- Asian Stocks Gain on Tech Strength; Yen Pares Drop: Markets Wrap
Asian shares rose to extend a tech-led rally on Wall Street, partly helped by a weaker yen that triggered a
warning from Japan’s finance minister. A gauge of regional equities gained 0.4%, as chip-related stocks
increased further after Nvidia Corp. chief Jensen Huang unveiled new products that rekindled optimism over
AI demand. US futures edged lower in Asia after the S&P 500 gained 0.6% Monday and the Nasdaq 100
added 1.1%. Mainland Chinese and Hong Kong stocks were outliers. Tencent Holdings Ltd. fell as much as
7.3%, with Contemporary Amperex Technology Co. down over 6% after the Pentagon included them in a list
that labeled several Chinese companies military entities. The yen regained some ground after Japanese
Finance Minister Katsunobu Kato said he will take appropriate action against what he considers one-sided,
sudden foreign exchange moves. Japan’s currency dropped 0.3% to 158.11 per dollar after falling to 158.42,
its weakest since July. - S&P 500, Nasdaq post back-to-back gains on Monday as Nvidia shares rise
The S&P 500 climbed alongside the Nasdaq Composite on Monday for back-to-back wins, as Wall Street
rebounded from a losing week and chipmakers surged. The broad market index advanced 0.55% to end at
5,975.38, and the Nasdaq Composite added 1.24% to 19,864.98. The Dow Jones Industrial Average lagged,
losing 25.57 points, or 0.06%, and closing at 42,706.56. Earlier in the session, the 30-stock average rose as
much as 383 points. Chip stocks were among the big winners of the session after Foxconn announced record
fourth-quarter revenue. Nvidia jumped 3.4%, closing at a record after the stock posted three straight days of
gains. Broadcom gained about 1.7%, while Micron Technology advanced 10.5%. The VanEck Semiconductor
ETF (SMH) jumped more than 3%. - Oil prices extend losses, firmer dollar and supply outlook weigh
Oil prices extended losses into a second straight session on Tuesday on technical correction after last week’s
rally, while forecasts for ample supply and a firm dollar also weighed. Brent futures fell 28 cents, or 0.37%, to
$76.02 a barrel by 0148 GMT, while U.S. West Texas Intermediate (WTI) crude fell 33 cents, or 0.45%, to
settle at $73.23. Both benchmarks rose for five days in a row last week and settled at their highest levels
since October on Friday, partly due to expectations of more fiscal stimulus to revitalize China’s faltering
economy. - Gold edges higher with market focus on U.S. economic data
Gold prices nudged higher on Tuesday, as market participants awaited further U.S. economic data to gauge
the Federal Reserve’s interest rate trajectory for the year. Spot gold was up 0.1% at $2,638.09 per ounce, as
of 0242 GMT. U.S. gold futures were little changed at $2,648.60. Gold prices have managed to stabilize amid
some cooling off in the U.S. dollar overnight, but higher U.S. Treasury yields may remain a key overhang for
further gains, IG market strategist Yeap Jun Rong said. The benchmark 10-year Treasury yield hit the highest
since May 2024 on Monday after conflicting reports about how aggressive U.S. President-elect Donald
Trump’s tariff plans could be when he takes office. US/Investors are now looking to the U.S. jobs report, due
on Friday, which could help shed more light on the Fed’s policy path. - Trudeau Quits After 9 Years in Power With Liberals in Revolt
Justin Trudeau is resigning after more than nine years as Canada’s prime minister, bowing to dreadful polls
and a rebellion within his governing Liberal party. Trudeau, 53, currently the longest-serving leader of
any Group of Seven country, said he’s unable to unite the Liberals going into the next election, so he’s
stepping down. He will remain as prime minister until a new leader is selected, probably sometime in March.
Parliament has been suspended until March 24 while that process is underway. - German Inflation Up More Than Expected, Backing ECB Caution
German inflation accelerated more than anticipated last month, backing the European Central Bank’s plans to
keep cutting interest rates only gradually. Consumer prices rose 2.9% from a year ago in December, up from
2.4% in the previous month. That’s higher than all estimates by analysts in a Bloomberg poll. The acceleration
was driven by energy and food costs, the statistics office said. - Global Central Banks Tiptoe Toward Rate Cuts Under Trump Shadow
Global central bankers are poised to cut borrowing costs further in 2025, but only warily and with a keen eye
on the policies of incoming US President Donald Trump. While almost all major economies should see
monetary easing during the coming year, the pace is likely to slow. Bloomberg Economics projects its
aggregate measure of advanced-world interest rates to drop just 72 basis points in 2025, less than it did in2024. The shifts in that gauge tell a tale both of easing cycles that have already progressed, of lingering
caution about inflation pressures that might yet need to fully dissipate, and of the unknowns posed by the
impending second era of Trump. - Nippon Steel Says There’s No Plan B to Blocked US Steel Deal
Nippon Steel Corp. is not weighing any alternatives to its thwarted $14.1 billion takeover of United States
Steel Corp., its chairman and CEO said on Tuesday, shortly after both companies filed US lawsuits to rescue
the acquisition. The Japanese firm’s planned purchase of its US rival was blocked last week by US President
Joe Biden after a year of diplomatic tension, political debate and lobbying efforts from the companies and
unions. Biden, who had previously said he opposed the tie-up, cited national-security risks, despite Japan
being a close ally. The companies have filed a petition with the federal appeals court in Washington, arguing
that the Committee on Foreign Investment in the United States failed to consider the deal on national
security grounds, and that Biden’s order to block it was made for “purely political reasons.” They also filed a
lawsuit against rival Cleveland-Cliffs Inc. and United Steelworkers President David McCall, alleging
anticompetitive activities. - Disney’s Hulu + Live TV business to combine with Fubo, clearing way for Venu Sports
