Stocks advance on fall in bond yields as Nvidia optimism boosts Nasdaq

NEW YORK -- Global stocks mostly rose Wednesday following lackluster economic reports that mitigated worries about further central bank tightening.

The tech-rich Nasdaq enjoyed outsized gains in anticipation of earnings from artificial intelligence player Nvidia.

Analysts said stocks were supported by a drop in yields of the 10-year US Treasury note, which had hit multi-year peaks in recent sessions.

The retreat in yields followed meager purchase managing index data from the United States and Europe, suggesting a slowing economy.

The drop in yields "created a little bit of an opportunity to buy on some of the weakness," said Briefing.com analyst Patrick O'Hare.

All three major US indices climbed, with the Nasdaq jumping 1.6 percent.

European markets closed higher following data showing Britain's economic activity contracting for the first time in six months while the downturn in the eurozone deepened.

Sentiment has taken a hit in recent weeks owing to a spike in US Treasury yields to around 15-year highs, fueled by expectations that a strong economy will force the Federal Reserve to stick to its campaign of monetary tightening.

That has forced investors to push back their expectations as to when borrowing costs will eventually come down -- just a few months ago, they were betting on a cut by the end of the year.

All eyes are on a planned speech Friday by Fed chief Jerome Powell, with dealers hoping for some clarity on its plans to keep inflation on a downward path and confirmation of the central bank's two percent target.

Meanwhile, oil prices fell as the data showing weak economic activity doesn't bode well for demand.

"Today’s disappointing economic numbers on both sides of the Atlantic have cut the rug out from underneath crude oil prices, falling to one-month lows, and down over four percent from their peaks of earlier this month," said Michael Hewson at CMC Markets UK.

Nvidia

Tech shares were also buoyed by hopes that a strong Nvidia report would "get the market back on track," said O'Hare.

The firm's shares have rocketed this year, helping boost many other tech firms, even as traders fret over the impact of higher borrowing costs on their bottom lines.

In results released after Wednesday's closing bell, Nvidia crushed expectations.

The Silicon Valley-based chip company said sales doubled year-on-year to $13.5 billion in the latest completed quarter, leaving a net profit of $6.2 billion -- an eye-watering 843 percent higher than a year before.

Signaling that the boom in AI is still going strong, Nvidia said revenue in its current quarter would ramp up further to $16 billion.

Shares of Nvidia surged more than eight percent in after-hours trading.

Agence France-Presse

Asian shares struggle after yet another Brexit delay

TOKYO -- Asian shares and US stock futures dipped on Wednesday after British lawmakers rejected the government's timetable to fast-track legislation for its deal to take Britain out of the European Union.

Technology shares in the region were knocked after Texas Instruments forecast current-quarter revenue well below estimates in a sign the global microchip industry is being squeezed by a downturn in demand and a prolonged US-China trade dispute.

In after-hour trade, Texas Instruments shares tumbled 9.8 percent, driving down other chipmaker shares including Intel and Nvidia.

In Asia, SK Hynix slipped 1 percent while Tokyo Electron fell 3.6 percent.

"This will be a warning on semi-conductor shares, which have put on a strong performance recently," said Norihiro Fujito, chief investment analyst at Mitsubishi UFJ Morgan Stanley Securities.

S&P500 mini futures dropped 0.4 percent while Japan's Nikkei dipped 0.3 percent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.17 percent.

On Tuesday on Wall Street, the S&P 500 lost 0.36 percent.

In the currency market, sterling traded at $1.2897, below 5-month highs of $1.3012 set on Monday in a volatile trading session.

But the currency still kept hefty gains made over the past fortnight on growing expectations that a no-deal Brexit will be avoided even though it is still not clear how the process will unravel.

The defeat in parliament meant Britain would not be able to finalize its exit by Prime Minister Boris Johnson's Oct. 31 deadline.

