Economy

Strong spending from cloud computing service providers and the rise of AI-embedded personal computers are driving demand for more advanced chips and by extension, for chip making equipment too.”There is a reacceleration of capital investment by cloud companies, fab utilization is increasing across all device types and memory inventory levels are normalizing,” CEO Gary Dickerson said in a conference call with analysts. The company reported first-quarter revenue of $6.71 billion, beating estimates, and said China sales of $3 billion accounted for 45% of total revenue, up from 17%, a year earlier. Applied Materials makes equipment that helps fabricate chips and counts Intel (NASDAQ:INTC) and Samsung (KS:005930) among its customers.The California-based company said it expects second-quarter revenue of $6.5 billion, plus or minus $400 million, compared with analysts’ average estimate of $5.92 billion, according to LSEG data.It also forecast adjusted profit per share of $1.79 to $2.15, above estimates of $1.79.Analysts believe the push for stronger domestic supply chains for chips are benefiting companies such as Applied Materials and rival Lam Research (NASDAQ:LRCX).Governments across the world have been urging chipmakers to develop domestic production of semiconductors, to reduce reliance on China and Taiwan amid U.S.-Sino tensions.Late last year, Applied Materials was under a criminal investigation by the Justice Department for sending equipment to China’s top chipmaker SMIC via South Korea without export licenses, sources had told Reuters. Excluding items, Applied Materials’ adjusted profit for the quarter ended Jan. 28 stood at $2.13 per share, beating estimates of $1.91.Its gross margin jumped to 47.8% from 46.7% a year earlier. More

The New York-based firm’s quarterly operating expenses fell more than 14% to $2.99 billion from $3.48 billion in the previous year. Costs for fuel fell to $41 million from $101 million a year ago.The company forecast adjusted earnings in the range of $5.20 to $5.40 per share for 2024, compared to analysts’ average estimates of $5.29 per share, according to LSEG data.Utility firms have been cutting costs to counter inflation and rising interest rates. Peers Southern Co (NYSE:SO) and WEC Energy (NYSE:WEC) have also benefited from lower operating expenses in this quarter, beating profit estimates.Con Edison provides electric and gas services to about 5.1 million customers through its subsidiaries, mainly in some boroughs of New York City – Manhattan, the Bronx, parts of Queens – and parts of adjoining Westchester County.On an adjusted basis, the company, which was founded in 1823, reported earnings per share of $1.00 in the fourth quarter, beating LSEG analysts’ estimates of 96 cents. More

The company reported a loss of 55 cents per share, while analysts were expecting a loss of 52 cents, according to LSEG estimates. Roku (NASDAQ:ROKU) faces competition from streaming rivals such as Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN)’s Prime Video to attract subscribers at a time when Americans are trying to reduce expenses amid sticky inflation.Roku shares have fallen 4% since a media report on Tuesday that Walmart (NYSE:WMT) was in talks to buy the company’s rival Vizio for more than $2 billion. The company has an exclusive deal with the retailer to sell products fulfilled by Walmart on its devices. Roku’s stock more than doubled last year. Roku, however, forecast first-quarter revenue above Wall Street estimates. It expects first-quarter net revenue of $850 million, compared with analysts’ estimates of $834.1 million, according to LSEG data.Total revenue for the fourth quarter was up 14% to $984.4 million.Active accounts grew 14% to 80 million, and streaming hours rose 21% to 29.1 billion. Its average revenue per user (ARPU) slipped 4% to $39.92. More

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(Reuters) – A look at the day ahead in Asian markets.Asian stocks are on track for their fourth weekly rise in a row if they can avoid falling more than 1% on Friday, which would mark the longest winning streak in over a year. The regional and global backdrop for Asian markets on Friday looks relatively supportive, at least from an interest rate perspective, if not an economic one.Figures on Thursday showed that Japan and Britain slipped into recession at the end of last year, and U.S. retail sales last month fell much more than expected. But the upshot of that could be relatively looser monetary policy.That’s how it played out on Wall Street and in Japan on Thursday – the Nikkei chalked up another 34-year high to come within 1,000 points of its all-time peak, as traders bet that Japan’s shock slide into recession will force the Bank of Japan to go slow on normalizing monetary policy. The Nikkei is the stock market darling of the year, up a staggering 14% since Jan. 1. The yen’s fall through 150.00 per dollar to within sight of its recent 33-year low has been a key driver of the Nikkei’s rally, but not on Thursday – it got swept along in the global wave of non-dollar currency appreciation. Japan’s GDP figures were remarkable, with the 0.4% annualized contraction in the October-December period deeper than even the gloomiest forecast in a Reuters poll of 16 economists. The consensus, meanwhile, was +1.4%. Surprisingly weak U.S. retail sales data on Thursday also weighed on Treasury bond yields and the dollar, which was enough to keep Wall Street in the green for a second day.Juiced by the ongoing tech and AI boom, and strength in recent earnings, the S&P 500 has risen 14 out of the last 15 weeks, something it last did in 1972. The index is now flat on the week, leaving it finely poised to register a 15th-out-of-16-weeks winning streak on Friday. It has only managed this seven times in its history, the last occurrence also being in 1972.All in all, Asian markets seem set for a fairly positive end to the week on Friday, and perhaps a more somber tone will set in next week. When China re-opens. The Asian and Pacific economic calendar on Friday includes Japan’s tertiary manufacturing index, South Korean unemployment and trade, New Zealand’s manufacturing PMI, the final estimate of fourth quarter GDP from Malaysia, and Singapore’s trade data.Here are key developments that could provide more direction to markets on Friday:- New Zealand manufacturing PMI (January)- South Korea unemployment (January)- Malaysia GDP (Q4, final) (By Jamie McGeever) More

