Blog

By Amanda Cooper

LONDON (Reuters) – Global stocks rose on Thursday, powered by a rally in technology shares that pushed Japan’s Nikkei to a new 34-year high, while the dollar steadied around three-month peaks as investors assessed the chances of when U.S. rates might fall.

A warmer reading of U.S. inflation earlier this week prompted traders to cut the chances of a prompt rate cut from the Federal Reserve, which lifted the dollar and sparked a sell-off in the fixed income market.

However, with other measures of economic activity pointing to resilient U.S. growth, analysts say investors are banking increasingly on a soft landing – a gradual slowing in growth and inflation that does not result in recession.

Stocks particularly have got a boost this week and on Thursday were fired up by another scorching rally in big U.S. tech shares, which tend to be more sensitive to the growth outlook, that spread to other markets.

The MSCI All-World index, which is trading around two-year highs, was up 0.27%, while in Europe, the STOXX 600 benchmark rose 0.6%, lifted by strong semiconductor stocks and auto shares after results from carmakers Renault and Stellantis.

The dollar was holding around its highest in three months, buoyed by the fact that investors are banking on far fewer rate cuts this year than they were just weeks ago.

“The market is assessing the probabilities here around the rate outlook – probably a soft landing where growth is acceptable and inflation continues to converge towards 2%, I think, remains the market’s base-case scenario, and our base case too,” Samy Chaar, chief economist at Lombard Odier, said.

“What has totally shifted is the fact that the inflation risk has collapsed, but the risk of some form of decent growth that is leading to sticky inflation has increased and therefore pricing for cuts has come down,” he said.

Optimism about the growth outlook sent Wall Street stocks higher overnight, as chipmaker Nvidia overtook Apple as the third-largest U.S. company by market value.

AI BOOM

Enthusiasm for all things AI also pushed Taiwan stocks to a record high on Thursday, with chipmaker TSMC up nearly 8%.

Japan’s Nikkei closed 1.2% higher, climbing as high as 38,188.74 during the session, the most since January 1990, inching closer towards the record high set in December 1989.

Traders are now pricing in an 82% chance of a Fed cut in June, the CME FedWatch tool showed. Markets at the end of 2023 had priced in rate cuts starting as early as March.

Investors now anticipate 97 basis points of cuts in the year, closer to the 75 bps the Fed had forecast in December.

U.S. retail sales numbers later on could offer some insight into how consumer spending held up in January.

Central bankers everywhere will be a little less keen on cutting rates if the Fed delays, said Ben Bennett, APAC investment strategist at Legal & General Investment Management.

“But it’s only one inflation print, and we all know how hard it is to forecast inflation, so the market impact is probably relatively small unless we get a second high print in a row.”

Chicago Fed President Austan Goolsbee said on Wednesday the Fed should be wary of waiting too long before it cuts rates.

That sent Treasury yields lower, with the yield on 10-year Treasury notes down 4 basis points to 4.224%.

Separate data releases on Thursday showed the economies of Japan and the United Kingdom slipped into recession. The Japanese yen strengthened marginally but was still around its weakest since November. The dollar was down 0.3% on the day at 150.04 yen.

The 150 level has been seen in the past as a potential catalyst for intervention by Japanese monetary authorities. It was just past this level that led them to intervene to shore up the yen in late 2022.

Sterling, meanwhile, eased 0.1% to $1.2551.

Brent crude traded down 0.6% at $81.08 a barrel, while U.S. crude eased 0.68% to $76.12.

(Additional reporting by Ankur Banerjee in Singapore; Editing by Jacqueline Wong, Tomasz Janowski and Susan Fenton)

(Reuters) – Nvidia’s bet on smaller AI firms from healthcare companies Nano-X Imaging and Recursion to chipmaker Arm Holdings boosted their shares in premarket trading on Thursday.

Nvidia, the biggest winner of the AI boom, revealed its new stakes in the firms as of Dec. 31 in a 13-F filing with the U.S. SEC late on Wednesday.