The next step, Johnson said, would be waiting for the EU to respond to a request to delay the Oct. 31 Brexit date, which the prime minister reluctantly sent to Brussels on Saturday after being forced to do so by lawmakers.

A source in Johnson's office said on Tuesday that a new election is the only way to move on from Britain's Brexit crisis if the European Union agrees to a delay until January.

"Broadly speaking, there are two scenarios. There will be a short extension before the parliament will agree on Johnson's plan. Or there could be a general election, which would need a longer extension," said Kyosuke Suzuki, director of forex at Societe Generale.

"But it now seems unlikely that Britain will crash out of the EU on Oct. 31," he said.

Receding worries about a no-deal Brexit also underpinned the euro, which stood at $1.1130, off Monday's two-month high of $1.1180.

The yen ticked up to 108.48 yen per dollar, in a slow recovery since hitting a 2-1/2-month low of 108.94 on Thursday as falls in global shares soured risk sentiment.

The dollar was broadly weak, ahead of a Federal Reserve policy meeting next week, where policy makers are expected to cut interest rates by 0.25 percentage point.

Oil prices fell after industry group data showed US crude stocks rose more than expected last week.

Still, on the whole the market held firm after China signaled progress in trade talks with the United States and OPEC and its allies pondered deeper production cuts.

Brent crude futures fell 0.49 percent to $59.41 a barrel while US West Texas Intermediate (WTI) crude lost 0.64 percent to $54.13 per barrel.

source: news.abs-cbn.com

Chinese bitcoin mining rig makers aim for billions in HK IPOs - sources

HONG KONG - Three of the world's largest bitcoin mining equipment makers plan to raise billions of dollars with initial public offerings in Hong Kong, even as other companies report plunging demand for the chips needed to make bitcoin and a halving in the price of the cryptocurrency.

Soaring cryptocurrency prices last year triggered a boom in demand for specialist mining chips and in developing "mines" - facilities with thousands of machines that create the coins by solving complex mathematical puzzles.

Yet the U.S. chipmaker Nvidia Corp said this month that second-quarter sales to crypto miners totaled just $18 million, compared with $100 million expected by analysts.

Nvidia's chief financial officer, Colette Kress, said she anticipated "no contribution" to revenues from cryptocurrency in coming months.

That has raised concerns about the upcoming Hong Kong listings by three Chinese manufacturers of bitcoin mining equipment, Bitmain, Canaan Inc and Ebang International Holdings.

The companies all design high-end computer chips intended for mining cryptocurrencies, particularly bitcoin, and sell mining equipment containing the chips. In addition, Bitmain mines cryptocurrencies on its own account. Companies like Nvidia also sell specialty chips used for mining.

"The marked decline in the price of bitcoin since the start of the year is likely to weigh on investors' interest in these companies," said Benjamin Quinlan, chief executive of financial services consultancy Quinlan & Associates.

But, he added, "the fall in the price of bitcoin from its peaks has not been matched by an equivalent fall in the numbers of people mining it."

Bitcoin is currently trading at $6,699, down 64 percent from its December 2017 peak of $18,690. Daily mining revenue was 77 percent lower than in December, according to Blockchain.info, a data analytics and wallet provider.

"As the bitcoin price decreases, so does the profitability of mining itself, which decreases demand for mining chips and miners," said Wang Leilei, a consultant at financial services consultancy Kapronssia.

It is not just the price of bitcoin that is causing worries. People close to the IPOs said regulatory scrutiny and a patchy performance by Hong Kong offerings this year were additional concerns.

Julian Hosp, president of TenX, a Singapore-based blockchain firm, has also warned that if coins switch mining algorithms, then the machines designed to mine them would become useless.

"I would be quite wary of investing in these miners," Hosp said, referring to the equipment makers. "They are not long-term businesses and I think they've had their uptrend for now."

READYING IPO SALES PITCHES

Canaan and Ebang filed plans in May and June respectively for floats in Hong Kong, while Bitmain is expected to file its plans next month for an IPO in which it aims to raise at least $3 billion, sources close to the deal said.

