2024-10-18 10:04

NEW YORK, Oct 18 (Reuters) - U.S. semiconductor companies will get a closer look from investors in coming weeks, after diverging reports from two industry leaders abroad set off a volatile few days of trading. Because semiconductors are key components in a broad array of products, chipmakers and related equipment companies are closely followed for insight into the economy. Wall Street also watches the stocks as indicators of overall market trends. This year, the industry has been at the center of the artificial intelligence enthusiasm powering the stock market to record highs, highlighted by massive gains for Nvidia (NVDA.O) , opens new tab, the AI poster child. "It's vitally important that these chip stocks hold up," said Matt Maley, chief market strategist at Miller Tabak. "If they go down, it weighs on the rest of the market." The Philadelphia SE Semiconductor index (.SOX) , opens new tab has pulled back after climbing more than 40% in the first half of the year. It is now up about 25% in 2024 against a 22.5% gain for the benchmark S&P 500 (.SPX) , opens new tab. Semiconductor and related equipment stocks account for 11.5% of the weight of the S&P 500. Nvidia, which is approaching Apple (AAPL.O) , opens new tab as the largest company by market value, holds a 6.8% weight in the index. The sector had its share of drama in the past week. Chip shares tumbled on Tuesday after equipment maker ASML (ASML.AS) , opens new tab, Europe's biggest tech firm, projected lower-than-expected 2025 sales and bookings. But the group rebounded on Thursday after Taiwan Semiconductor Manufacturing Co (2330.TW) , opens new tab, which produces advanced chips used in AI applications, reported a forecast-beating 54% jump in quarterly profit. Following the dueling announcements, the SOX semiconductor index is down 2.5% so far this week, with the S&P 500 up 0.5%. The semiconductor group could take its next cues from imminent corporate reports, including from Texas Instruments (TXN.O) , opens new tab and equipment company Lam Research (LRCX.O) , opens new tab next week. Texas Instruments' products are used in a broad range of applications, including automotive and industrial, and could be a barometer for whether such areas that have been sluggish for the chip industry are starting to rebound, said Daniel Morgan, portfolio manager at Synovus Trust. Overall, Morgan said, the semiconductor group is trading at 5.6 times price-to-book valuation, which he said was fair, noting that group topped 8 times price-to-book levels in 2021. Advanced Micro Devices' (AMD.O) , opens new tab earnings report the following week will give some initial insight into AI-related demand ahead of Nvidia's highly anticipated report due late next month. If AMD's 2025 forecast for its AI chips is strong, "that's going to be bullish for the sector," Maley said. The semiconductor reports are due in a busy week for U.S. corporate earnings overall, with well over 100 S&P 500 companies set to report, including Tesla (TSLA.O) , opens new tab, Coca-Cola (KO.N) , opens new tab and IBM (IBM.N) , opens new tab. "The (semiconductor) group is very important, if nothing else because of the market cap that it carries," said Chuck Carlson, chief executive officer at Horizon Investment Services. Sign up here. https://www.reuters.com/markets/us/wall-st-week-ahead-wall-street-zeroes-semiconductors-after-turbulent-week-2024-10-18/

2024-10-18 09:35

FRANKFURT, Oct 18 (Reuters) - Some European Central Bank governors at Thursday's rate-setting meeting made the case for dropping a pledge to keep policy tight as inflation may now turn out lower than anticipated only a few weeks ago, five sources told Reuters. Their idea did not gain traction but it suggests the debate within the ECB, which cut interest rates on Thursday for the third time this year, was increasingly shifting from battling high inflation to reviving lacklustre economic growth. At the meeting, some policymakers suggested inflation may stabilise at the ECB's 2% target a few quarters earlier than the last three months of next year, as was predicted by the bank's staff only last month, the sources said. They argued for dropping a long-standing pledge to keep borrowing costs "sufficiently restrictive for as long as necessary", the sources added. Economists say rates are restrictive when they are high enough to slow down the economy and, with it, inflation, so the change would have signalled that more rate cuts were coming. An ECB spokesperson declined to comment. ECB President Christine Lagarde said during her press conference inflation would fall to 2% "in the course of next year", rather than "over the second half of next year" as she had said after the Sept. 12 meeting. The bank will publish new projections at its next policy meeting on Dec. 12. Lagarde did not provide hints about future rate cuts but four sources close to the matter told Reuters on Thursday that a fourth cut in December was likely unless economic or inflation data turns around in the coming weeks. Yet, the U.S. elections, and the threat of fresh trade tariffs if Donald Trump is elected president, were seen as a major source of uncertainty, the sources added. Sign up here. https://www.reuters.com/markets/rates-bonds/some-ecb-governors-wanted-drop-pledge-keep-policy-tight-sources-say-2024-10-18/

