Japan Leads Asian Stock Selloff, Yen Resumes Climb: Markets Wrap
(Bloomberg) — Japanese stocks fell alongside Asian equities Thursday, continuing a bout of volatile trading as investors digest signals from central banks on the path ahead for interest rates. The Topix Index opened lower alongside benchmarks in Australia and South Korea. US futures also fell in early Asian trading Thursday.
Stocks close lower on Wednesday as market’s comeback attempt fizzles out
Stocks closed lower on Wednesday as the market’s attempt to fully recover from Monday’s sell-off failed. The Dow Jones Industrial Average fell 234.21 points, or 0.60%, to 38,763.45. The S&P 500 declined 0.77% and ended at 5,199.50, while the Nasdaq Composite dropped 1.05% to close at 16,195.81. At session highs, the Dow surged 480.30 points, while the S&P 500 jumped 1.73%. The tech-heavy Nasdaq was up more than 2% at one point.
Oil prices tick up on sharp fall in U.S. crude inventories
Oil prices edged higher on Thursday for the third straight session after government data showed a steep draw in U.S. crude stockpiles, rebounding from multi-month lows touched this week. Brent crude futures rose 23 cents, or 0.3%, at $78.56 a barrel by 0017 GMT, while U.S. West Texas Intermediate crude gained 29 cents, or 0.4%, to $75.52. Brent tumbled to its weakest since early January on Monday, and WTI dipped to its lowest since February, hurt by worry over a U.S. recession and a selloff in global stocks.
Gold buoyed by Fed rate-cut hopes, geopolitical concerns
Gold prices firmed on Wednesday on mounting bets of U.S. interest rate cuts in September and rising geopolitical tensions in the Middle East, with markets awaiting U.S. economic data for clues on the Federal Reserve’s interest rate path. Spot gold rose 0.4% to $2,399.38 per ounce, as of 11:29 a.m. ET (1529 GMT). U.S. gold futures gained 0.3% to $2,438.80. Bullion prices fell as much as 3% on Monday, caught in a global sell-off driven by fears of a U.S. recession.
Hedge Funds Hit by Tech-Stock Losses Before Latest Selloff
(Bloomberg) — As a stock rout hit markets mid-July, some of the world’s biggest equity hedge funds lost hundreds of millions of dollars from piling into popular tech stocks that led the meltdown. Worst hit were Glen Kacher’s Light Street Capital Management, Bill Ackman’s Pershing Square Capital Management and Philippe Laffont’s Coatue Management.
Hedge Funds Cut Tesla Short Bets Before Earnings: ESG Investing
(Bloomberg) — Hedge funds trimmed their short bets against Tesla Inc. as the electric vehicle maker unveiled a quarterly earnings report that triggered its biggest share-price slump in almost four years. Some 16.3% of the 500-plus hedge funds tracked by data provider Hazeltree had an overall short position on Tesla the week before the report.
JPMorgan Says 75% of Carry Trades are Closed, YTD Return Wiped
(Bloomberg) — Three quarters of the carry trade has been unwound as the recent slump wiped out all positive year-to-date returns, according to JPMorgan. Losses in G10, EM and global carry baskets have been ongoing since May with a drawdown of around 10%, erasing this year’s positive return and significantly cutting into returns since end-2022.
China’s exporters enjoyed the benefits of a weak yuan. Now that’s changing and cutting into profits
The offshore yuan traded in Hong Kong surged Monday against the U.S. dollar to its strongest level for 2024 below 7.1 before weakening slightly to around 7.18 as of Wednesday afternoon, according to Wind Information. Many trade companies, especially smaller ones, have currently adopted a strategy of preferring not to take orders rather than take loss-making orders, Winnie Wang, president of the Shenzhen CrossBorder E-Commerce Association, said Tuesday in Chinese, according to a CNBC translation. Apart from geopolitical reasons, Chinese companies are increasingly focused on hedging currency risk because they are localizing operations globally.
Apple could charge up to $20 for some Apple Intelligence AI features, analysts say
Apple could charge its users up to $20 for its advanced artificial intelligence features, analysts told CNBC, as the company looks to boost the growth of its lucrative services business. The Cupertino giant plans to rollout Apple Intelligence, its forthcoming AI system, across some of its devices later this year. It is not unusual for technology firms to charge for their AI offerings. OpenAI, for example, has a subscription fee for more advanced ChatGPT features and Microsoft charges for its AI Copilot tool.
