Asian mkts traded in green; Nikkei inches closer to 20,000

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian equities opened higher on Thursday after US markets reacted positively to the release of Federal Reserve’s October meeting minutes that signaled a likely interest rate hike in December.

US markets all ended in positive territory, with the Nasdaq Composite outperforming to close 1.79 percent or 89.19 points higher. The Dow Jones Industrial Average closed 247.66 points or 1.42 percent higher while the S&P 500 finished 1.62 percent or 33.14 points up.

The Federal Open Market Committee’s October minutes showed most members felt that economic conditions for a rate hike would be met by the next time the committee met in December. This was despite continued volatility being seen across global markets as a result of geopolitical issues, dampened commodity prices and an economic slowdown in China.

Investors also appeared to have taken the latest developments in France positively, after a police raid in the Parisian suburb of Saint-Denis, which lasted nearly six hours, resulted in the arrests of more suspects linked to the deadly terror attacks last Friday.

Nikkei hits a 3-month high, edges closer to 20,000

Japan’s were higher as Japan’s October trade hit a surplus of 111.5 billion yen (USD 902.5 million), beating estimates of a shortfall.

Exports fell 2.1 percent on-year, dropping for the first time in 14 months, and were on par with expectations according to a Reuters poll. A 13.4 percent decline in imports fell below estimates.

The Nikkei opened at a 3-month high at 19,870.55 points, inching closer to the key 20,000 mark. Export-oriented shares such as Toyota, Nissan, Honda, Toshiba and Fast Retailing opened in positive territory. Early gainers were insurance company Sompo Japan Nipponkoa, steelmaker JFE Holdings, and packaging business Toyo Seikan Holding.

Internet and telecommunication giant Softbank opened in the red, shares down some 0.71 percent, along with Furukawa Electric and Denso.

The other big news out of Tokyo will be the Bank of Japan’s decision on interest rates, following a two-day meeting.

Chris Weston, chief market strategist at spreadbetter IG, said in a note he didn’t expect the BOJ meeting to produce any developments, meaning there will unlikely be any rate hike.

Kospi rallies, following Nikkei, ASX

South Korea’s market followed the rally in the Australian and Japanese markets. The Seoul Kospi was up 0.61 percent as investor sentiment was boosted by developments in Wall Street overnight.

Shares of Lotte Shopping was up 1.37 percent in early trading, despite news emerging that Korea Customs Service, which previously denied Lotte a duty-free license, had awarded a license to a Lotte competitor. Local department store giant Shinsegae was awarded an operating license to open a duty-free shop in Seoul’s Myeong-dong district according to reports.

Shinsegae shares shot up some 7.37 percent at the open.

ASX opens in the green, up 1.16 percent

Australian stocks broadly opened in the green on Thursday morning, as banks and resources producers capitalized on overnight gains in Wall Street.

Shares of Rio Tinto was up over 4 percent, Fortescue Metal saw 3.5 percent gains, and South32 shares jumped 2.41 percent after the company announced it slashed its net debt in half as conditions toughen for industrial producers. Atlas Iron shares plunged some 4 percent.

BHP Billiton’s shares were also up over 2 percent as the company will hold its annual general meeting later in the day. The mining, metals, and petroleum company has come under pressure in recent months on the back of a slump in commodities prices. Recently its problems worsened after a mine-waste dam in Brazil burst at the Samarco iron ore mine it co-owns with Vale.

There have also been talks around revising BHP’s dividend policy as the company struggles to produce favorable numbers. In August, the mining giant saw an 86 percent drop in its profits after tax for the full year ending in June, falling from USD 13.8 billion to USD 1.91 billion.

Tim Schroeders, portfolio manager at Pengana Capital told CNBC’s “The Rundown” that the BHP board will likely be under pressure to review the company’s progressive dividend policy as it is becoming unsustainable on an ongoing basis.

“It’s increasingly vulnerable,” he said. “The recent events in Brazil around the dam bursting and unquantified damages yet to be worked out just put a spotlight on the company’s vulnerability.”

Elsewhere gold miner Newcrest also saw its shares bounce back in early trade, up some 4.5 percent, on the back of a 0.09 percent rise in gold prices in the US overnight to USD 1,070.96.

