- Asian Stocks Rise After US, China Falls at Reopen: Markets Wrap
Asian stocks rose as traders navigated their way through a US-China trade war and earnings from Wall
Street’s big tech companies. Chinese shares edged lower. Hong Kong equities fell while shares advanced in
Australia and Japan. Contracts for US equities edged lower as Google’s parent Alphabet Inc. and Advanced
Micro Devices Inc. tumbled in extended trading. Treasury yields edged higher. - S&P 500, Nasdaq close higher as traders look past Trump tariff shake-up
The Nasdaq Composite and S&P 500 moved higher on Tuesday due to a strong gain in Palantir, as Wall Street
sought stable footing following the latest developments on the global trade front. The tech-heavy index
jumped 1.35% to 19,654.02, while the S&P 500 rose 0.72% to 6,037.88. The Dow Jones Industrial Average
climbed 134.13 points, or 0.3%, to 44,556.04. - Oil little changed as market shrugs off China tariffs but Iran pressure supports
Oil prices were little changed on Wednesday after volatile trading in the previous session as investors
shrugged off the impact of China’s tariffs on U.S. energy imports though President Donald Trump’s renewed
push to eliminate Iranian crude exports provided some support. Brent crude futures were down 18 cents, or
0.24%, at $76.02 a barrel by 0210 GMT. U.S. West Texas Intermediate crude (WTI) lost 9 cents, or 0.12%, to
$72.61. Oil on Tuesday traded in a wide range, with WTI falling at one point by 3%, its lowest since Dec. 31,
after China announced tariffs on U.S. imports of oil, liquefied natural gas and coal in retaliation to U.S. levies
on Chinese exports. Prices rebounded, however, after Trump restored the “maximum pressure” campaign on
Iran to curtail its nuclear program he enacted in his first term that cut Iranian crude exports to zero.
The impact of China’s retaliatory tariffs on energy prices will be limited “given that neither global supply nor
demand of these commodities are changed by China’s tariffs,” analysts at Goldman Sachs said in a note on
Tuesday. - Gold rises to all-time high on Sino-US tariff war
Gold prices hit a record high on Wednesday, bolstered by fears of a new trade war between the United States
and China after Beijing slapped tariffs on U.S. imports in a response to new U.S. duties on Chinese goods.
Spot gold was up 0.2% at $2,848.69 per ounce, as of 0253 GMT, after hitting a record high of $2,853.97
earlier in the session. U.S. gold futures gained 0.2% to $2,879.70. U.S. President Donald Trump said on
Tuesday he is in no hurry to speak to Chinese President Xi Jinping to try to defuse the trade tensions between
the world’s two largest economies. China imposed targeted tariffs on U.S. imports on Tuesday and put
several companies, including Google, on notice for possible sanctions, in a measured response to Trump’s
tariffs. - Japan Wages Grow Most Since 1997, Helping BOJ Rate Path and Yen
Japanese nominal wages rose at the fastest pace in nearly three decades, supporting the Bank of Japan’s
latest rate hike decision and keeping it on track for further tightening steps. Nominal cash earnings for
workers climbed 4.8% in December from a year earlier, up from a revised 3.9% gain in November, the labor
ministry said Wednesday. The reading exceeded economists’ consensus forecast and marked the largest
jump since 1997. The strong gain was driven by a jump in bonuses. The yen strengthened as much as 0.8% to
153.17 versus the dollar, leading gains among Group-of-10 currencies. Yields on Japanese government debt
rose. - China retaliates with additional tariffs of up to 15% on select U.S. imports starting Feb. 10
China unveiled a series of retaliatory measures against the U.S. on Tuesday, shortly after U.S. tariffs on
Chinese goods took effect, raising concerns of a broader trade war between the world’s two largest
economies. China’s Finance Ministry said Tuesday it will impose additional tariffs of 15% on coal and liquefied
natural gas imports from the U.S. and 10% higher duties on American crude oil, agricultural machinery and
certain cars, starting Feb. 10. China reiterated that the imposition of additional levies of 10% by the U.S.