Walt Disney (NYSE:DIS) Co said on Monday it would merge its Hulu + Live TV business with smaller rival
FuboTV (NYSE:FUBO), removing a significant hurdle to the launch of its sports streaming venture with Fox
Corp (NASDAQ:FOXA) and Warner Bros Discovery (NASDAQ:WBD). The combination creates the second
biggest online pay-TV company in North America, behind YouTube TV , with around $6 billion in revenue and
6.2 million subscribers. The services deliver cable TV-like packages of channels via the internet, offering an
alternative to cable or satellite TV subscriptions. Disney will hold a 70% majority stake in the combined Fubo
and Hulu + Live venture, which will be led by Fubo CEO and co-founder David Gandler. The deal excludes
Hulu’s mainstay video-streaming business. Wall Street investors reacted enthusiastically to the deal. Shares
of Fubo, which had a market value of about $480 million as of its Friday close, surged roughly 260% to $5.18
in afternoon trading. Disney was up marginally. - Tencent shares fall 7% in Hong Kong after U.S. designates it a Chinese military company
Shares of Chinese tech heavyweight Tencent Holdings tumbled 7% in Hong Kong after the company was
added to a list of “Chinese military companies” by the U.S. Department of Defense.The move follows a near
8% fall in Tencent’s U.S. depository receipts on Wall Street. Other Chinese companies added to the list
included battery maker CATL, which is part of the supply chain for automakers such as Ford and Tesla. CATL
shares, which fell as much as 5.6%, were last down 2.8% in Shenzhen. The National Defence Authorization
Act of 2024 says that the DoD will be prohibited from procuring goods or services directly from entities on
the list in June 2026, and indirectly from June 2027. In response to the decision, Tencent said in a statement
that its inclusion on the list was clearly a mistake. “We are not a military company or supplier. Unlike
sanctions or export controls, this listing has no impact on our business,” the company added. CATL also called
the designation a mistake in a response, saying it is not engaged in any military related activities. Tencent has
a good chance of managing to secure its exclusion from the list through U.S. courts due to the company’s
business model, which primarily revolves around social networking and online gaming, said Ivan Su, senior
equity analyst at Morningstar. The U.S. has taken aim at Chinese tech companies as it seeks to restrict
transfer of high-end technologies to China. Last year, it revoked certain licenses to sell chips to China’s
Huawei in May and unveiling new sweeping export controls on critical technologies in September, including
quantum computing and semiconductor goods. In 2022, the U.S. Department of Commerce’s Bureau of
Industry and Security said companies must apply for a license if they want to sell certain advanced computing
semiconductors or related manufacturing equipment to China. - Micron Technology Inc (MU US)
Chip stocks rose on Monday as Taiwan’s Foxconn gave the latest indication that demand for artificial
intelligence infrastructure is set to boom this year. Foxconn, an assembler of Apple and Nvidia products
formally known as Hon Hai Precision Industry, said that its quarterly revenue rose 15% on the year to 2.132
trillion New Taiwan dollars ($64.75 billion). Foxconn recorded annual sales growth in almost all of its major
segments, driven by demand for AI servers. The news boosted stocks across the semiconductor supply chain.
Among U.S. companies, memory chip maker Micron Technology rallied 10%, at least partly because high
bandwidth memory chips the company makes are needed as a component of the latest processors from the
likes of Nvidia. Separately, Microsoft said Friday it plans to invest $80 billion in fiscal 2025 to build AI-enabled
data centers, with more than half of the spending in the U.S. The value of the AI server business is set to rise
to $298 billion this year from $205 billion in 2024, according to research firm TrendForce. It expects AI
servers to account for more than 70% of the total value of the entire server industry in 2025. - Citigroup Inc (C US)
Citigroup shares rose 2.5% after Barclays upgraded the lender to overweight from equal-weight, as the
broker takes a constructive view on bank stocks for 2025 as earnings per share growth accelerates and price
to-equity multiples expand. Analyst Jason Goldberg sees high-single-digit/low-double-digit EPS growth being
possible in 2025 and 2026 as “post-election optimism among corporates should translate into bank revenues
over time”. There are risks and uncertainties, however; while election outcome is now known, policy details
are unclear and it may take time for several potential changes to materialize, Goldberg says. Citigroup is
raised to overweight, with Goldberg expecting the company to amplify drivers such as accelerating earnings
growth and higher banking fees. “After hitting its revenue and expense targets in 2024, we forecast
continued improvement in 2025,” Goldberg writes. PT raised to $95 from $70. - American Airlines Group Inc (AAL US)
Shares of American Airlines rose 3.2% on Monday after the company received a trio of upgrades from Wall
Street analysts. Analysts from Jefferies, TD Cowen and Melius Research all raised their recommendation on
the airline to buy from hold, citing improved domestic and corporate traffic, as well as American’s exclusive
credit card pact with Citigroup Inc. for the newfound bullishness. “American’s recently renewed credit card
agreement with Citi is expected to add at least $560 million in incremental, high margin revenue in 2025,”
wrote Melius’ Conor Cunningham. “At the same time, American is working towards regaining lost corporate
travel market share.” “There is further opportunity for investors to benefit from significant torque in positive
earnings revisions,” wrote Tom Fitzgerald, a TD analyst who has a Wall Street-high $25 price target on
American’s shares. “Improved performance will enable the company to continue paying down debt and
equity owners should see their share of enterprise value rise in tandem.”
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