Fellow chip designer Arm Holdings drew the biggest investment from Nvidia, worth $147.3 million. The British company has said its processors complement Nvidia’s chips for AI work in data centers.

Arm shares gained 2.6% on Thursday after surging more than 60% in value since its strong quarterly forecast last week.

Shares of biotech company Recursion Pharmaceuticals, in which Nvidia invested nearly $76 million, gained 16.5%. About eight months ago, Nvidia said it would invest in Recursion to speed up training of the biotech firm’s AI models for drug discovery.

The Silicon Valley megacap firm also invested nearly $3.7 million in voice AI platform SoundHound AI, sending its shares 72% higher.

It bought shares of Israel-based medical device company Nano-X Imaging, which uses AI software to analyze reports. Nano-X shares rose 42.5% higher.

Autonomous driving technology TuSimple Holdings, which delisted from Nasdaq last week, also drew $3 million in capital from the chipmaker.

Shares of other small-cap chipmakers rose in tandem, with C3.ai Inc adding 1.5% and BigBear.ai Holdings gaining 8.9%.

Nvidia overtook Alphabet and Amazon.com this week to become the third most valuable U.S. company.

(Reporting by Medha Singh in Bengaluru; Editing by Krishna Chandra Eluri)

By Amanda Cooper

LONDON (Reuters) -Global equities rose on Thursday, powered by a rally in technology shares that pushed Japan’s Nikkei to a new 34-year high, while the dollar steadied around three-month peaks as investors assessed the chances of when U.S. rates might fall.

A warmer reading of U.S. inflation earlier this week prompted traders to cut the chances of a prompt rate cut from the Federal Reserve, which lifted the dollar and sparked a sell-off in the fixed income market.

However, with other measures of economic activity pointing to resilient U.S. growth, analysts say investors are banking increasingly on a soft landing – a gradual slowing in growth and inflation that does not result in recession.

Stocks particularly have got a boost this week and on Thursday were fired up by another scorching rally in big U.S. tech shares, which tend to be more sensitive to the growth outlook, that spread to other markets.

The MSCI All-World index, which is trading around two-year highs, was up 0.25%, while in Europe, the STOXX 600 benchmark rose 0.6%, lifted by strong semiconductor stocks and auto shares after results from carmakers Renault and Stellantis.

The dollar was holding around its highest in three months, buoyed by the fact that investors are banking on far fewer rate cuts this year than they were just weeks ago.

“The market is assessing the probabilities here around the rate outlook – probably a soft landing where growth is acceptable and inflation continues to converge towards 2%, I think, remains the market’s base-case scenario, and our base case too,” Samy Chaar, chief economist at Lombard Odier, said.

“What has totally shifted is the fact that the inflation risk has collapsed, but the risk of some form of decent growth that is leading to sticky inflation has increased and therefore pricing for cuts has come down,” he said.

Optimism about the growth outlook sent Wall Street stocks higher overnight, as chipmaker Nvidia overtook Apple as the third-largest U.S. company by market value.

AI BOOM

Enthusiasm for all things AI also pushed Taiwan stocks to a record high on Thursday, with chipmaker TSMC up nearly 8%.

Japan’s Nikkei closed 1.2% higher, climbing as high as 38,188.74 during the session, the most since January 1990, inching closer towards the record high set in December 1989.

Traders are now pricing in an 82% chance of a Fed cut in June, the CME FedWatch tool showed. Markets at the end of 2023 had priced in rate cuts starting as early as March.

Investors now anticipate 97 basis points of cuts in the year, closer to the 75 bps the Fed had forecast in December.

U.S. retail sales numbers later on could offer some insight into how consumer spending held up in January.

Central bankers everywhere will be a little less keen on cutting rates if the Fed delays, said Ben Bennett, APAC investment strategist at Legal & General Investment Management.

“But it’s only one inflation print, and we all know how hard it is to forecast inflation, so the market impact is probably relatively small unless we get a second high print in a row.”

Chicago Fed President Austan Goolsbee said on Wednesday said the Fed should be wary of waiting too long before it cuts rates.