“seriously violates the rules of the World Trade Organization destructs the normal bilateral economic and
trade activities” according to a CNBC translation of the statement in Chinese. In a separate statement
Tuesday, Chinese Commerce Ministry and customs officials announced to impose export controls on a range
of items and technologies related to certain critical minerals, including tungsten, tellurium, ruthenium,
molybdenum and ruthenium. China’s tariff announcement is more of a “symbolic move for now,” said Louise
Loo, China lead economist at Oxford Economics, who estimates the additional duties could raise the effective
tariff rate on U.S. imports into China by close to 2 percentage points. - New Reserve Bank of India Governor Shakes Up Traders’ Playbook
The last two years of Shaktikanta Das’ tenure as India’s central bank chief was marked by a rock-steady
rupee, dwindling liquidity and high interest rates. Sanjay Malhotra looks set to break from that template.
Malhotra’s arrival in mid-December was followed by an almost 3% drop in the rupee as the governor showed
a willingness to allow more moves that are in line with regional peers. Benchmark bond yields plummeted
over 10 basis points in the past three weeks after a cash infusion and talk is growing that authorities will
initiate their first interest-rate cut in almost five years on Friday. - PayPal shares fell 13.2% after the fintech reported growth in branded payments that analysts described
as disappointing
Branded checkout total payment volume saw 6% growth y/y in the quarter on a currency-neutral basis.
Unbranded payment processing slowed to 2% growth from 29% in the prior-year period. Mizuho
(outperform, PT $100): “The health of the Branded Checkout button is the heart of the debate around the
future of PYPL,” analyst Dan Dolev wrote. Expectations “likely ran ahead of themselves” after comments on
Visa’s call on the strength of US e-commerce, Dolev wrote. BMO (market perform, PT $90): “Shares are
trading lower pre-market, we believe in part due to crowded long positioning into the print, and some
disappointment around the 2025 guidance,” analyst Rufus Hone wrote. Hone sees the stock reaction as too
negative and expects initial guidance to prove conservative. FOURTH QUARTER RESULTS: Adjusted EPS $1.19
vs. $1.14 y/y, estimate $1.13. Total payment volume $437.84 billion, +6.8% y/y, estimate $436.74 billion.
Transaction margin dollars $3.94 billion, +7.2% y/y, estimate $3.78 billion. FIRST QUARTER FORECAST: Sees
adjusted EPS $1.15 to $1.17, estimate $1.14. Sees transaction margin dollars $3.6 billion to $3.65 billion,
estimate $3.59 billion. YEAR FORECAST: Sees adjusted EPS $4.95 to $5.10, estimate $4.89. Sees transaction
margin dollars $15.2 billion to $15.4 billion, estimate $15.07 billion. - Alphabet’s fourth-quarter revenue was $81.6 billion, slightly missing analysts’ expectations of $82.8
billion
The company announced $75 billion in 2025 capital expenditures, exceeding analysts’ expectations of $57.9
billion. Alphabet’s shares fell 7.3% in after-hours trading. Google’s cloud unit is so far the clearest indicator of
how the AI boom is contributing to the company’s sales. Startups are becoming customers because they
require more computing power for their work, but not as quickly as expected. Sales of about $12 billion in
the period ended Dec. 31 missed estimates. Search advertising brought in $54 billion in sales, slightly beating
analysts’ estimates. Video-streaming site YouTube reported $10.5 billion in revenue, exceeding analysts’
estimates of $10.2 billion. Alphabet’s Other Bets, a collection of futuristic businesses that includes the life
sciences unit Verily and the self-driving car effort Waymo, generated $400 million in revenue, missing
estimates for $592 million. Alphabet has been aggressively expanding Waymo, which recently announced
plans to test in 10 new cities in 2025. - AMD’s data center business will grow by a percentage in the “strong” double digits this year, but this
outlook was disappointing to investors
The company’s fourth-quarter revenue topped estimates, but its data center division’s revenue of $3.86
billion was below analysts’ projections of $4.09 billion. AMD predicts “strong double-digit percentage
revenue and EPS growth year over year” for 2025, with better products expected to be released around the
middle of the year. Though AMD’s fourth-quarter overall revenue topped estimates — and it provided an
solid forecast for the current period — the data center numbers overshadowed the results. The report
renewed concern that AMD’s push into AI equipment has lost some momentum. That sentiment was stoked
in recent weeks by the arrival of a Chinese startup with a cheaper approach. Shares of the chipmaker fell
8.9% in after-hours trading after the report was released. - Snap shares soar on better-than-expected profit and revenue
Snap shares jumped in extended trading Tuesday after the company reported better-than-expected fourth
quarter results. Here is how the company did compared with Wall Street’s expectations: Earnings per
share: 16 cents adjusted vs. 14 cents expected, according to LSEG; Revenue: $1.56 billion vs. $1.55 billion
expected, according to LSEG; Global daily active users: 453 million vs. 451.1 million expected, according to
StreetAccount; Global average revenue per user: $3.44 vs. $3.44 expected, according to StreetAccount.