Oil producers mostly also saw an uptick in their stocks in early morning trade, with the exception of Santos which saw its shares slide by 2 percent. At the end of US trading session, oil prices closed at USD 40.75 after dipping below the USD 40 mark earlier.

The Australian dollar also slid against the US dollar, fetching USD 0.7128, after the Fed comments overnight made a strong case for an upcoming interest rate hike later this year.

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Warren Buffett is having a very unusual bad year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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It hasn’t been a banner year for the Oracle of Omaha.

Warren Buffett has seen shares of his Berkshire Hathaway fall more than 11 percent this year. Even worse, Berkshire shares have underperformed the S&P 500 by more than 10 percent.

What makes this highly unusual is that Berkshire famously tends to underperform when the S&P skyrockets and outperform when the stocks as a whole do less well, which makes sense given Buffett’s long-term time frame. Indeed, Buffett is well known for instructing investors: “Be fearful when others are greedy and be greedy when others are fearful.”

This year, however, the S&P is slightly lower, with a 0.4 percent decline. And while there is still a month and a half left in 2015, it is notable that this would mark the first year that Berkshire A shares have underperformed in a down year for the S&P 500 since 1990. (Readers might note that this excludes 2011, when the S&P fell by less than 0.05 percent.)

The most striking year of underperformance came in 1999, when Berkshire shares fell 20 percent while the S&P 500 rose by nearly the same amount.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

European stocks fall at open amid security concerns

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Two suspects killed in French police raid in Paris: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fed may send a big message to markets

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Minutes from the Fed’s last meeting could be a big deal for markets Wednesday, showing the central bank is finally ready to raise rates next month — barring any negative surprises in the economy.

“Hopefully, they’ll make their intentions to raise rates a lot clearer in the new set of minutes,” said Jack Ablin, CIO of BMO Private Bank.

The Fed on Oct. 28 laid out some of what it would consider in December when deciding whether to move its target fed funds rate off of zero rates for the first time in nearly seven years. Analysts expect that to be emphasized in the minutes.

“I think even if they were to hike 25 basis points in December, it’s not a tightening. It’s just a removal of accommodation and I think they want to make that very clear so as not to derail the rally in risk assets,” said Jim Caron, fixed income portfolio manager at Morgan Stanley Investment Management.

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Caron said the Fed could explain in its 2 p.m. EST release that the environment has changed since September, when it surprised markets and held off hiking rates due to concerns about financial markets and overseas conditions. “China was imploding. Equities were tanking. October saw a significant return and reversal of asset prices,” he said.

The central bank is also likely to point out that its path to normalization should be very slow, he said. “Slower than previous paces of rate hikes,” Caron said. “I think they’re going to try to prevent any kind of taper tantrum.”

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There are also a number of Fed speakers Wednesday, including Richmond Fed President Jeffrey Lacker, who will be on “Squawk Box” at 8 a.m. ET. New York Fed President Bill Dudley, Cleveland Fed President Loretta Mester and Atlanta Fed President Dennis Lockhart are on a panel in the morning at the Clearing House Annual Conference in New York.

Dallas Fed President Rob Kaplan speaks at noon on the economy and Fed policy, and former Fed Chairman Ben Bernanke will be at the Economic Club of New York at noon.

Oil could also remain a factor Wednesday. There is government inventory data expected at 10:30 a.m. ET, after American Petroleum Institute data Tuesday afternoon showed a small stockpile draw.

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“I still expect to see a build … probably just around a million barrels,” said John Kilduff of Again Capital. Oil inventory data have shown big increases in US supply in recent weeks and that has been a factor weighing on oil prices. West Texas Intermediate oil futures rose slightly above USD 41 per barrel in late trading after declining close to USD 40 in Nymex trading.

Caron said oil is getting a disproportionate amount of attention from investors. “All roads lead to inflation and what’s happening in oil. It is the absolute nexus and linchpin that is moving market sentiment up and down,” he said.

Ablin said big moves in oil are often negatives for stocks and other risk assets. He looked at the correlation between a 3 percent or greater weekly decline in oil futures, and the performance of things like high-yield bonds, emerging markets, master limited partnerships, dividend stocks, gold, REITs and preferred stocks.