That sent Treasury yields lower, with the yield on 10-year Treasury notes down 4 basis points to 4.224%.

Separate data releases on Thursday showed the economies of Japan and the United Kingdom slipped into recession. The Japanese yen strengthened marginally, edging below 150 per dollar, but still at its weakest since November.

The 150 level has been seen in the past as a potential catalyst for intervention by Japanese monetary authorities. It was just past this level that led them to intervene to shore up the yen in late 2022.

Sterling, meanwhile, eased 0.1% to $1.2553.

Brent crude traded down 0.5% at $81.19 a barrel, while U.S. crude eased 0.6% to $76.22.

(Additional reporting by Ankur Banerjee in Singapore; Editing by Jacqueline Wong and Tomasz Janowski)

By Fergal Smith

(Reuters) -Canada’s main stock index on Wednesday clawed back much of the previous day’s sharp decline as technology and industrial shares led broad-based gains for the market.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 304.43 points, or 1.5%, at 20,889.40, its biggest advance since Dec. 13.

The index was down 2.3% on Tuesday after hotter-than-expected U.S. inflation data rattled investors.

“It’s responding in my opinion to a very deep oversold condition that we got yesterday on a short-term basis,” said Sid Mokhtari, chief market technician for CIBC Capital Markets.

“We are getting better participation with the industrials, stable price momentum within the financial sector in both the U.S. and Canada, and the technology complex is still considered to be the leadership area of focus.”

The technology sector rallied 3%, industrials were up 2.4% and heavily weighted financials added 1.7%.

Financials were helped by a 7.2% gain for Intact Financial after the insurance company reported fourth-quarter results.

Alternative financial services company goeasy Ltd also reported quarterly earnings, beating estimates. Its shares climbed 8%.

All 10 major sectors ended higher but energy was barely up as the price of oil settled 1.6% lower at $76.64 a barrel on surging U.S. crude inventories.

Shares of CAE Inc fell 9.7% after the civil aviation training company missed analysts’ estimates for quarterly earnings.

(Reporting by Fergal Smith in Toronto and Purvi Agarwal in Bengaluru; Editing by Ravi Prakash Kumar and Sandra Maler)

By Jody Godoy

(Reuters) – Elon Musk has claimed that Delaware, home to much of corporate America, is trying to prevent businesses from heeding his call to leave the state, where a court invalidated his $56 billion Tesla pay package.

Since the Delaware Court of Chancery ruled to rescind Musk’s record pay package on Jan. 31, the Tesla CEO has posted on social media about reincorporating the electric vehicle maker in Texas, where it has its headquarters, and encouraging others to follow.

“Move your company out of Delaware before they lock the doors, as they just did with Tripadvisor,” Musk tweeted on Monday.

Here are the facts behind the billionaire’s claim.

WHAT IS HAPPENING WITH TESLA?

Musk said on the X social media platform on Feb. 1 that Tesla would “move immediately to hold a shareholder vote” to reincorporate the company in Texas.

It is not clear that Tesla’s board will recommend such a vote, or that it would garner the necessary support from shareholders. Many are retail investors who, research shows, typically fail to vote their shares.

DOES DELAWARE BLOCK COMPANIES FROM LEAVING?

The vast majority of large publicly traded companies incorporate in Delaware, even when they have no physical presence in the state, in part because of the predictable court system, which has specialist judges and non-jury trials.

Delaware has actually made it easier to reincorporate elsewhere. State law had required a unanimous shareholder approval. Since a change in 2022, companies can leave Delaware with the approval of a majority of shareholders.

But Delaware’s Chancery Court is now considering how closely to scrutinize moves that arguably benefit a controlling shareholder.

WHAT DOES TRIPADVISOR HAVE TO DO WITH IT?

A shareholder lawsuit against TripAdvisor’s board seeks to block the online travel guide company’s planned reincorporation in Nevada.

The shareholders argue the move was designed to let Gregory Maffei, head of TripAdvisor’s parent company, avoid accountability for potential self-dealing. Nevada sets a lower bar for such transactions, they argued.