2024-10-18 08:51

Oct 21 (Reuters) - Start your electric engines, Tesla is the first of the "Magnificent Seven" to report earnings, while finance chiefs descend on Washington and markets get a taste of how business activity is holding up in October just as the U.S. election looms. Here's your look at what matters for markets this week from Kevin Buckland in Tokyo, Ira Iosebashvili in New York, and Naomi Rovnick, Dhara Ranasinghe and Karin Strohecker in London. 1/ ELECTRIC DREAMS As the latest earnings season goes full steam, focus is on Tesla (TSLA.O) , opens new tab, one of the first of big U.S. tech companies to report. Tesla shares have taken a hit this month, following a long-awaited unveiling of its robotaxis that some investors said was short on practical details. Year-to-date, Tesla's shares have lost around 11%, compared to the S&P 500's 22.5% gain. A weaker-than-expected Tesla earnings in late July, along with underwhelming results from Google-parent Alphabet, sparked a U.S. stocks selloff that was a prelude to the steeper drop in early August. Though investors are more optimistic about the U.S. economy after a blowout jobs report and last month’s 50 bps rate cut from the Federal Reserve, a soft earnings report from Tesla on Oct. 23 could reignite worries about tech stock valuations, which have climbed along with the broader indexes. 2/ FAR AWAY Finance officials head to Washington DC for the annual meeting of the International Monetary Fund and World Bank Group from Monday to debate how countries can navigate slowing growth and ever-rising debt. Some 5,000 miles east, in the Russian city of Kazan, President Vladimir Putin hosts a summit of BRICS leaders, seeking support in his standoff with the West. Russia says leaders from Brazil, India, China, South Africa, Egypt, the UAE and Saudi Arabia, which account for a third of global economic output, will be there. Key topics include a push to end U.S. dollar dominance. By then, there will be just days to go to the biggest political risk event of 2024: a U.S. election that is too close to call and one that could mark the start of a new global trade war if Donald Trump wins - a prospect seen as damaging to economies everywhere. 3/ THINGS CAN ONLY GET BETTER When September business activity data were released a month ago, investors got a shock from news of a sharp euro zone contraction and ramped up ECB rate cut bets. So October PMIs on Thursday will likely be scrutinised for a sense of how rapidly rates have further to fall. PMI data from other economies are published the same day. Note, the final euro zone Sept purchasing managers index, while below the 50 mark that divides contraction from expansion, was not as dire as the initial estimate. And other data suggest tentative reasons for optimism in a bloc that has skirted recession for over a year. Q3 lending demand rose; German sentiment has improved. But tell that to the euro. It will lag as long as investors reckon the ECB will ease policy at a faster pace than the Fed. 4/ PROOF Chinese stocks have been a near-perfect barometer of expectations for big bang stimulus from Beijing, and just a glance at a chart of the past two months shows how quickly hopes have been deflated. On Monday, China cut rates-- as expected. Since the announcement of the biggest and broadest stimulus since the pandemic in late September, one highly anticipated briefing after another has passed without the details investors are craving - particularly the size of fiscal spending. Just how powerful the fine print can be was shown Friday, when the launch of promised swap and relending schemes sparked a stocks surge. But with further stimulus clarity not expected in any major capacity before a meeting of parliament's standing committee, probably early next month, that leaves a weeks-long void when stoking the equity rally looks a very big ask. 5/ MONEY, MONEY, MONEY The UK's new Labour government presents its first budget on Oct. 30 and with the nation's finances strained and growth stalling, investors will scrutinise fresh monthly government borrowing data this week. Public sector net debt has hit 100% of economic output and government borrowing in August, at 13.73 billion pounds, 3 billion pounds above economists' forecasts. September's borrowing amount will be revealed on Oct. 22. After finance minister Rachel Reeves identified a fiscal "black hole" worth 22 billion pounds, but ruled out raising taxes on working people, stock market investors suspect they are in the firing line from potential hikes to capital gains taxes. Bond market lenders are also, according to BNY, selling gilts at the fastest pace since former Prime Minister Liz Truss' chaotic 2022 mini-budget, as speculation mounts about the UK increasing debt issuance to fund public investment. Sign up here. https://www.reuters.com/business/take-five/global-markets-themes-graphic-2024-10-18/