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Advance retail sales declined 0.8% for January, down from a 0.4% gain in December and worse than the estimate for a 0.3% drop.
Sales at building materials and garden stores were especially weak, sliding 4.1%. Miscellaneous store sales fell 3% and motor vehicle parts and retailers saw a 1.7% decrease.
Also, initial claims for unemployment insurance totaled 212,000 for the week ended Feb. 10, a decline of 8,000 from the previous week’s upwardly revised total and below the estimate for 220,000.

Consumer spending fell sharply in January, presenting a potential early danger sign for the economy, the Commerce Department reported Thursday.
Advance retail sales declined 0.8% for the month following a downwardly revised 0.4% gain in December, according to the Census Bureau. A decrease had been expected: Economists surveyed by Dow Jones were looking for a drop of 0.3%, in part to make up for seasonal distortions that probably boosted December’s number.

However, the pullback was considerably more than anticipated. Even excluding autos, sales dropped 0.6%, well below the estimate for a 0.2% gain.
The sales report is adjusted for seasonal factors but not for inflation, so the release showed spending lagging the pace of price increases. On a year-over-year basis, sales were up just 0.6%.
Headline inflation rose 0.3% in January and 0.4% when excluding food and energy prices, the Labor Department reported Tuesday. On a year-over-year basis, the two readings were 3.1% and 3.9%, respectively.
Sales at building materials and garden stores were especially weak, sliding 4.1%. Miscellaneous store sales fell 3% and motor vehicle parts and retailers saw a 1.7% decrease. Gas station sales also declined 1.7% as prices at the pump dropped during the month. On the upside, restaurants and bars reported an increase of 0.7%.
The control group of retail sales, which excludes items such as food service, autos, gas and building materials, fell 0.4%. The number feeds directly into the Commerce Department’s calculations for gross domestic product.