At a November hearing in Delaware Chancery Court, Vice Chancellor Travis Laster seemed open to scrutinizing whether the move was fair to minority shareholders. But he expressed “discomfort” with the idea of blocking it.

“The idea that Delaware is going to block people from leaving, I think, is pretty strained,” the judge said, according to a transcript of a hearing in the case.

An attorney for the TripAdvisor shareholders told the judge that only a “small subset” of Delaware companies could have moves scruntinized – those with controlling shareholders heading to a state with fewer legal protections for minority shareholders.

In a non-controlled company, “the stockholder vote would carry the day,” the attorney, Andrew Blumberg, said.

COULD THE CASE AFFECT TESLA?

Musk does not have a controlling stake in Tesla, though he was found to have controlled the process that led to his 2018 pay package.

The shareholders who voted to approve the package lacked information about the process, the judge in that case ruled.

Texas does not shield corporate leaders in the same way as Nevada – meaning it could be harder for Tesla shareholders to argue a move there is designed to let Musk escape liability.

Still, a ruling expected this month in the TripAdvisor case could have implications, as it will show how closely Delaware judges will review out-of-state moves to determine if they are fair to minority shareholders.

(Reporting by Jody Godoy in New York; Editing by Tom Hals and Matthew Lewis)

By Purvi Agarwal

(Reuters) – Canada’s main stock index rose on Wednesday, boosted by gains in technology and financial stocks, as it recovered from the previous session’s broad sell-off triggered by hotter-than-expected U.S. inflation data.

At 10:30 a.m. ET (15:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 196.45 points, or 0.95%, at 20,781.42.

Wall Street futures also opened higher, recovering from a selloff in the previous session after a hot inflation report. [.N]

“We saw a correction in the market yesterday. The merchants keep hoping that inflation will come down. Then that’ll force central bankers to cut interest rates. And when it doesn’t come down, the market gets upset”, said Colin Cieszynski, chief market strategist at SIA Wealth Management.

On TSX, information technology stocks led sectoral advances, up 1.9%, rebounding from their 2.3% loss in the previous session.

IT gains were led by crypto miners Hut 8 and Bitfarms after Bitcoin hit a two-year high and breached $1 trillion in market cap.

Heavy-weight financials also rose 1.5% and were on track for their best day since Dec. 13 last year.

Insurance company Intact Financial and lender goeasy advanced 5.8% and 4.8% to become the top performers amongst financial stocks.

All sectors partially erased losses from the previous session, with the materials sector the only outlier with a 0.3% decline, tracking metal prices lower. [MET/L] [GOL/]

Canada’s largest insurer Manulife Financial and gold miners like Dundee Precious Metals and Kinross Gold among others are set to report their quarterly results after the bell on Wednesday.

Shares of gold miner Centerra Gold jumped 6.4% to the index’s top after the company announced its fourth-quarter results.

(Reporting by Purvi Agarwal in Bengaluru; Editing by Ravi Prakash Kumar)

LONDON (Reuters) -The total value invested in bitcoin surpassed $1 trillion on Wednesday for the first time since November 2021 as inflows to U.S. spot bitcoin exchange traded funds continued to support prices.

Bitcoin’s price reached $51,902 on Wednesday, its latest 25-month high and a rise of 4.7% on the day, taking the token’s market cap to $1.017 trillion according to price platform Coingecko.

The all-time high for bitcoin’s market cap was $1.28 trillion hit in November 2021, according to Coingecko.

The world’s largest cryptocurrency has risen around 20% since the start of February, already set for its biggest monthly rise since October.

Investments in bitcoin make up for more than half of the $2.01 trillion parked in the overall cryptocurrency market which includes ether and other digital coins.

Strong inflows to new U.S. listed ETFs have driven some of the price action in recent weeks, say analysts, and capital flows into the 11 U.S. spot bitcoin ETFs increased to $1.64 billion in the week to Wednesday, LSEG Lipper data showed.

The previous five trading sessions saw inflows of $409 million to the products, which received regulatory approval and began trading in January.