2024-10-18 07:56

Indians will celebrate Diwali in late October Ongoing price rally is slowing down the demand - Indian trader China discounts between $3-$14 this week Oct 18 (Reuters) - Physical gold dealers in India were forced to offer discounts this week, as record high prices dampened demand ahead of a key festival, while discounts in top consumer China narrowed. In India domestic prices hit a record high of 77,641 rupees ($923.85) per 10 grams, up more than 15% from a four-month low of 67,400 rupees hit in July. "The ongoing price rally is slowing down the demand. Consumers are buying less volume because they need to allocate far more money if they want to buy the same volume they planned with the rising prices," said Bachhraj Bamalwa, partner at Indian jewellery retailer Nemichand Bamalwa & Sons. Indian dealers offered a discount of up to $8 an ounce over official domestic prices, – inclusive of 6% import and 3% sales levies, versus last week's $3 premium. "Jewellers aren't feeling too confident about Diwali sales this year due to rising gold prices. To keep customers interested, many are offering discounts on jewellery making charges to help boost their sales during the festive season," a Mumbai-based bullion dealer with a private bank said. Indians will celebrate Diwali in late October, when buying gold is consider auspicious. Chinese dealers narrowed discounts to $3-$14 below international spot prices , from $15-$31 discounts quoted last week. In Hong Kong, gold was sold between $2 discount and $1.20 premium . Recently, China has sharply ramped up policy stimulus, but markets are waiting for a clearer road map on economic recovery. Retail gold demand in China has taken a hit this year amid sky-high prices and economic slowdown. Chinese demand unlikely to recover in the next three months as prices will rise further, said Peter Fung, head of dealing at Wing Fung Precious Metals, Hong Kong. Hong Kong leader John Lee on Wednesday pledged to promote the development of world-class gold storage facilities in the region. In Singapore, gold was sold between discount $0.80 to $2.20 premium . ($1 = 84.0410 Indian rupees) Sign up here. https://www.reuters.com/markets/commodities/asia-gold-record-prices-dull-india-demand-ahead-key-festival-2024-10-18/

2024-10-18 07:53

FTSE 100 down 0.4%; FTSE 250 down 0.2% British retail sales up 0.3% for September Oct 18 (Reuters) - London stocks opened lower on Friday as investors digested an unexpected rise in retail sales data, although both indexes were poised to break a two-week losing streak, buoyed by anticipated Bank of England rate (BoE) cuts and healthy corporate updates. The blue-chip index (.FTSE) , opens new tab was down 0.4% after closing at its strongest level since late May in the previous session, while the domestically-focused FTSE 250 index (.FTMC) , opens new tab dropped 0.2% after hitting over a two-week high on Thursday. A 1.7% gain in the industrial metal miners sector (.FTNMX551020) , opens new tab kept losses at check, as copper prices rose due to China's stimulus measures. Luxury brand Burberry's (BRBY.L) , opens new tab 3.6% gain boosted the personal goods sector (.FTNMX402040) , opens new tab to lead sectoral gains. British retail sales figures on Friday showed an unexpected 0.3% rise in September, while analysts had forecast a monthly fall of 0.3%. The sterling ticked 0.4% higher after the data. Consumer-focused stocks were the biggest drag on the benchmark, with heavyweight Unilever (ULVR.L) , opens new tab dropping 1.4%, while British American Tobacco (BATS.L) , opens new tab lost 1.6%. The Dunhill and Lucky Strike maker said a plan has been filed in a Canadian court to potentially resolve and settle its Canadian subsidiary's tobacco litigation. Meanwhile, both the FTSE 100 and FTSE 250 were on track to break a two-week losing streak. The FTSE 100 was poised for its best performance in over two months, while the FTSE 250 was set for its strongest week in three. Gains were mainly powered by Wednesday's data that showed British inflation fell to 1.7%, below the BoE's 2% target, bolstering bets for a rate cut on Nov. 7, when the central bank convenes. The rate-sensitive house-builder's sector (.FTNMX402020) , opens new tab outperformed other sectors, gaining 6.8% this week; however, it was down 1.4% in the current session. Among other notable moves, Future (FUTR.L) , opens new tab lost 7.7% after the British publishing firm said CEO Jon Steinberg will step down. Sign up here. https://www.reuters.com/world/uk/london-stocks-open-lower-after-retail-sales-data-set-weekly-gains-2024-10-18/

2024-10-18 07:49

PARIS, Oct 18 (Reuters) - Massive floods caused serious damage and power outages on Friday in parts of France's mountainous southeast region after days of heavy rain, though there were no immediate reports of any casualties. France's weather authority Meteo France placed six departments south of the city of Lyon on a red flood alert on Thursday. The alert was downgraded to 'orange' on Friday, indicating that water levels would come down again. "At certain places in the Ardeche region, up to 700 milimetres of water has fallen in 48 hours. That's more than a year's rainfall in Paris, so it's absolutely gigantic," Agnes Pannier-Runacher, the environment minister, told BFM TV. French news stations showed cars, traffic signs and cattle being swept away by the floods. The A47 highway close to Lyon was temporarily transformed into a giant stream of water. The French interior ministry said Paris had dispatched 1,500 additional firefighters to the affected areas. Sign up here. https://www.reuters.com/world/europe/floods-cause-damage-power-outages-southeast-france-after-heavy-rainfall-2024-10-18/