Revenue for the fourth quarter increased 14% from $1.36 billion a year earlier. Net income in the quarter was
$9.1 million, or a penny a share. In the prior year, Snap recorded a fourth-quarter net loss of $248 million, or
15 cents a share. Snap said it expects first-quarter revenue to come in between $1.325 billion and $1.36
billion. The midpoint of that range is $1.34 billion, higher than Wall Street projections of $1.33 billion.
However, Snap’s first-quarter adjusted earnings will fall in the range of $40 million to $75 million, below
analyst expectations of $78.5 million. In an investor letter, Snap attributed the guidance to “investment plans
for the quarter ahead.” First-quarter adjusted operating expenses will grow in the range of 11% to 12% year
over year due to hiring, legal-related costs, and “a seasonal shift of marketing expenses into Q1 relative to
the prior year,” Snap said. “As we look ahead to 2025, we see additional opportunities to invest productively
in scaling our business given the foundational improvements we have made to our ad platform and the
momentum we have established in our go to market initiatives,” particularly in the segment focused on small
and medium-sized businesses, Snap said in the letter. “Our investment plans for 2025 reflect this optimism,
alongside a strong commitment to make further financial progress towards profitability as we scale.”
Additionally, the company said it committed $5 million to “support communities and team members”
affected by the recent Los Angeles wildfires and that it anticipates making “further commitments over time.”
In September, the New Mexico attorney general filed a lawsuit against Snap that alleged the company’s
Snapchat app’s design and recommendation systems “openly foster and promote illicit sexual material
involving children and facilitate sextortion and the trafficking of children, drugs, and guns.” Earlier in January,
Snap shares dropped after the Federal Trade Commission said it would refer a complaint against the
company related to its My AI chatbot to the Department of Justice. Last week, Meta reported fourth
quarter results that beat on revenue and earnings and reiterated its plans to spend heavily on AI-related
investments. Alphabet on Tuesday beat on earnings but missed on revenue. Pinterest reports earnings
Thursday followed by Reddit next week. - Palantir Technologies shares surged 22.6% afterhours, after giving a full-year revenue forecast that
exceeded analysts’ estimates, thanks to what Chief Executive Officer Alex Karp described as “untamed
organic growth” in demand for its artificial intelligence software
Sales will be about $3.75 billion in 2025, the company said. Adjusted operating income will be about $1.56
billion. Analysts, on average, projected revenue of $3.54 billion and operating profit of $1.37 billion. Best
known for its national security work, and more recently its AI platform, Palantir’s stock surged 340% in 2024.