The worst performer was MLPs, down an average 3 percent, and the best was preferred stocks, the only positive asset with a gain. Preferreds were up just an average 0.1 percent.

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The S&P 500 averaged a 1 percent decline, and emerging markets were down 1.7 percent. There were 17 weeks where there was a 3 percent or more drop in oil futures during the past 50 weeks.

Stocks were mixed and barely changed Tuesday, after reports of bomb threats in Germany sapped gains in afternoon trading. That followed a strong surge in stocks Monday, as markets shook off worries about the coordinated Paris terror attacks that left at least 129 dead and dozens injured on Friday night.

“I think the cancellation of the German soccer game looked like it coincided with the falloff. One isolated event alright, but if you start getting a few of these things, the market’s going to be concerned. Right now we’re (U.S. stocks) are the flight to quality, but who knows,” Ablin said.

He said the idea the Fed could drop its rate hiking plans if the economy is hurt or the terror situation worsens had helped lift stocks Monday.

Caron said terrorism events tend to have transitory impacts on markets, but another incident might cause more of a reaction. ISIS, or the so-called Islamic State, claimed credit for the Paris attacks, and also the downing of a Russian airliner over Egypt. The situation in Germany was unclear, after a soccer stadium was evacuated Tuesday night due to a bomb threat.

Analysts have said one outcome after the Friday terrorism attacks is that the European Central Bank, already expected to ease Dec. 3, could be even more committed to doing so. This expectation could make the move in the euro/dollar pair even more aggressive, with the euro reaching parity in the next couple of months as the Fed moves in the opposite direction of the ECB.

The euro was lower at USD 1.06 Tuesday. “We know USD 1.05 is sort of a boundary on the bottom, at least it has been this year,” Caron said. “If we take that out, people will be talking about 90 to 95 (cents) pretty quickly.” Caron said investors seem to be waiting to see what ECB President Mario Draghi will do with deposit rates and easing. Speculation is that the ECB will cut the discount rate by 10 basis points and expand QE, possibly adding in muni bond purchases.

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Caron said he could see the euro reaching parity with the dollar in the first quarter.

Besides the Fed minutes, traders will be watching housing starts and building permits, reported at 8:30 a.m. Retailers Target and Lowe’s also report earnings. Both Home Depot and Wal-Mart rose sharply Tuesday after earnings, countering a batch of negative moves in big retail names last week.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

How a global solar drive will boost silver prices

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Snapdeal CEO: We will be India’s biggest e-commerce player

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Delhi-based e-retailer Snapdeal is confident of becoming the market leader in India’s rapidly-growing e-commerce market by the end of this fiscal year through March, co-founder and CEO Kunal Bahl told CNBC early Wednesday.

According to data by Morgan Stanley, Snapdeal is currently the second-biggest player in India, with a market share of 32 percent. Rival Flipkart, the poster boy of Indian e-commerce, is holding on to the lion share of 44 percent, while US behemoth Amazon accounts for 15 percent of market share.

“[Flipkart] had a [headstart] of USD 500 million and 10,000-person, but it doesn’t seem like that any longer. We are quickly covering ground there. Also, a lot of the investments we made in infrastructure and other platforms like consumer-to-consumer (C2C) and payments are paying huge dividends,” said Bahl, who was speaking to CNBC at the Morgan Stanley Asia Pacific Summit in Singapore.

“Our market share is only climbing year-on-year. Three years ago, our market share was zero,” he added.

India’s e-commerce sector has grown by leaps and bounds in the past few years, on the back of improving telecommunications infrastructure and as Indian consumers grow increasingly comfortable with shopping online.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nikkei jumps at open, Kospi up as ASX slides

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian shares opened higher on Wednesday, with Japan’s Nikkei 225 leading gains even as investors remain cautious over the latest global geopolitical developments in the wake of the Paris terror attacks.

Local stocks got a lackluster lead from US markets. Wall Street’s Monday rally was short-lived, with the major averages giving up intraday gains that briefly took the S&P 500 into positive territory for the year and pushed the Dow Jones industrial average up more than 100 points on the back of solid earnings reports from Home Depot and Wal-Mart.