Consumer strength has been at the center of a U.S. growth picture that has proven far more durable than most policymakers and economists had expected. Spending accelerated by 2.8% in the fourth quarter of 2023, finishing out a year in which gross domestic product rose 2.5% despite widespread predictions for a recession.
However, worries linger that stubbornly high inflation could take its toll and jeopardize prospects going forward.
“It’s a weak report, but not a fundamental shift in consumer spending,” said Robert Frick, corporate economist for Navy Federal Credit Union. “December was high due to holiday shopping, and January saw drops in those spending categories, plus frigid weather plus an unfavorable seasonal adjustment. Consumer spending likely won’t be great this year, but with real wage gains and increasing employment it should be plenty to help keep the economy expanding.”
A separate economic report Thursday showed continuing labor market strength, another critical bedrock for the economic picture.
Initial claims for unemployment insurance totaled 212,000 for the week ended Feb. 10, a decline of 8,000 from the previous week’s upwardly revised total and below the estimate for 220,000, the Labor Department reported.
Continuing claims, which run a week behind, totaled just shy of 1.9 million, up 30,000 on the week and higher than the 1.88 million estimate.
There also was some good news on the manufacturing front, as regional surveys in the Federal Reserve’s Philadelphia and New York districts both came in better than expected for February.
The Philadelphia survey showed a reading of 5.2, up 16 points and better than the -8 estimate, while the Empire State survey for New York was at -2.4. Although the New York survey still indicated contraction, it was a much better reading than January’s -43.7 and the -15 estimate. The surveys measure the share of companies reporting growth, so a positive reading indicates expansion.
Markets largely took the reports in stride, with stock futures pointing to a higher open on Wall Street.
Investors are closely watching the numbers for clues about which way the Fed will go in terms of monetary policy and interest rates.
Federal Reserve officials have said they are satisfied enough with the prospects for both inflation falling and growth holding steady that the rate-hiking cycle begun in March 2022 is likely over. But they are watching the data closely, with most saying that they will need more evidence that inflation is on a sustainable path back to the central bank’s 2% goal before starting to cut.
Futures market pricing is indicating the first rate reduction will happen in June, with the Fed moving a total of four times, or a full percentage point, by the end of 2024.
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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Britain’s recession was variously described by economists on Thursday as “technical” and “shallow”, but in the brutal political arena ahead of a general election it was given a different name: “Rishi’s recession”.The bare facts are that Rishi Sunak promised at the start of 2023 to “grow the economy” but new statistics showed that instead it shrank for two consecutive quarters in the second half of the year.That means that the “R” word will be hanging around the prime minister’s neck until at least May, when the next quarterly GDP figures are released, unless last year’s figures are revised upwards in the meantime.“This is Rishi’s recession,” said shadow chancellor Rachel Reeves, who told a press conference in London that the growth data showed that “something has gone profoundly wrong”.Sir Ed Davey, Liberal Democrat leader, joined the chorus: “Rishi’s recession has savaged the British economy by decimating growth and leaving families to cope with spiralling prices.”You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Sunak told business leaders this week the British economy had “turned the corner”; the prime minister hopes that inflation will resume its downward path and the Bank of England will soon start cutting interest rates. Wages are growing in real terms and the jobs market is strong.But for now he is saddled with a record that saw a contracting economy in the second part of 2023 in spite of the fact that Britain’s GDP was given a boost by a growing population.If it had not been for a big influx of migrants — net migration hit a record 745,000 in 2022 — Treasury insiders admit that the headline GDP figures would have been even worse. Meanwhile, the GDP per capita figures were gloomier still. The Office for National Statistics reported that GDP per head fell 0.7 per cent in 2023, the first contraction since the financial crisis, excluding 2020, when strict pandemic restrictions heavily affected activity.It is GDP per capita that ultimately boosts living standards and Reeves said that data was “deeply worrying news for families struggling to make ends meet and for business too”.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The Resolution Foundation think-tank estimated that GDP per capita is now 4.2 per cent off its pre-cost of living crisis path — equivalent to a loss of nearly £1,500 per household. It also estimated that this was the longest run of falls or stagnation in GDP per capita since 1955.At the end of last year, UK GDP per head was still 1.5 per cent below its pre-pandemic level in the fourth quarter of 2019, ONS data showed. This compares poorly with a 5 per cent growth in the previous four years and with a 6.4 per cent expansion in the four years to the end of 2015.Sunak and Hunt believe they can still convince voters that Britain is now “on the right track”; they argue it was inevitable that growth would stall in 2023 while the BoE was fighting inflation with high interest rates.But time is running out, with an election expected in the autumn. “The economics are looking better but this is a frustrating political narrative,” admitted one Tory official.Reeves said Labour would pull the country out of its growth stupor, but faced questions about her abandonment last week of the party’s flagship plan to boost the economy with a £28bn-a-year green investment plan.She admitted that an incoming Labour government would face the same deep-seated problems as Sunak: “There are no short-cuts, quick fixes or easy answers,” she said.The debate among economists about the “technical” nature of Britain’s recession was quickly drowned out by the political furore, but many argued that the country was facing stagnation rather than the “R” word.They pointed to the fact that employment rose by about 100,000 in the second half of the year and real wages rebounded, expanding by an annual rate of 1.8 per cent in the three months to December. Business and consumer confidence also expanded with the closely watched S&P PMI survey indicating private sector activity grew at the fastest pace in eight months in January.  “It’s overly dramatic to label the decline in economic activity in the second half of 2023 a recession,” said Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics.Kallum Pickering, senior economist at Bank Berenberg, said the country slipping into a technical recession should not be “a cause for worry” partially because net trade was a large drag to growth. ONS data showed that export volumes contracted by 2.9 per cent in the final quarter while imports fell by 0.8 per cent, subtracting 0.6 percentage points from the quarterly GDP growth figure. “In all likelihood, the late-2023 softness should mark the bottom of the cycle for the UK,” said Pickering.Ellie Henderson, economist at Investec bank, was “not too concerned” by Thursday’s data. “The contraction was mild, and it is essentially old news,” she said. Henderson expects the economy to recover over the course of this year, with activity picking up again after the first quarter supported by various factors, including rising household disposable incomes and interest rate cuts. “The UK may have been in a recession at the end of last year, but the outlook for the economy is brighter across 2024,” she added. More