Banks face tough new security standards in the EU their tech suppliers are under scrutiny, too
By January 2025, banks and their technology suppliers will have to comply with a new EU law known as DORA. It could help prevent major IT disruptions in future. The importance of financial firms reducing risks stemming from third-party tech vendors became more pronounced after a faulty CrowdStrike software update caused widespread global tech outages.
BOJ Didn’t See July Hike as Policy Tightening, Summary Shows
(Bloomberg) — A summary of opinions from the Bank of Japan’s July 31 board meeting showed that authorities believed monetary policy would remain accommodative even as they conducted a small interest rate hike. It should be noted that raising the rate at a moderate pace means an adjustment in the degree of monetary accommodation in accordance with underlying inflation.
Harris Rides Momentum in Midwest as Vance Eyes Air Force Two
(Bloomberg) — Vice President Kamala Harris and her new running mate, Minnesota Governor Tim Walz, took their campaign to crucial Midwest swing states to sell voters on their economic message, an effort Donald Trump’s running mate, JD Vance, sought to undercut.
JPMorgan Boosts US Recession Chance to 35% by End of This Year
(Bloomberg) — JPMorgan Chase & Co. now sees a 35% chance that the US economy tips into a recession by the end of this year, up from 25% as of the start of last month. US news hints at a sharper-than-expected weakening in labor demand and early signs of labor shedding, JPMorgan economists led by Bruce Kasman wrote in a note to clients Wednesday.
Fed Moving Aggressively on Rate Cuts May Spur PBOC to Ease More
(Bloomberg) — The People’s Bank of China is potentially getting the respite it’s been hoping for from global financial markets, bringing closer a dose of monetary stimulus long awaited by investors and traders.
Stocks Swoon After Weak $42 Billion Treasury Sale: Markets Wrap
(Bloomberg) — The rapid slide in US stocks that followed a weak $42 billion sale of Treasuries underscored the fragility of global financial markets in the wake of historic volatility. After an equity surge driven by the Bank of Japan’s dovish signals, the S&P 500 wiped out its gains.
Brookfield Asset Profit Misses, Assets Hit About $1 Trillion
(Bloomberg) — Brookfield Asset Management Ltd. said its assets under management rose to a record of approximately $1 trillion, and it reported profit that increased from a year ago but still missed analysts’ expectations. During the quarter, we raised a total of $68 billion, Chief Executive Officer Bruce Flatt and President Connor Teskey said in a letter to investors.
BHP Is Said to Seek Buyer for Gold, Copper Mines in Brazil
(Bloomberg) — BHP Group Ltd., the world’s No. 1 miner, is planning to sell Brazilian copper and gold assets it acquired with the takeover of Oz Minerals Ltd., according to people familiar with the matter. The company’s acquisition of Oz Minerals in May 2023 was its biggest deal in more than a decade and included buying an untapped gold deposit and four small.
Market Chatter: Millers to Partner with BOCHK to Accept Digital Yuan at 300 Hong Kong Outlets
BOC Hong Kong (HKG:2388) will partner with retailer Mannings to help customers use digital yuan for payments in their 300 stores in Hong Kong, The Standard reported Thursday. Merchants can accept the payments by scanning the buyer’s digital yuan payment code.
Novo Nordisk A/S shares fell 6.7% after the drugmaker reported disappointing sales of its blockbuster weight-loss treatment Wegovy
Revenue from the drug was hit by higher-than-expected price concessions to US managers of pharmacy benefits in the latest quarter, Chief Financial Officer Karsten Knudsen said. He called it a one-time factor, but the size of the shortfall raised concerns among investors about growing pricing pressure as Eli Lilly & Co. muscles in with its rival product. Second-quarter sales of Wegovy were 11.7 billion Danish kroner, $1.7 billion, while the average estimate was 13.7 billion kroner. Novo is vying with Lilly for supremacy in the pharmaceutical industry’s fastest-growing new business, obesity drugs. The market is expected to reach $130 billion by the end of the decade.
Amgen shares fell 5% after the drugmaker reported second-quarter results that underwhelmed Wall Street. The company also said it planned to increase capital spending on its obesity asset, though it didn’t provide any new data on the closely watched compound
SECOND QUARTER RESULTS: Adjusted EPS $4.97 vs. $5 y/y, estimate $4.98. Revenue $8.39 billion, +20% y/y, estimate $8.34 billion. Product sales $8.04 billion, +20% y/y, estimate $8.03 billion. Adjusted operating income $3.87 billion, +10% y/y, estimate $3.83 billion. Adjusted operating margin 48.2% vs. 52.6% y/y. YEAR FORECAST: Sees adjusted EPS $19.10 to $20.10, saw $19 to $20.20, estimate $19.51. Sees revenue $32.8 billion to $33.8 billion, saw $32.5 billion to $33.8 billion, estimate $33.04 billion. Sees capital expenditure about $1.3 billion, saw about $1.1 billion. Still sees share buyback up to $500 million.