The DJIA closed up 0.04 percent at 17,489.5 points, the S&P 500 down 0.13 percent at 2,050.44 and the Nasdaq up 0.03 percent at 4,986.02.

Nikkei opens in positive territory

Japan’s Nikkei 225 opened nearly 1 percent higher on Wednesday, as investors keep an eye on the Bank of Japan’s two-day meeting, which kicks off later in the day.

The Japanese yen made marginal gains against the dollar, fetching 123.25.

Shares of Softbank were up 1.14 percent after the bank announced plans to issue 370 billion yen (USD 2.97 billion) in straight bonds for retail investors in December.

Japanese car makers were also seeing gains in early trade as shares of Toyota was up 0.95 percent, Nissan up 1.54 percent, Honda up 0.78 percent and Mazda rounded off with a 0.81 percent increase.

Toshiba, on the other hand, opened in red after reports emerged that Japan’s securities watchdog was likely to recommend a fine of about 7.5 billion yen (USD 60 million) for the accounting scandal that engulfed the company earlier in the year. Toshiba was found to have cooked its books over seven years, reporting more than USD 2 billion in overstated profits. The accounting scandal led to a shake-up of its senior management as the company continues to rebuild its image.

Shares of Toshiba was down nearly 0.5 percent.

Kospi up by 0.31 percent

South Korea’s Kospi saw gains on the back of investor appetite for heavyweights such as Samsung Electronics, which was up by 1.26 percent.

Hyundai shares also leaped by 1.59 percent, after the car manufacturer introduced its new luxury brand ‘Genesis’, whose production will begin in December with a total of six models in the pipeline. The Genesis brand is set to take on rivals in the luxury car segment such as Volvo, Audi, Mercedes, and BMW.

Meanwhile, Lotte shares were down some 2.19 percent as investors took in the news of founder and Chairman Shin Kyuk-ho filing a complaint against senior leaders in the group’s subsidiaries. The group recently failed to retain its license from the Korea Customs Service for its duty free shop in Seoul.

ASX opens 0.33 percent lower

In Australia, the ASX 200 benchmark index opened 0.33 percent lower on Wednesday, with commodity producers taking the biggest hit.

“Commodities were once again the biggest talking point in trade overnight,” said Evan Lucas, market strategist at IG, in a note, stating “the complex as a whole is trading at its lowest levels in over 15 years.”

Shares for Rio Tinto was down 2.68 percent and Fortescue Metals was down 3.15 percent, on the back of a decline in iron ore prices. BHP Billiton was down some 2.6 percent, following a slump in copper prices. Reports showed the London Metal Exchange benchmark copper was down to USD 4,590 a tonne on Tuesday, hitting its lowest in over six years on fears of slowing global demand.

Newcrest shares were down 3.63 percent, on the back of falling gold prices.

Oil producers Santos, Oil Search, and Woodside also dropped on the back of an oil market bogged down by oversupply concerns. Their shares were down between 1 to 2 percent.

US crude futures were down USD 1.07 at USD 40.67 a barrel while the internationally trade Brent crude was down 81 cents at USD 43.75 in late UStrading.

Share of Orica, an explosives and mining services company, were also down by 0.38 percent as it wrote down the value of its assets due to slower demand from the resources sector. The company reported a net loss of 1.27 billion Australian dollars (USD 900 million) for the year through September.

Meanwhile scrap metal merchant Sims Metal announced plans this morning to buy back up to 10 percent of its issued stock over the next year. Its shares were up 0.7 percent, trading at USD 7.240 a share.

Australian banks began the trading day in positive territory after the recent minutes of Reserve Bank of Australia’s (RBA) policy meeting confirmed an easing bias but also greater conviction of improving economic conditions in the country. Earlier in the month, the RBA had kept interest rates on hold at a record low of 2 percent.

The Australian dollar was flat at USD 0.7109 against the US dollar in early trade.

Also, investors will watch China’s House Price Index, due Wednesday, for signs of continued recovery in the mainland property market.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Paris and Fed: No wonder it’s a torrid time for markets

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

BlackBerry expects handset profitability next year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow