Aurelia Butler

1. Futures higherUS stock futures point higher as investors weighed earnings from megacap technology companies this week and assessed a raft of key economic indicators.By 04:30 ET (08:30 GMT), the Dow futures contract had added 38 points or 0.1%, S&P 500 futures had gained 13 points or 0.2%, and Nasdaq 100 futures had moved up by 49 points or 0.2%.The main averages on Wall Street were mixed in the prior session, with traders gauging the outlook for Federal Reserve interest rate policy over the rest of the year. Expectations that the Fed will roll out further cuts were somewhat bolstered by a report showing a decline in job openings — a proxy for labor demand — to their lowest level since 2021.By the end of the trading on Tuesday, the tech-heavy Nasdaq Composite notched a record closing high and the benchmark S&P 500 rose, while the 30-stock Dow Jones Industrial Average fell. Looming over dealmaking were results from Google-owner Alphabet, which were released after the closing bell.2. Alphabet results top estimatesAlphabet reported Tuesday third-quarter results that topped Wall Street estimates thanks in large part to solid demand for the computing and data services needed to power artificial intelligence models fueling returns at its cloud computing unit.In the three months ended in September, net income surged to $26.3 billion, up from $19.7 billion in the year-ago period and beating projections of $22.8 billion. Group-wide revenue also increased by 15% to $88.27 billion, ahead of expectations of $86.37 billion.Underpinning the returns was the Google Cloud division, where revenue spiked by 35% to $11.4 billion and operating profit jumped to $1.9 billion — up from $266 million in the corresponding timeframe last year.Advertising revenue also moved up by 10% to $65.85 billion, a slightly slower rate of growth but still resilient enough to potentially temper some concerns over intensifying competition from AI chatbots like OpenAI’s ChatGPT.”[T]his is a great quarter with little to complain about […], although investors really aren’t worried about near-term fundamentals,” analysts at Vital Knowledge said in a note. “[T]he primary concerns are more in the medium/long-term with regulatory scrutiny and search competition from the likes of AI chatbots.”Shares in Alphabet gained in premarket US trading.3. AMD shares slide premarketShares in Advanced Micro Devices slumped in premarket US trading after the chipmaker’s fourth-quarter revenue outlook just missed estimates, erasing much of its over 10% gain logged so far this year.AMD also increased its projections for sales of its key AI chips for next year to $5 billion from its prior estimate of $4.5 billion, although investors were underwhelmed by the guidance.Due to soaring AI chip demand from a host of large tech firms, AMD has been struggling to provide the necessary supply of processors. Chief Executive Lisa Su flagged that supplies of AI chips would be tight heading into 2025.In a note to clients, analysts at Morgan Stanley said AMD’s returns were “essentially in line” with consensus forecasts, adding that they were “somewhat surprised” by the sell-off in the stock.”[W]e still see 2024-25 as investment years for the AI opportunity, and think some revenue [and] earnings expectations are still too high,” the analysts wrote.4. Earnings parade marches onInvestors will be busy on Wednesday as they sift through an accelerating stream of corporate results and crucial economic data.Higlighting the earnings slate will be quarterly reports from software behemoth Microsoft (NASDAQ:MSFT) and Facebook-parent Meta Platforms (NASDAQ:META) following the closing bell on Wall Street. The two firms are both members of the so-called “Magnificent Seven” group of big-name tech stocks that have largely driven broader market movements in recent months.Elsewhere, drugmaker Eli Lilly (NYSE:LLY) is set to unveil its numbers before US markets open, as well as pharmaceutical player AbbVie (NYSE:ABBV). Construction equipment seller Caterpillar (NYSE:CAT), often seen as a bellwether of the global economy, will also report.On the data front, traders will get a first look at US growth in the third quarter. Economists predict that the initial preliminary reading of gross domestic product for the period will come in at an annualized rate of 3.0%, matching the April-June quarter’s pace.The figures could factor into how Americans view the state of the economy, a major issue for voters heading into the all-important Nov. 5 presidential election. Polls show the race between Democratic Party candidate Kamala Harris and Republican former president Donald Trump is all but tied.5. Crude gainsOil prices rose Wednesday, recouping some of the recent losses as industry data showed an unexpected draw in U.S. inventories.By 04:30 ET, the Brent contract climbed 1.2% to $71.58 per barrel, while U.S. crude futures (WTI) traded 1.3% higher at $68.11 a barrel.Data from the American Petroleum Institute showed U.S. oil inventories fell 0.57 million barrels in the past week, compared with expectations for a build of 2.3 million barrels.The official inventory data is due later on Wednesday, and if this data matches the API numbers then it could indicate supplies in the world’s biggest fuel consumer were somewhat tight. More