“Whether this pace will be sustained remains to be seen but in crypto, price often drives flow,” said analysts at crypto liquidity provider B2C2.

“One has to imagine that if there are more days like the last few, large inflows will be met by further price rises for spot (bitcoin).”

CRYPTO-LINKED STOCKS JUMP

Shares of U.S.-listed cryptocurrency companies also gained before the bell on Wednesday, with exchange Coinbase climbing 13%, while miners Riot Platforms and CleanSpark gained nearly 11% and 17%, respectively.

Bitcoin had hit an all-time high of $69,000 in November 2021, before struggling for much of 2022 and the first part of 2023, weighed down by monetary tightening by global central banks, and a slew of high profile failures at crypto companies, including leading exchange FTX.

But in the last few months, hopes of a soft landing for the economy and the launch of spot bitcoin ETFs have helped sentiment. The ETFs have been touted as a game-changer for the industry, already known for its appeal to retail traders, since investors can now have exposure to bitcoin without directly holding the asset.

Second-largest token ether, which underpins the ethereum network, was last up 4.8% at $2,761 its highest since May 2022.

(Reporting by Alun John in London and Medha Singh and Niket Nishant in Bengaluru; Editing by Chizu Nomiyama)

By Tim Hepher

PARIS (Reuters) – The head of Europe’s Airbus has told staff that recent unexpected charges in its Space business are “not acceptable”, in a candid assessment of a business facing what he described as an internal crisis, people familiar with the matter said.

In November, Airbus took a 300-million-euro ($320 million)charge on unidentified satellite programmes, said by industry sources to include the commercial telecoms OneSat family.

CEO Guillaume Faury told staff in a January review of 2023 that Defence and Space “performed strongly in many areas, but faced a major setback in the Space business which tarnished the overall performance”, according to extracts seen by Reuters.

Some major satellite developments have recorded unexpected charges, Faury said, adding: “Put simply, mishaps of this magnitude and suddenness are just not acceptable at Airbus”.

A spokesperson for Europe’s largest aerospace group, which reports earnings on Thursday, declined comment on staff memos.

Faury said the episode demonstrated that risks had to be managed in the right way and urged the whole group to learn from what he described as an internal “crisis” in Space.

“We no longer ‘say what we do, and do what we say’. As a listed company and a global leader in aerospace and defence, this is something we simply cannot afford.”

A recent reorganisation of Defence and Space, splitting the unit into three parts – Air Power, Space Systems and Connected Intelligence – will strengthen accountability and help manage risks, and is already showing initial results, Faury said.

The company has separately told staff that Jean-Marc Nasr, executive vice president of Space Systems, will be replaced in March as head of Space Systems by Alain Faure, head of Airbus Operations, industry sources said, confirming French reports.

“Thank you for your unwavering commitment to the company, including in the recent difficulties. It is what it is,” Faury said in hand-written comments addressed to Nasr in the memo, they said.

Nasr could not immediately be reached for comment. Airbus declined comment on management changes.

Since January, Faury has focused increasingly on reviewing Airbus’s strategy in Defence and Space after the company appointed Christian Scherer as head of its core jetmaking business, a job previously held by Faury alongside his CEO role.

Some analysts say the decision to refocus Faury’s role, as well as competition from Elon Musk’s SpaceX launchers and a new generation of low-cost satellites, have raised questions over the European company’s future in the space business.

Faury’s January letter to staff, however, said that “a high-performing Defence and Space division is a stronger Airbus than one without a Defence and Space business”.

Agency Partners analyst Sash Tusa wrote in a preview of 2023 Airbus results that outperformance in the core commercial jetmaking division would be eroded by weakness in Space, where he cited “seemingly structural problems of competitiveness”.

($1 = 0.9339 euros)

(Reporting by Tim Hepher; Editing by Mark Potter)

By Samrhitha A

(Reuters) – Lyft’s forecast error that sent shares into a tizzy overnight may invite regulatory or legal scrutiny, analysts and experts said on Wednesday, overshadowing its solid quarter and forecast.