Shopify reported second-quarter sales and profit that beat estimates, showing that the e-commerce company is managing to navigate cautious consumer spending. Shares surged 17.8%
Revenue for the period came in at $2.05 billion, up about 21% year-over-year and beating the $2 billion average estimate. Profit, excluding one-time items, was 26 cents a share, above the 20 cents expectation. Percentage revenue growth for the current quarter ending in September will be in the low to mid-twenties on a year-over-year basis, Shopify said. Analysts were looking for 21% growth. Shopify has been struggling with slowing revenue growth in recent quarters. In an effort to kick-start growth, President Harley Finkelstein pledged to invest heavily in marketing even if doing so crimps profit margins.
CVS Health lowered its 2024 earnings outlook for the third straight quarter and announced cost-cutting measures to save $2 billion over several years as health-care expenses continue to soar
The company also announced the departure of Brian Kane, who took the helm as the president of the Aetna insurance unit just under a year ago. CVS Chief Executive Officer Karen Lynch and Chief Financial Officer Tom Cowhey will temporarily take over his duties during the search for a successor. CVS is slashing spending and streamlining operations as its insurance arm faces pressure from rising US medical costs. Aetna accounts for about a third of the company’s revenue, but its struggles this year are largely to blame for a downturn in earnings and slump in the stock price. Adjusted earnings for the year will be in the range of $6.40 to $6.65 a share, down from the earlier forecast of at least $7 a share, CVS said. Cash flow from operations will be about $9 billion, a drop from its previous estimate of at least $10.5 billion.
Emerson Electric fell 7.6% after cutting its earnings per share forecast for the full year and narrowing its adjusted EPS estimate
THIRD QUARTER RESULTS: Adjusted EPS $1.43, estimate $1.41. Underlying revenue Y/y % +3%, estimate +4.13%. Net sales $4.38 billion, estimate $4.41 billion. Underlying sales +3%, estimate +4.13%. YEAR FORECAST: Sees adjusted EPS $5.45 to $5.50, saw $5.40 to $5.50, estimate $5.47. Sees EPS $2.82 to $2.87, saw $2.98 to $3.08. Sees net sales about +15%. Sees underlying sales about +6%, estimate +6.31%. Sees operating cash flow about $3.2 billion, saw about $3.1 billion. Sees free cash flow about $2.8 billion, saw about $2.7 billion.
Hilton Worldwide shares dipped 1.7% after the hotel operator posted better-than-expected earnings per share in the second-quarter earnings while its full-year guidance missed the average estimate
SECOND QUARTER RESULTS: Adjusted EPS $1.91 vs. $1.63 y/y, estimate $1.85. Revenue $2.95 billion, +11% y/y, estimate $2.93 billion. System-wide comparable revPAR +3.5%. System-wide ADR $163.70, +0.1% y/y, estimate $165.64. System-wide occupancy 75.3% vs. 74.6% y/y, estimate 75.4%. Total location count 7,780, +6.6% y/y, estimate 7,742. Total rooms at end of period 1.22 million, +6.2% y/y, estimate 1.22 million. Adjusted Ebitda $917 million, +13% y/y, estimate $902.2 million. Adjusted Ebitda margin 72.2% vs. 69.3% y/y, estimate 70.9%. Adjusted net income $481 million, +11% y/y, estimate $464.9 million. YEAR FORECAST: Sees adjusted EPS $6.93 to $7.03, saw $6.89 to $7.03, estimate $7.09. Sees system-wide comparable revPAR +2% to +3%, saw +2% to +4%. Sees adjusted Ebitda $3.38 billion to $3.41 billion, saw $3.38 billion to $3.43 billion, estimate $3.41 billion. Sees net income $1.53 billion to $1.56 billion, saw $1.59 billion to $1.62 billion, estimate $1.61 billion. Sees Net units +7% to +7.5%.
McKesson fell 7.4% afterhours after the drug distributor posted fiscal 1Q revenue that missed estimates
Revenue at the US pharmaceuticals division and at the prescription technology solutions fell short of expectations. FIRST QUARTER RESULTS: Adjusted EPS $7.88 vs. $7.27 y/y, estimate $7.17. Revenue $79.28 billion, +6.4% y/y, estimate $82.65 billion. US pharmaceutical revenue $71.72 billion, +6.8% y/y, estimate $75.78 billion. International revenue $3.69 billion, +6.4% y/y, estimate $3.67 billion. Medical-surgical solutions revenue $2.64 billion, +1% y/y, estimate $2.77 billion. Prescription technology solutions revenue $1.24 billion, -0.2% y/y, estimate $1.46 billion. 2025 YEAR FORECAST: Sees adjusted EPS $31.75 to $32.55, saw $31.25 to $32.05, estimate $31.59.
