On Wednesday, U.S. equity markets closed higher, with a rally in technology shares. The S&P 500 gained 0.6%, while the Nasdaq surged nearly 1.3%. Netflix experienced a notable jump of over 9.5% after announcing record subscriber growth for the fourth quarter and price hikes in various markets, including the U.S. and Canada.
In addition, Oracle saw a 7% increase in its stock price following President Trump’s announcement of a $500 billion private-sector investment in AI infrastructure, involving Oracle, OpenAI, and SoftBank.
The Dow Jones advanced by 0.3%, and the S&P 500 reached a new intraday high, driven by strong earnings in the tech sector.
Earnings Reports: Procter & Gamble, Johnson & Johnson, Halliburton
- Procter & Gamble saw its shares climb nearly 2%, exceeding second-quarter sales and profit estimates.
- Johnson & Johnson’s shares fell by 2%, despite delivering better-than-expected quarterly results.
- Halliburton experienced a decline of 3.5%, citing expectations of flat or slightly lower revenues due to weaker activity in North America and Mexico.
Investors were also cautious about trade tensions and inflation risks after President Trump indicated potential tariffs on imports from China, Mexico, Canada, and the EU, effective February 1st.
In addition, bond yields rose, with the 10-year U.S. Treasury yield reaching 4.6%.
Latest Market and Economic Update
Asian Markets: Mixed Reactions to Economic Data
On Thursday, most Asian equity markets rose, including Japan’s Nikkei 225 and China’s CSI 300, driven by optimism surrounding potential Bank of Japan rate hikes and new government measures to support Chinese shares. However, South Korea’s KOSPI dropped by 0.9%, influenced by weak GDP data and profit-taking in technology shares.
U.S. Futures and European Markets
- U.S. equity futures were steady on Thursday, indicating a flat market open as investors awaited fresh earnings reports and initial jobless claims data.
- European markets closed higher on Wednesday, with the STOXX 600 rising by 0.4%. This was driven by strong performances from Adidas, Siemens Energy, and Munich Re. Despite concerns over potential new tariffs, European markets showed resilience, supported by solid corporate earnings and expectations of interest rate cuts by the European Central Bank.
Currency and Commodity Updates
U.S. Dollar and Oil Prices
The U.S. dollar index held steady at 108.2 on Thursday, as investors awaited further clarification on President Trump’s policy intentions and the upcoming Federal Reserve meeting. The euro remained stable against the dollar, trading at 1.0412 EUR/USD.
Oil prices edged lower, as traders anticipated higher U.S. production under Trump’s energy policies, which include ramping up output and rolling back climate regulations. Despite cold weather and sanctions on Russia, U.S. inventory builds and weaker demand from China placed downward pressure on oil prices.
China’s Market Support Measures
The China Securities Regulatory Commission introduced measures to support the struggling equity market. Among the steps, insurers are encouraged to allocate CNY 100 billion to A-shares during the first half of 2025, and pension funds are urged to increase investments in listed companies. These initiatives aim to stabilize the Chinese equity market in the face of ongoing economic challenges.
Corporate Earnings and Market Movements
Key Companies on the Move
- Samsung launched its Galaxy S25 series, featuring Google’s AI-powered Gemini engine and an upgraded Bixby assistant, aiming to revitalize sales amidst competition from Apple and Chinese rivals. Despite keeping prices the same, Samsung faces challenges differentiating its AI features and boosting its chip business, as it used Qualcomm’s processors instead of its in-house Exynos.
- Procter & Gamble exceeded quarterly expectations due to strong demand for household products in the U.S., though it faced a flat pricing environment. The company plans to address potential tariff impacts through productivity improvements and supply chain adjustments, with new product launches expected to drive future growth.
- Johnson & Johnson reported a 19% rise in global cancer drug sales, driven by Darzalex, despite challenges from biosimilars for Stelara and currency headwinds. The company expects up to $91.7 billion in sales for 2025, with strategic acquisitions and new product launches driving growth.
- GE Vernova missed earnings expectations for the fourth quarter, reporting $1.73 earnings per share, lower than the consensus estimate of $2.37. However, the company anticipates 2025 revenue between $36 billion and $37 billion, with adjusted free cash flow expected to range between $2 billion and $2.5 billion.
- Electronic Arts shares dropped over 11% in after-hours trading after revising its Q3 and full-year bookings guidance downward. The company cited weak demand for EA Sports FC and Dragon Age.
- Siemens Energy shares rose by nearly 10% after its supervisory board chair, Joe Kaeser, expressed optimism about potential benefits from Trump’s $500 billion AI investment plan. The increasing demand for energy solutions, especially for data centers powering AI, positions Siemens Energy for strong growth in the U.S. market over the next decade.
- Puma reported a 2024 net profit of €282 million, lower than the previous year’s €305 million, mainly due to higher interest payments. The company announced a cost-cutting program aiming for an EBIT margin of 8.5% by 2027.
- Schaeffler AG shares declined sharply after the company warned that its full-year income margin would fall below guidance. The margin is expected to be 4.5% in 2024, down from 7.3% in 2023, due to weak performance in its bearings and industrial solutions unit.
Analyst Ratings and Cryptocurrency Forecast
Stock Ratings: Analyst Updates
- Analysts upgraded Netflix shares after its strong Q4 performance. Rosenblatt Securities raised its rating to “buy” with a target price of $1,494, while Canaccord Genuity upgraded from “hold” to “buy,” setting a target of $1,150. Barclays raised its target to $900, citing strong subscriber growth.
- Barclays downgraded Apple due to concerns over weaker iPhone SE4 sales and competition in China, lowering its price target. However, Wedbush remains optimistic, viewing the recent stock drop as a buying opportunity.
- TD Cowen raised its price target for LVMH to €800, citing strong brand execution and expected recovery in 2025. Jefferies raised Airbus and Rolls-Royce targets due to strong aircraft sales and favorable currency exchange rates.
- Barclays downgraded STMicroelectronics to “underweight,” citing exposure to China, trade restrictions, and weak demand in key sectors, while Roth MKM downgraded Reddit to “Neutral” due to decelerating revenue growth.
Cryptocurrency: Price Predictions for Bitcoin and Ethereum
- Standard Chartered forecasts Bitcoin could reach $200,000 and Ethereum $10,000 by 2025, advising clients to buy on dips.
- BlackRock’s CEO Larry Fink believes Bitcoin could rise to $700,000 if adoption grows as a hedge against currency debasement.
Economic Calendar and Data to Watch
Key economic releases today include the Consumer Confidence Index in Europe and Initial Jobless Claims in the U.S. Notable earnings reports are expected from Alcoa, Intuitive Surgical, and General Electric, with 157 companies across the U.S. and Europe scheduled to announce results.
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