Bank of Japan watchers are reassessing the trajectory of interest rates and bringing forward their forecasts after Governor Kazuo Ueda’s hawkish messaging Wednesday and his earlier-than-expected rate hike. Some 68% of 41 economists see the policy rate rising to 0.5% from 0.25% by the end of this year, according to a Bloomberg survey conducted Thursday. - Harris-Powell Double Act Leads to Unwind of ‘Trump Trades’
(Bloomberg) — The surging popularity of Kamala Harris in US election polls and soaring odds the Federal Reserve will soon start cutting interest rates is dealing a double-blow to the so-called Trump trades. In the 11 days since President Joe Biden declared he wouldn’t seek a second term and Democrats united behind the candidacy of Vice President Harris. - Trump Boasts $327 Million War Chest After $139 Million July Haul
(Bloomberg) — Republican nominee Donald Trump’s campaign said it raised $138.7 million in July a tumultuous month in the campaign which saw Vice President Kamala Harris emerge as his Democratic rival. The total tops the $112 million he raised in June for his campaign, the Republican National Committee and state parties. - Bank of England cuts interest rates for first time in over four years
The Bank of England on Thursday delivered its first interest rate cut in more than four years, taking the key rate to 5%. While several analysts had expressed the BoE could announce an interest rate reduction during its latest meeting, a lack of clear signaling from the central bank had shrouded the decision in uncertainty. Markets were pricing in a 61% probability of a 25-basis-point reduction of its key rate at the August meeting as of 8:15 a.m. in London, despite U.K. inflation hitting the BOE’s 2% target for two straight months. The Bank Rate has been held at a 16-year high of 5.25% since August 2023. - PBOC Adviser Issues Rare Criticism of China’s Economic Policies
(Bloomberg) — A People’s Bank of China adviser issued a rare critique of Beijing’s economic policies for being overly conservative, urging the government to ramp up fiscal stimulus and promote inflation. The policy concept of “focusing on investment and neglecting consumption” should be changed, according to an article citing Huang Yiping. - BOJ Likely to Hike in October After Big Shift, Ex-Official Says
(Bloomberg) — The Bank of Japan’s big policy shift this week makes another interest rate hike highly likely in October and raises the potential for quarterly increases, according to a former executive director in charge of monetary policy. “The chances are very high for an October rate hike,” Kazuo Momma, the former director, told Bloomberg on Thursday. - Dorsey’s Block Raises Guidance on Diligent Expense Management
(Bloomberg) — Block Inc. again raised its full-year outlook as the Jack Dorsey-helmed financial-technology firm doubles down on expense management. Ebitda, or adjusted earnings before interest, taxes, depreciation and amortization, is now expected to be $2.90 billion for the full year, up from $2.76 billion. - Morgan Stanley Selling SRT Tied to More Than $4 Billion of Loans
(Bloomberg) — Morgan Stanley is sounding out investors for a bond offering that would help offload risk tied to a more than $4 billion portfolio of loans to private market funds. The planned deal is a type of synthetic risk transfer, according to people familiar with the matter. Conversations are in the preliminary stages and details could still change. - Li Auto’s July deliveries hit a record as Chinese EV consumers prefer hybrid options
Chinese new energy vehicle company Li Auto announced Thursday it delivered a record number of cars in July, boosted by sales of its new, lower-cost Li L6 SUV. The new model and most of Li Auto’s cars come with a fuel tank for extending the battery’s driving range. Several battery-only automakers reported lower monthly deliveries than major competitors selling hybrid-powered cars. - AI Chipmaker Cerebras Is Said to Plan IPO as Soon as October
(Bloomberg) — Cerebras Systems, a startup making semiconductors optimized for artificial intelligence uses, is targeting a launch for its initial public offering as soon as October, according to people familiar with the matter. The Silicon Valley firm has added Barclays Plc to the lineup of banks working on the deal, the people said. - STRUCTURED PIPELINE: Structured Markets Didn’t Stop for Fed Day
(Bloomberg) — The new-issue structured market saw a flurry of 15G filings and marketing activity on Wednesday. Typically, issuers prefer to avoid any volatility introduced by the Federal Reserve, but yesterday’s session allowed for deal advances in every sector as Jerome Powell lent support to speculation that the bank’s interest-rate cuts are likely to start in September. - Anheuser-Busch InBev NV’s sales of Michelob Ultra helped the world’s largest brewer make up for a slump in demand for Bud Light in the US following a marketing mishap.
The company has stepped up promotion of Michelob Ultra, which is sponsoring Team USA at the Olympic Games in Paris. A light beer marketed at men and women, it overtook Bud Light and became America’s second-favorite beer in July after Mexican label Modelo Especial, according to industry analysts. Overall, AB InBev’s volumes in North America fell 3.2% in the second quarter, less than analysts expected. Shares of AB InBev rose 2.5%. The brand is stabilizing and regaining its place with customers, according to AB InBev Chief Executive Officer Michel Doukeris. - Rolls-Royce raised its profit guidance and said it will reinstate dividend payments for the first time since the pandemic as the manufacturer of aircraft engines benefits from greater cost discipline and demand for large jet turbines. Shares rose 7%.