India’s Nifty 50 is outperforming the S&P 500 so far this year
India’s Nifty 50 is beating the S&P 500 so far this year and analysts say it could run even higher. The South Asian index crossed the 25,000 level last week, while the BSE Sensex topped the 80,000 mark. The macroeconomic outlook, due to expectations for the U.S. Federal Reserve to begin cutting rates, along with increasing investment in India are expected to fuel Indian stocks.
As inflation fury lingers, politicians join customers in pushing companies to cut prices
Walmart, McDonald’s and Kroger are among the companies that have found themselves in the political debate over higher prices or other moves that could hit Americans’ wallets. On the campaign trail, politicians have tapped into consumers’ frustration with high prices, but Republicans and Democrats have blamed it on different causes. Promising to tackle higher everyday costs is a safe bet during contentious times, particularly for politicians in swing states, said Cait Lamberton, a professor of marketing at University of Pennsylvania’s Wharton School.
Warner Bros. Discovery stock falls as it writes down $9.1 billion, misses estimates
Warner Bros. Discovery’s stock dropped Wednesday after it reported a $9.1 billion write-down on its TV networks and missed analyst estimates on revenue. Here is how Warner Bros. Discovery performed, based on a survey of analysts by LSEG: Loss per share: 36 cents vs. a loss of 22 cents expected. Revenue: $9.7 billion vs. $10.07 billion expected. The company’s shares were down roughly 9% in aftermarket trading.
Google’s antitrust ruling has experts looking to 25-year-old Microsoft case for answers
A U.S. judge ruled Monday that Google holds a monopoly in the search market, and invoked the case of Microsoft from more than two decades ago. All along, the government has implicitly and explicitly said they’re basing this case on the Microsoft case said Sam Weinstein, law professor at Cardozo Law School and a former DOJ antitrust lawyer. In its appeal, Google is likely to argue that the emergence of artificial intelligence services like ChatGPT has created new competition.
Disney beats estimates as combined streaming services turn a profit
Disney reported its fiscal third-quarter earnings Wednesday, topping analyst estimates as its combined streaming businesses turned a profit earlier than expected. Here is what Disney reported compared with what Wall Street expected, according to LSEG: Earnings per share: $1.39 adjusted vs. $1.19 expected. Revenue: $23.16 billion vs. $23.07 billion expected. The company’s total segment operating income increased 19% to $4.225 billion compared with the same period last year, led by the positive results for Disney’s entertainment unit, particularly streaming.
Elon Musk ‘accountable to no one,’ UK tech minister says amid disinformation during riots
In an interview with the Times newspaper, Peter Kyle, secretary of science, innovation and technology, said that Musk is one person who is accountable to no one. His comments add to other criticisms from U.K. government officials of Musk, who on Sunday made comments associating riots taking place in the U.K. with civil war. Kyle has held conversations with social media firms including TikTok, Facebook parent company Meta, Google and X reminding them of their responsibility to tackle misinformation online.
Hamas’ new political leader Yahya Sinwar is seen as more extreme — and less willing to compromise
Hamas appointed Yahya Sinwar as the leader of its political wing following the assassination of its former political chief, Ismail Haniyeh. This makes Sinwar — a man known for his ruthlessness who is widely seen as having masterminded the Oct. 7 attack — the most powerful person in the organization. Haniyeh’s killing has resulted in a much more hard-line leader for Hamas, likely dealing a severe blow to chances of a cease-fire.
As inflation fury lingers, politicians join customers in pushing companies to cut prices
Walmart, McDonald’s and Kroger are among the companies that have found themselves in the political debate over higher prices or other moves that could hit Americans’ wallets. On the campaign trail, politicians have tapped into consumers’ frustration with high prices, but Republicans and Democrats have blamed it on different causes. Promising to tackle higher everyday costs is a safe bet during contentious times, particularly for politicians in swing states, said Cait Lamberton, a professor of marketing at University of Pennsylvania’s Wharton School.
Coupang shares rose 2.6% with analysts positive on the online retailer’s revenue growth trends. Still, the company reported a wider-than-expected quarterly net loss due to the inclusion of operating losses incurred at Farfetch and a fine from the Korean authorities