Date Issued – 11th December 2024
Preview
Asian stocks dipped as markets awaited US inflation data, which could shape the Federal Reserve’s rate decision. While South Korean stocks gained, Chinese equities fluctuated amid expectations of fiscal stimulus in 2025. The US dollar steadied, Treasury yields rose, and Japan’s yen strengthened slightly. Separately, SpaceX’s valuation surged to $350 billion after a $1.25 billion insider share sale, solidifying its dominance in space tech. Intel’s credit rating was downgraded by S&P due to sluggish recovery and leadership uncertainty, raising concerns about its turnaround strategy. Meanwhile, US Steel shares plunged 9.7% as President Biden moved to block a $14.1 billion sale to Japan’s Nippon Steel over national security concerns. Lastly, Broadcom’s AI-driven growth lifted its stock price targets ahead of earnings, though order slowdowns may temper near-term momentum. Investors are urged to monitor US CPI data, geopolitical tensions, and sector-specific risks as markets navigate opportunities in semiconductors, space tech, and critical industries.
Asian Stocks Slip as Dollar Holds Steady Ahead of US CPI Data
Asian markets retreated as investors anticipate the release of US inflation data, which could influence the Federal Reserve’s interest rate decision next week. Hong Kong and mainland Chinese stocks fluctuated, while South Korea extended gains following recent political turbulence. Meanwhile, the US dollar steadied after a three-day rally, and US Treasury yields inched higher. China’s Central Economic Work Conference raised expectations of fiscal stimulus for 2025, with economists forecasting the largest budget deficit in decades. In Japan, the yen strengthened slightly as producer price inflation accelerated, but remained subdued ahead of US CPI data.
Investment Insight
Investors should watch US CPI data closely, as it could solidify expectations for upcoming Fed rate cuts. Meanwhile, China’s potential fiscal expansion and Japan’s inflation trends suggest evolving opportunities in Asian markets—but also heightened risks. Diversification remains key.
SpaceX Valuation Soars to $350 Billion in Insider Share Sale
SpaceX has agreed to a $1.25 billion insider share purchase, valuing the company at a staggering $350 billion, according to an internal memo. The per-share price of $185 marks a sharp increase from $112 just three months ago. SpaceX itself will reportedly buy up to $500 million in common stock as part of this transaction, solidifying its position as the world’s most valuable private startup. The valuation underscores SpaceX’s dominance in rocket launches and its growing Starlink internet network, while Elon Musk’s businesses continue to gain momentum post-election, with his personal wealth climbing to $384 billion.
Investment Insight
SpaceX’s valuation jump highlights investor confidence in space technology and satellite communications as high-growth sectors. However, private market dynamics and geopolitical considerations remain key risks for long-term gains in the space industry.
Intel’s Credit Rating Downgraded by S&P on Slow Recovery, Leadership Uncertainty
S&P Global Ratings has downgraded Intel’s credit rating to ‘BBB’ from ‘BBB+’ due to a sluggish recovery and uncertainty following CEO Pat Gelsinger’s unexpected departure. Intel’s revenue of $38.84 billion for the first nine months of 2024 fell short of expectations, raising concerns about the company’s turnaround plan. Gelsinger’s exit before completing his four-year roadmap to reclaim chip leadership from Taiwan Semiconductor Manufacturing Co. adds further uncertainty. Despite the downgrade, S&P maintained a “stable” outlook, citing modest growth prospects in 2025.
Investment Insight
Intel’s credit downgrade highlights risks tied to leadership changes and execution challenges. Investors should assess the company’s ability to stabilize and innovate amid rising competition in the semiconductor space.
Market price: Intel Corp (INTC): USD 20.16
US Steel Shares Plunge as Biden Set to Block Nippon Steel Deal
President Joe Biden is expected to block the $14.1 billion sale of US Steel to Japan’s Nippon Steel on national security grounds, following a recommendation from the Committee on Foreign Investment in the United States (CFIUS). The deal has faced political opposition, with Biden emphasizing the need for US Steel to remain domestically owned. US Steel warned of potential headquarters relocation and operational closures if the merger fails, while Nippon Steel criticized the politicization of the process. Shares of US Steel dropped 9.7% on the news, while Nippon Steel shares remained steady.
Investment Insight
The blocked merger underlines the growing scrutiny of cross-border deals in critical industries. Investors should monitor geopolitical tensions and protectionist policies, which could weigh on M&A activity and valuations in sectors tied to national security.
Broadcom Targets AI Growth as Analysts Raise Price Expectations Pre-Earnings
Broadcom’s stock price target has been raised by Citi to $205 ahead of its fiscal Q4 earnings, driven by strong AI semiconductor growth and VMware’s integration. Analysts expect Q4 revenue to hit $14.06 billion, a 51% year-over-year increase. Broadcom’s AI chip sales are forecasted to reach $12 billion in 2024, with partnerships like Apple and Google supporting growth. However, a slowdown in Google orders could temper Q1 guidance, offset by expected business from Meta in 2025. Broadcom shares are up 54% year-to-date, reflecting bullish market sentiment.
Investment Insight
Broadcom’s AI-driven growth positions it as a long-term tech leader, but near-term headwinds like order slowdowns warrant caution. Investors should focus on its ability to sustain momentum in the competitive AI infrastructure market.
Market Price: Broadcom Inc (AVGO): USD 171.81
Conclusion
In a week dominated by anticipation of US inflation data, markets are grappling with shifting dynamics across sectors. Asian stocks wavered as fiscal stimulus in China and Japan’s inflation trends hint at evolving opportunities. SpaceX’s soaring valuation underscores investor confidence in space tech, while Intel’s downgrade highlights challenges in leadership and execution. The blocked US Steel deal reflects growing geopolitical tensions, adding uncertainty to cross-border M&A. Meanwhile, Broadcom’s AI momentum signals long-term promise despite near-term risks. As markets await clarity from the Fed, diversification and vigilance remain essential in navigating economic shifts and sector-specific opportunities.
Upcoming Dates to Watch
- December 11, 2024: US CPI
- December 12, 2024: US PPI
Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $400 million AUM and over 1000 Clients.
Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.