Cryptocurrency trading is a global activity, but Chinese chipmakers have led the way in developing the most efficient means to mine the coins.

Bitmain had three quarters of the market for the specialist chips last year, followed by Canaan on 14 percent, according to estimates by analysts at Bernstein.

Ebang is aiming to raise up to $1 billion, according to sources, while Canaan is targeting at least $400 million - down from a figure of up to $2 billion touted earlier this year by people involved in the deal.

While EBang is expected to face Hong Kong's listing committee in September - a key approval needed for marketing the IPO - Canaan's offering is taking longer.

Two sources familiar with Canaan's situation said the company had not yet fixed a date for a committee appearance, as it worked on clearing up questions from HKEX officials regarding due diligence done on its prospectus.

A source close to Bitmain'S IPO said the company was aware about the potential for close regulatory scrutiny.

Bitmain, Canaan and Ebang didn't respond to requests for comment. A Hong Kong exchange spokesman declined to comment.

The bitcoin price slump is leading miners to consider their IPO sales pitches carefully, with many involved expecting them to push the potential of other uses for their chips.

Both Canaan and Ebang highlight the potential for their technology to be applied to other cutting-edge sectors.

That includes broader development of blockchain applications - the ledger system that underpins bitcoin and which is being widely explored by the financial industry - as well as artificial intelligence tools and the forthcoming build-out of 5G telecoms networks both within and outside China.

"The mainland government encourages chip design and production, as that is a segment of China's market that has been suffering," said Kapronssia's Wang.

"Bitmain and Canaan chips could also be used for non-bitcoin applications, like blockchain in general, big data, cybersecurity or AI, which is an advantage for the companies." 

source: news.abs-cbn.com

Largest drop in two months as Wall St. rally loses steam

NEW YORK - US stocks fell in low volume on Wednesday in a broad decline triggered in part by a sharp drop in home resales.

Contracts to buy previously-owned U.S. homes fell in November to their lowest level in nearly a year, a sign that rising interest rates could be weighing on the housing market.

The PHLX housing sector index .HGX fell 1.2 percent to close at its lowest in three weeks. The S&P 500 posted its largest daily decline since Oct. 11.

Technology was the largest weight on major indexes, however, with Nvidia (NVDA.O) down 6.9 percent to $109.25 after short seller Citron Research said the market was overlooking the headwinds for the stock - which had earlier touched a record high.

The S&P 500 tech sector .SPLRCT fell 0.9 percent after closing on Tuesday at its highest closing level since the year 2000.

"There was enough bad news during the day" to pull the market lower, said Keith Bliss, senior vice-president at Cuttone & Co in New York referring to the housing data.

He said U.S. Secretary of State John Kerry's comments that Israel's building of settlements on occupied land was endangering Middle East peace, made some traders nervous and exacerbated the decline with two allies publicly at odds.

The Dow Jones Industrial Average .DJI fell 111.36 points, or 0.56 percent, to 19,833.68, the S&P 500 .SPX lost 18.96 points, or 0.84 percent, to 2,249.92 and the Nasdaq Composite .IXIC dropped 48.89 points, or 0.89 percent, to 5,438.56.

About 4.82 billion shares changed hands in U.S. exchanges, below the 7.2 billion daily average over the last 20 sessions. Average daily volume this week last year was 5 billion.

Boeing (BA.N) fell 0.9 percent to $156.10 a day after Delta Air Lines (DAL.N) said it had reached an agreement with the planemaker to cancel a $4-billion order for 18 Dreamliner aircraft.

Declining issues outnumbered advancing ones on the NYSE by a 2.73-to-1 ratio; on Nasdaq, a 2.72-to-1 ratio favored decliners.

The S&P 500 posted 11 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 98 new highs and 46 new lows.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

source: news.abs-cbn.com