Notable market news this past week (19-Jan-25)
Here is the Skeptivest roundup of the latest market headlines for the week
🇺🇸 Energy and food cost weigh on progress in battling US inflation
Core CPI (excl. food/energy, which are volatile) signal progress in combating inflation: The December Consumer Price Index (CPI) report highlighted modest progress in the battle against inflation. Core CPI, which excludes food and energy, rose just 0.2% month-over-month, down from November’s 0.3% increase. While the change is slight, it marks a step forward in curbing inflationary pressures.
Annual inflation trends provide a mixed picture: Year-over-year, core CPI showed its first decline since July, growing 3.2% in December compared to 3.3% in previous months. This suggests inflationary trends are easing. However, headline CPI, which includes energy and food, told a different story. Monthly headline inflation climbed to 0.4% in December, up from 0.3% in November, pushing annual CPI growth to 2.9%, compared to November's 2.7%.
Energy and food costs keep pressures alive: Energy and food prices played a significant role in driving December’s headline CPI uptick. Gas prices rose 4.4% month-over-month, though they remain 3% lower than a year ago. Meanwhile, grocery prices saw minimal movement, but eggs stood out with a sharp 3.2% month-over-month rise and a staggering 37% year-over-year increase, highlighting the ongoing strain from volatile supply chains and external factors like avian flu.
☕️ Quick fire happenings to note
🌏 Global macro
- Active China funds lose out: Despite a late-2024 rebound in Chinese equities, most active managers struggled to outperform passive strategies. Only 10% of funds tracking the MSCI China Index managed to beat the iShares MSCI China ETF, according to Copley Fund Research.
- Oil show signs of resilience: Oil markets are navigating mixed signals as geopolitical tensions and extreme weather drive volatility. Despite recent highs, supply constraints and diplomatic actions could keep prices elevated in 2025.
- Rising bond yields threaten IPO resurgence: Equities have enjoyed their best two-year run since 1998, encouraging IPO activity. However, the surge in bond yields is raising concerns, potentially dampening valuations for high-growth companies eyeing stock market listings. While the IPO market has been resilient to interest rates historically, volatility remains a key factor influencing investor sentiment.
- Trump’s Treasury secretary pick backs tariffs, tax cuts, and Russia sanctions: Scott Bessent, President-elect Donald Trump’s pick for Treasury Secretary, faced Senate confirmation hearings, emphasizing tariffs as a revenue source and supporting the extension of 2017 tax cuts. He also called for increased sanctions on Russian oil producers to pressure Vladimir Putin toward negotiations with Ukraine
🏦 Individual stocks/companies
- TikTok app shuts down in the US: TikTok has gone offline in the US, hours before a new law banning the platform was due to come into effect. President Joe Biden had said he would leave the issue to his successor, Donald Trump. Trump has said he will "most likely" give TikTok a 90-day reprieve from a ban once he takes office on Monday.
- Nintendo shares slumped (-4.26%) as Switch 2 console disappoints: Nintendo shares saw their sharpest drop in over three months after its next-gen console teaser failed to excite investors. Analyst Hideki Yasuda of Toyo Securities expects a recovery as attention turns to pricing after the April 2 reveal. Meanwhile, Sony faced challenges as PlayStation scrapped two unannounced "live service" games from Bend Studio and Bluepoint Games.
- Intel shares (+9.5%) spike at the back of M&A speculation: Intel shares spiked as much as 9.5% Friday following a report by tech newsletter SemiAccurate suggesting the chipmaker might be an acquisition target. The report cited an email hinting at a "mystery company" with the resources for a full buyout, though no names were disclosed. This speculation follows the recent ousting of CEO Pat Gelsinger, as Intel’s board lost confidence in his turnaround strategy, sparking interest from potential buyers.
- BP is cutting about 5% of its workforce Chief Executive Officer Murray Auchincloss told staff on Thursday. In total, about 4,700 internal staffers and 3,000 contractors will be terminated.
- Meta axing 5% of low performers in workforce: In an internal memo, Zuckerberg said he plans to cut 5% of the company’s workforce for “performance” reasons and “bring new people in” to replace them.
- Tesla (+11.28% past 5 days) rise despite SEC suing Musk: Tesla shares surged despite news of an SEC investigation, with investors dismissing the probe as either immaterial or likely to be resolved under the incoming Administration. The real driver behind the rally, however, was declining core inflation, which eased concerns about prolonged restrictive interest rates—benefiting growth-oriented stocks like Tesla, much like the recent rebound in bank stocks.
- Lululemon (-7.02% past 5 days) dips despite guidance upgrade: Even the "emperor of athleisure" couldn’t win over markets despite raising guidance. On Monday, Lululemon updated its Q4 outlook, forecasting 11–12% revenue growth (up from “high single digits”) and increasing EPS estimates from $5.60 to $5.825. While early data indicates a stronger-than-expected Holiday shopping season, markets had hoped for even larger upgrades, leaving Lululemon shares underwhelmed by the announcement.
🇸🇬 Singapore related
- Singapore's GDP growth expected between 1% and 3% in 2025: Singapore's economy, which ended 2024 on a robust note, faces a more subdued outlook in 2025. GDP growth is forecasted at 1–3%, down from the 4% achieved last year. Key risks include geopolitical tensions, a slowing Chinese economy, and uncertainties tied to Donald Trump’s return as US president. However, trade-related services and manufacturing sectors offer some optimism, fueled by strong demand for chips used in PCs, smartphones, and AI devices. These bright spots may provide resilience amid broader economic headwinds.
- Cost of living tops Singaporeans' concerns: The cost of living has emerged as the top concern of Singaporeans heading into this year’s general election, for which over a quarter have not yet made up their minds on who they will be voting for, a new survey has found. Concerns over jobs and unemployment came in second, while the state of the economy followed in third place, according to the study by Blackbox Research’s sentiment tracker SensingSG.
