—— Fed Seen Sticking with Three 2024 Cuts; CATL Full-Year Income Jumps; S&P 500 Falls as $5.3 Trillion Options Expires; Adobe Tumbles Most Since 2002; Global Art Sales Dropped 4% Last Year; TikTok’s US revenues hit $16bn; Tesla hits 10-month low
1. Fed Seen Sticking with Three 2024 Cuts
Economists surveyed by Bloomberg News suggest that despite a recent uptick in inflation, Federal Reserve policymakers are unlikely to revise their forecasts for three interest-rate cuts this year and four in 2025.
The consensus among economists is that the Federal Open Market Committee will maintain interest rates within the 5.25% to 5.5% range for the fifth consecutive meeting next week. They anticipate policymakers to initiate rate reductions in June.
A significant majority of respondents foresee Fed officials projecting three or more cuts in 2024
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2. CATL Full-Year Income Jumps
Contemporary Amperex Technology Co. Ltd. (CATL) exceeded expectations with its full-year net income, emerging as the world’s largest electric vehicle battery maker by successfully navigating competition and capitalizing on reduced input costs.
In 2023, CATL recorded a net income of 44.12 billion yuan ($6.13 billion), marking a substantial 44% increase compared to the previous year and surpassing estimates of 43.7 billion yuan. The company reported fourth-quarter earnings of 3 billion yuan alongside revenue of 106.23 billion yuan.
However, while the full-year revenue amounted to 400.9 billion yuan, demonstrating strong performance, it fell short of initial estimates which projected 411.1 billion yuan in revenue.
Earlier in January, CATL had provided guidance indicating that its annual net income would likely range between 42.5 billion yuan and 45.5 billion yuan.
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3. S&P 500 Falls as $5.3 Trillion Options Expires
As the week drew to a close, the stock market experienced a downturn amid heightened volatility, driven by the looming expiration of a significant volume of options contracts set to mature on Friday. This event, known as triple witching, is a quarterly occurrence that involves the expiration of derivatives contracts linked to stocks, index options, and futures. Traders on Wall Street are preparing for potential sudden price fluctuations as they grapple with the need to either roll over their existing positions or initiate new ones.
According to estimates by Rocky Fishman, the founder of derivatives analytical firm Asym 500, approximately $5.3 trillion worth of contracts are set to expire during this period. The uncertainty surrounding triple witching makes it challenging for traders to predict market movements accurately.
Matt Maley, a strategist at Miller Tabak, emphasized the difficulty of forecasting market direction on such days. He highlighted that the expiration-related activity can distort market indicators, making them unreliable for predicting future trends.
Maley advised investors not to rely solely on the day’s market performance when analyzing the outlook for the upcoming week and beyond.
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4. Adobe Tumbles Most Since 2002
Adobe Inc. experienced a significant decline of up to 14% on Friday morning following a disappointing sales forecast for the current quarter, which raised concerns about the competitive threat posed by emerging AI startups.
The company announced that revenue for the period is expected to range between $5.25 billion and $5.3 billion, falling short of analysts’ expectations.
According to data compiled by Bloomberg, analysts had anticipated revenue of $5.31 billion. In terms of profitability, Adobe forecasted earnings, excluding certain items, of up to $4.40 per share, slightly surpassing analysts’ average estimate of $4.38.
Recent demonstrations by OpenAI showcasing its video-generation model, Sora, have reignited investor worries about heightened competition in the market.
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5. Global Art Sales Dropped 4% Last Year
Despite facing challenges such as high borrowing rates, geopolitical tensions, and economic volatility, the global art market still achieved an estimated $65 billion in sales in 2023, as reported jointly by Art Basel and UBS Group AG. This figure represents a positive aspect amidst the prevailing circumstances.
However, there is cause for concern as sales, encompassing both auctions and art gallery transactions, have declined by 4% in value compared to 2022. Furthermore, when considering inflation, the actual decline in the market’s value could be even more significant.
Clare McAndrew, the author of the report, expressed slight surprise that the decline wasn’t more pronounced, stating, “I was actually slightly pleasantly surprised that it didn’t decline more.”
McAndrew highlighted the challenges faced by individuals in the art market, describing it as a tough period.
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6. TikTok’s US revenues hit $16bn
According to sources familiar with the matter, TikTok has generated approximately $16 billion in sales in the United States in 2023. This achievement underscores the app’s immense popularity among Gen Z users despite facing potential regulatory challenges, including the threat of a ban.
Owned by ByteDance, a Beijing-based company, TikTok has experienced rapid growth, contributing significantly to ByteDance’s overall revenue. In fact, ByteDance is projected to surpass Meta, the parent company of Facebook, as the world’s largest social media company by sales.
While TikTok drives a substantial portion of ByteDance’s revenue, the majority still comes from its operations in China.
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7. Tesla hits 10-month low
Tesla shares were poised for their first consecutive weekly decline since January, reflecting challenges facing the electric-car manufacturer amid recent setbacks and industry-wide disruptions.
During midday trading on Friday, Tesla shares remained relatively unchanged, contributing to a 7.3% decline over the past five trading sessions. This decline marks the first instance since mid-January that Tesla has experienced two consecutive weeks of losses, following a significant 13.5% drop last week.
Earlier on Friday, Nissan and Honda revealed their intentions to collaborate on an electric vehicle project, aiming to navigate the escalating competition within the automotive sector.
Source: Financial Times – Tesla hits 10-month low as first back-to-back weekly drop since January looms
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.