The company said it now expects underlying operating profit of £2.1 billion ($2.7 billion) to £2.3 billion and free cash flow of as much as £2.2 billion. Rolls-Royce will also reinstate dividend payments for the full year, starting at a 30% payout ratio of underlying net income and lifting that metric to as much as 40% over time. The new earnings outlook compares with a previous guidance of operating profit of as much as £2 billion and free cash flow of £1.9 billion at best. Under Chief Executive Officer Tufan Erginbilgic, Rolls-Royce has put greater focus on profitable contracts, sometimes at the frustration of aircraft manufacturing partner Airbus SE, which relies on the engine maker for its A350 and smaller A330neo models. - Societe Generale shares fell 9% after a disappointing performance at the French bank’s domestic retail unit overshadowed a surge in trading revenues. Analysts focused on the lowered guidance for net interest income in France, rather than the corporate and investment banking beat.
SECOND-QUARTER RESULTS: Net income EU1.11 billion, +24% y/y, estimate EU1.04 billion. Operating income EU1.73 billion, +2.9% y/y, estimate EU1.74 billion. Provision for loan losses EU387 million vs. EU166 million y/y, estimate EU378.9 million. CET1 ratio fully-loaded 13.1%, estimate 13.1%. COMMENTARY: Sees FY24 net interest income for French Retail, Private Banking and Insurance at around €3.8 billion. Barclays (equal weight): “Key new news today is the French retail miss & guidance cut for French NII this year,” analysts Flora Bocahut and Sam Moran-Smyth write. Earnings beat, but largely driven by Equities revenues, which was largely expected after peers reported. - Shares of Chevron Corp. and Hess Corp. fell, after announcing an arbitration hearing with Exxon Mobil Corp. related to their $53 billion merger will be delayed until at least mid-2025.
The international arbitration panel handling Exxon’s right-of-first-refusal claim over Hess’ stake in its Guyana oil project has scheduled the hearing for May 2025, with a decision expected in the following three months. They had previously issued guidance for a decision in the fourth quarter of 2024. The spread between Hess trading price and the value of Chevron’s all-stock offer reached nearly $15, the widest since the deal was announced, a sign that the market is increasingly concerned about the deal outcome. - Air Products & Chemicals Inc. shares rose 9% after the company reported third-quarter adjusted earnings per share from continuing operations and adjusted Ebitda that beat estimates.
THIRD QUARTER RESULTS: Adjusted EPS from continuing operations $3.20, estimate $3.03. Adjusted Ebitda $1.3 billion, +7.6% y/y, estimate $1.27 billion. Sales $2.99 billion, -1.6% y/y, estimate $3.02 billion. FOURTH QUARTER FORECAST: Sees adjusted EPS $3.33 to $3.63, estimate $3.53. YEAR FORECAST: Still sees adjusted EPS $12.20 to $12.50, estimate $12.23. Still sees capital expenditure $5.0 billion to $5.5 billion, estimate $5.33 billion. Commenting on the results, Air Products’ Chairman, President and Chief Executive Officer said, “Our third quarter adjusted EPS of $3.20 exceeded our previous guidance and increased seven percent over the prior year, driven by Americas and Europe operating performance as well as pricing and productivity actions. - Apple Inc. predicted that its new artificial intelligence features will spur iPhone upgrades in coming months, helping the company reemerge from a sales slowdown that has hit its China business especially hard.
Chief Executive Officer Tim Cook said that upcoming Apple Intelligence features will provide a fresh reason for customers to buy new phones. The remarks followed generally upbeat third-quarter results that were marred by sluggish sales in China. Apple returned to revenue growth in the period, which ended June 29, with an increase of 5% to $85.8 billion. That beat the $84.5 billion analyst estimate. But sales from China fell 6.5% to $14.7 billion, missing the $15.3 billion projection from Wall Street. The shares fluctuated between gains and losses afterhours and ended 0.6% higher. - Amazon.com, risking Wall Street’s displeasure, told investors that profits for now will take a back seat to heavy spending on artificial intelligence.
The shares fell 6.9% afterhours, after the company projected operating income for the current quarter ending in September will be $11.5 billion to $15 billion. Analysts were looking for $15.7 billion. After focusing on cost-cutting during the past two years, Chief Executive Officer Andy Jassy is spending in an effort to capitalize on the boom in generative AI, which can create text, video and images based on simple user prompts. Amazon has said the opportunity represents a “multibillion-dollar revenue run rate business.” “Amazon has always had spurts of investment at the expense of short-term margins, and it appears they are planning a spurt into the rest of the year,” said Gil Luria, an analyst at DA Davidson. “The good news,” Luria said, is much of the money is going toward the Amazon Web Services cloud unit that produced 19% sales growth in the second quarter more than analysts’ projected. - Intel Corp. plunged 18.9% afterhours, after delivering a barrage of startling news, including a grim growth forecast and plans to slash 15,000 jobs, in the latest sign that the chipmaker is struggling to compete in the artificial intelligence era.
Sales for the current quarter will be $12.5 billion to $13.5 billion, the company said. Analysts had projected $14.38 billion on average. Intel will have a loss of 3 cents a share, excluding certain items, versus expectations for a profit 30 cents. Intel said it plans to cut more than 15% of its workforce of around 110,000 people. It’s also suspending dividend payments to shareholders starting in the fourth quarter, and will continue that until “cash flows improve to sustainably higher levels.” The company has paid a dividend since 1992.
Menu