BEIJING (Reuters) – China’s planned fiscal package targets damaged property and local government balance sheets that weigh on the economy and fuel deflationary pressures, thus acting as a stabiliser rather than the instant growth booster markets craved.Larger-than-expected monetary stimulus last month fuelled unfettered investor speculation about a complementing, blockbuster fiscal programme to immediately revive sagging economic activity.On Tuesday, Reuters reported that China is considering approving next week new debt issuance of more than 10 trillion yuan ($1.4 trillion) in coming years.Some 6 trillion yuan will go chiefly towards lowering the off-books debt of municipalities, while 4 trillion will fund buybacks of idle land from cash-strapped developers and help reduce a giant inventory of unsold flats.The measures in the works represent a more calibrated approach to stimulus, which is a departure from previous all-out strategies to revive growth.In 2008, for example, China threw lavish resources directly at the infrastructure and property sectors to counter the effects of the global financial crisis.”The primary goal of this stimulus is clearly more about shoring up balance sheets rather than boosting near-term GDP growth,” said Christopher Beddor, deputy China research director at Gavekal Dragonomics.”It should ease the strains, but not necessarily generate instantly higher spending.”This prudent approach is partly informed by the fact that China is now suffering from the excesses of previous stimulus. But it also leaves open questions about the impact the measures will have on short- and long-term growth.That lingering uncertainty is reflected in financial markets, with Chinese stocks down about 0.5% on Wednesday, pulling other Asian markets lower.”The package can be a painkiller, rather than a booster for the economy,” said Gary Ng, senior economist at Natixis. “The economic impact may not be as big as it looks on the surface.”CLOGGED PIPESStill, a programme worth more than 8% of the world’s second-largest economy’s gross domestic product (GDP) cannot be dismissed.”It’s not just about quantity. It’s about providing a sense of stability,” said Zong Liang, chief researcher at state-owned Bank of China.Local governments, facing high debt and falling revenues, have been cutting civil servants’ pay and other expenses. Property developers starved for cash have struggled to resume work on incomplete projects, hitting jobs and incomes.China hopes to unclog the pipes that transmit money to businesses and consumers by shifting liabilities onto the central government’s healthier balance sheet, which only carries a debt load of 24% of GDP.”Policymakers seem to sense that there’s a major liquidity squeeze right now unfolding among local governments, in large part due to the property downturn, leading many local authorities to stop paying their staff and corporate suppliers,” Gavekal’s Beddor said.Tackling that squeeze releases resources into the real economy, but the impact may only show up in the second half of 2025, he added.Another lingering question is whether the package merely postpones the debt crunch.The International Monetary Fund calculates explicit local government debt at 31% of GDP at the end of 2023, that of their finance vehicles at a further 48% of GDP, and other government-related debt at another 13%.Add the central government’s debt and the total reaches 116 trillion yuan, the Fund estimates.In the property sector, Goldman Sachs estimates the unsold real estate inventory, if fully built, would amount to 93 trillion yuan.Overcoming these past excesses hinges on whether the package can kick off a virtuous growth circle that allows China to curb, rather than simply transfer these liabilities.Many analysts say a decades-old household consumption deficit holds back such prospects.Low wages, high youth unemployment and a feeble social safety net leave China’s household spending below 40% of GDP, or about 20 percentage points behind the global average.While Beijing is also expected to unveil consumer subsidies for appliances and other goods, the amount will be a tiny fraction of the gap.”It seems support for consumption remains modest,” said Louis Kuijs, chief Asia economist at S&P Global. “That means it remains unlikely that we will see a substantial improvement of the economic growth outlook or that deflation risks have been vanquished.” More