The company rode a wave of investor excitement for AI, and more commercial and government customers
started using Palantir’s data analysis software. Fourth-quarter revenue jumped 36% to $827.5 million,
compared with analysts’ average estimate of $775.9 million. Profit, excluding some items, was 14 cents a
share. Analysts, on average, estimated 11 cents. As the company deepens its connection with the US Defense
Department, sales to the US government jumped 45% to $343 million. US commercial revenue gained 64% to
$214 million in the period ended Dec. 31. Palantir projected US commercial sales in 2025 will rise about 54%
to $1.08 billion. - Spotify shares pop 13% after company reports first profitable year
Spotify shares climbed 13% on Tuesday after the music streaming company recorded its first full year of
profitability, closing the fiscal year with 1.14 billion euros in net income. Here are the numbers from its
fourth-quarter earnings report, compared with analyst expectations: Revenue: 4.24 billion euros vs. 4.19
billion euros expected by analysts polled by LSEG; Earnings per share: 1.76 euros vs.1.99 euros expected by
analysts polled by LSEG; MAUs (monthly active users): 675 million vs. 664.3 million expected by analysts
polled by StreetAccount. The Luxembourg-based company reported a 40% growth year over year for gross
profit, rising 10% from the previous quarter. Operating income came in at 477 million euros, slightly below
guidance. The company said it paid a record $10 billion in royalties to the music industry in 2024, growth
that’s likely to continue with the streamer’s new multiyear publishing agreement with Universal Music
Group announced in January. The deal will include new paid subscription tiers, bundles for music and
nonmusic content and a direct license between the two companies for Spotify in the U.S. and other
countries. - Estée Lauder Stock Dives on Surprise Loss, Job Cuts as Sales Decline
Estée Lauder (EL) shares tumbled 17% Tuesday to lead S&P 500 decliners as the beauty products maker
reported a surprise quarterly loss and weak guidance, and announced it was slashing jobs as sales lagged.1
The cosmetics giant posted a fiscal 2025 second-quarter operating loss of $580 million, or $1.64 per share.
Analysts surveyed by Visible Alpha were looking for a per-share profit of $0.26. Revenue fell 6% year-over
year to $4.0 billion, although that was a tick better than forecasts. Skin Care segment sales sank 12% to $1.92
billion, and Makeup sales slipped 1% to $1.15 billion, mainly because of slowing demand in China and the rest
of the Asia-Pacific region. Hair Care sales were down 8% to $159 million on “continued softness in the
Company’s salon channel and the timing of shipments.” The only segment to post a sales gain was Fragrance,
which added 1% to $744 million. CEO Stéphane de La Faverie said Estée Lauder was launching a new strategic
plan called “Beauty Reimagined,” aimed at “significantly transforming our operating model to be leaner,
faster, and more agile, while taking decisive actions to expand consumer coverage, step-change innovation,
and increase consumer-facing investments to better capture growth and drive profitability.” As part of the
move, the company will shake up the executive suite and lay off 5,800 to 7,000 employees. - Enphase forecasts Q1 revenue above expectations, shares rise
Solar inverter maker Enphase Energy forecast first-quarter revenue above market estimates on Tuesday,
after robust demand helped it post a better-than-expected fourth-quarter operating profit, sending its shares
up about 6% after the bell. The solar energy company forecast first-quarter revenue to be in the range of
$340 million to $380 million, compared with analysts’ expectations of $338.5 million, according to data
compiled by LSEG. The company said the forecast included shipments of 150-170 megawatt hours of IQ
Batteries, which are used to store excess solar energy for later use, as well as about $50 million of safe harbor
revenue, which is any sales made to customers who plan to install the inventory over more than one year.
“Stock was up in after-market, but this (inclusion of ‘safe harbor’ revenue in Q1 guide) may be frowned upon
as the Street fully digests it,” GLJ Research LLC analyst Gordon L. Johnson said in a note.
In the U.S., Enphase’s biggest market, revenue rose 6% sequentially due to higher microinverter sales in the
quarter. The Fremont, California-based company’s adjusted net operating income was $120.4 million for the
quarter ending Dec. 31, ahead of analysts’ average estimate of $100.4 million, according to data compiled by
LSEG. Enphase Energy is planning to move its battery cell manufacturing out of China to avoid tariffs imposed
by U.S. President Donald Trump, Bloomberg News reported on Tuesday. “We need to be making cell packs
outside of China and that’s what we are going to be focusing on the next year,” CEO Badri Kothandaraman
said in an interview with Bloomberg News, without specifying where the company would move its
operations.