An error in its earnings statement caused a brief 67% surge in shares before a clarification from Chief Financial Officer Erin Brewer in a conference call with analysts.

Lyft said incorrectly that a key margin metric was expected to rise by 500 basis points this year, but Brewer later corrected that forecast to an increase of 50 basis points.

About 48 million shares traded after-hours Tuesday, more than triple the usual daily regular-session volume in the stock.

“The SEC will probably review the situation given the scale of the share price movement upon release of the original results and Lyft could potentially be fined,” said Dan Coatsworth, an investment analyst at AJ Bell.

Analysts said the surge could have included significant short covering from hedge funds. Lyft had short interest of $566.1 million, or 13.1% of its free float shares, as of Feb. 12, according to data and analytics firm Ortex.

Still, shares were up 24% in Wednesday premarket activity, setting on course to add more than $1 billion to its market value if premarket gains hold.

Whether the company could face legal liability is unclear, experts said.

“Since the error relates to a forecast, it’s likely that liability under securities regulations will not attach unless it can be proved that it was made with knowledge that it was wrong or with some intent to mislead,” said Bobby Reddy, professor of corporate law and governance at the University of Cambridge.

CEO David Risher’s push for aggressive restructuring has helped the company cut total costs last year by 12% compared with a 28% increase in expenses in 2022.

Lyft was trading at 20.27 times its 12-month forward earnings estimates compared with Uber’s 49.75.

Shares of rival Uber gained more than 8% after the company said it would buy back up to $7 billion worth of company shares for the first time ever.

Thousands of drivers for ride-sharing platforms Uber, Lyft and food delivery app DoorDash are expected to go on strike across the United States on Valentine’s Day for fair pay, drivers’ groups said earlier this week.

(Reporting by Samrhitha Arunasalam and Medha Singh in Bengaluru; Editing by Arun Koyyur)

By David Shepardson

WASHINGTON (Reuters) – The U.S. government has reimbursed auto dealers for about $135 million in advance point-of-sale consumer electric vehicle tax credit payments since the start of the year through Feb. 6, the Treasury said on Wednesday.

Prior to 2024, U.S. auto buyers could only take advantage of the $7,500 new electric vehicle credit or $4,000 used EV credit when they filed tax returns the following year.

Starting Jan. 1, consumers can transfer the credits to a car dealer at the time of sale, effectively lowering the vehicle’s purchase price.

The Internal Revenue Service has received more than 25,000 time of sale reports, including more than 19,500 – or 78% – with advance payment requests and approximately $135 million has been paid to dealers since Jan. 1, Treasury said in disclosing the previously unreported figures.

“One month into implementation of this provision, there is strong demand for this new upfront discount, which will continue momentum in growing this industry in the United States,” Deputy Treasury Secretary Wally Adeyemo said in a statement.

The advance payment requests include 17,500 for new EVs and 2,000 for used vehicles. More than 11,000 U.S. auto dealers have registered for the program, including more than 8,000 registered for advanced payments.

In January, many EVs lost eligibility for tax credits after new battery sourcing rules took effect, including the Nissan Leaf, some Tesla Model 3s, Chevrolet Blazer EV, Cadillac Lyriq, Ford Mach-E and Ford E-Transit.

The Treasury issued guidelines in December aimed at weaning the U.S. electric vehicle supply chain away from China. The number of EV models qualifying for U.S. EV tax credits fell on Jan. 1 to 19 from 43, but since then Volkswagen regained eligibility for versions of its ID.4 EV.

Consumers must attest they meet income limits to qualify for the tax credit at time of purchase or they will need to repay the government when filing their taxes. For new vehicles, the adjusted gross income limit is $300,000 for married couples and $150,000 for individuals.

The August 2022 Inflation Reduction Act law reformed the EV tax credit, requiring vehicles to be assembled in North America to qualify for any tax credits, eliminating nearly 70% of eligible models.

It also created a used EV tax credit, lifted 200,000-vehicle manufacturer caps on credits, imposed income and vehicle price restrictions and extended credits to leased vehicles.

(Reporting by David Shepardson; Editing by Lincoln Feast.)