Standard DigitalStandard & FT Weekend Printwasnow $29 per 3 monthsThe new FT Digital Edition: today’s FT, cover to cover on any device. This subscription does not include access to ft.com or the FT App.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The EU is pushing ahead with tariffs of up to 45 per cent on Chinese electric vehicles, sharply escalating the trade war between the 27-member bloc and Beijing over allegations of unfair industrial subsidies.The tariffs, which come into force on Wednesday and will be imposed for five years, come after the EU rejected China’s claims that it was introducing protectionist measures without evidence that Chinese vehicles were receiving undue state support. The new duties also come on top of an existing 10 per cent tariff on Chinese car imports in the bloc.The two sides said they would continue talks, including over the introduction of “minimum prices” for Chinese-made vehicles sold in Europe. That level would have to be high enough to compensate for the “injurious subsidisation” that Chinese manufacturers received and which allowed them to undercut European rivals, an EU official said.China’s commerce ministry said in a statement on Wednesday that Beijing would “continue to take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies”. It added that it hoped Brussels could work with Beijing in a “constructive manner” to resolve the dispute through dialogue.The EU’s decision to impose additional duties on Chinese-made EVs followed the conclusion of a months-long investigation launched by commission president Ursula von der Leyen last year into China’s allegedly unfair support for its EV industry.Beijing has repeatedly criticised Brussels over the investigation and tariff rises, arguing the European actions violate international trade rules and threaten global progress on fighting climate change.The EV tariffs have caused deep divisions in the bloc, with strong opposition from member states including Germany and Hungary. Diplomats have warned that EU countries that export to China are bracing for further retaliation from Beijing.A spokesman for German Chancellor Olaf Scholz said on Wednesday that Berlin was pushing for a negotiated solution because of the risk of retaliation.“Such trade conflicts are not something we should strive for and in this respect the clear expectation towards Brussels, but also towards Beijing, is that good results will be achieved in the ongoing talks so that a trade conflict can be averted,” he said.The introduction of the duties also comes at a vulnerable time for the EU car industry, which has struggled to compete with the aggressive expansion of low-priced Chinese EVs in the bloc. Except for Renault, all the major European car manufacturers have issued profit warnings this year.Volkswagen, Europe’s biggest car manufacturer, is planning to shut at least three German plants and shed tens of thousands of jobs as part of a cost-cutting drive.Along with high energy costs and challenging regulation linked to the EU’s green transition, the industry is contending with a significant increase in the number of cheaper Chinese models reaching the market. The commission has insisted it is introducing tariffs to ensure a level playing field in Europe rather than to restrict trade with China.The tariffs were first announced in June, with four companies — China’s BYD, Geely and SAIC and Tesla of the US — allocated individual duties that ranged from 7.8 per cent for Tesla to 35.3 per cent for SAIC, according to the level of subsidies they received from Beijing.All other manufacturers that co-operate with Brussels by providing requested information will be hit with a tariff of 20.7 per cent. Those that do not face a 35.3 per cent levy.“We can safely say that we basically disagreed on each and every fact, each and every legal argument that we have established in the investigation,” an EU official said.China has already said it will impose anti-dumping measures on EU brandy imports and has launched probes into EU imports of pork and dairy products since the EV tariffs were announced. Beijing also raised a complaint at the World Trade Organization after the tariffs were provisionally announced, calling the investigation “protectionist in nature” and claiming an “absence of any concrete evidence regarding alleged subsidisation in China”.The EU has said the WTO complaint is now void since the tariffs were marginally reduced after the investigation ended.The China Chamber of Commerce to the EU “expressed profound disappointment” over the commission’s decision to proceed with the tariffs, telling the Financial Times it was “disheartened by the lack of substantive progress in negotiations”.But an EU official confirmed prices were unlikely to rise immediately for consumers. “There is a big chance that if a consumer bought a car now, it would be bought from stock [already] on the EU market,” the official said.Additional reporting by Gloria Li in Hong Kong and Laura Pitel in BerlinVideo: Content creators take the fight to AI | FT Tech More

$1 for 4 weeksThen $75 per month. Complete digital access to quality FT journalism. Cancel anytime during your trial.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

$75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More