Day: 1 August 2024

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Arm issues light earnings guidance but latest results exceed expectations

Arm Holdings

Arm results exceeded expectations, but earnings guidance disappointed.

The chip-design company has ceased disclosing the quarterly shipment numbers of its chips.

Arm’s shares dropped over 13% in after-hours trading on Wednesday following the chip-architecture firm’s announcement of modest earnings projections for the current quarter and the entire fiscal year.

Shareholders report

Total revenue was a record $939 million, up 39% year-on-year

Royalty revenues were up and amounted to $467 million, this represents a 17% increase.

Licence and other revenue was $472 million, up 72% year-on-year.

Arm’s revenue increased by 39% year-on-year for the quarter ending 30th June 2024, as reported in a shareholder update. The net income reached $223 million, a significant rise from the previous year’s $105 million.

Arm has kept its full year forecast unchanged, projecting revenues between $3.8 billion and $4.1 billion.

For the upcoming fiscal Q2, Arm anticipates revenues ranging from $780 million to $830 million. This projection suggests no mid-range growth, contrasting with some analysts’ expectations of $804.1 million in revenue.

Arm Holdings one day share price mid-day 1st August 2024

Arm Holdings one day share price mid-day 1st August 2024
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Bank of England cuts rate to 5.0% – the first since the Covid pandemic of March 2020 and from the highest rate for 16 years

Bank of England

The Bank of England (BoE) on Thursday 1st August 2024 announced its first-interest rate reduction in more than four years, taking the key rate to 5%.

Although numerous analysts predicted that the Bank of England might announce a reduction in interest rates at its August 2024 meeting, the absence of definitive signals from the central bank left the decision clouded in uncertainty.

The Monetary Policy Committee (MPC) ultimately cast a 5-4 vote in favour of the reduction, with Governor Andrew Bailey stating that the committee would proceed with caution.

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Rolls-Royce shares surge to all-time high as dividend is reinstated

Rolls-Royce

Rolls-Royce shares surged over 11% to reach a record high on Thursday 1st August 2024 following the reinstatement of its dividend and an increase in its profit outlook, buoyed by robust first-half results

The British aerospace and defence giant announced an underlying profit of £1.1 billion for the first half of the year and projected this to grow to between £2.1 billion and £2.3 billion for the full year of 2024.

This projection surpasses the previous forecast of £1.7 billion to £2.0 billion made in its full-year results for 2023 and exceeds market expectations.

Rolls-Royce one-year share price as of: 1st August 2024 (12pm)

Rolls-Royce one year share price as of: 1st August 2024 (12pm)
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Markets got to hear exactly what they wanted to hear from Fed chair Jerome Powell

FOMC

FOMC hold rates steady at 5.25% – 5.50%

Federal Reserve Chair Jerome Powell ended a press conference in which he gave markets exactly what they wanted; a strong indication of a September 2024 rate cut.

Powell says September 2024 rate cut ‘on the table’ if inflation continues to cool.

Federal Reserve officials held short-term interest rates steady but observed that inflation is getting closer to its 2% target.

The FOMC did not signal an immediate rate cut; they reiterated that further progress is necessary before considering rate reductions. However, Federal Reserve Chair Powell’s subsequent statement was markedly dovish, hinting at a potential rate cut in September 2024.

Markets were generally happy with the news after moving up all day in anticipation of the confirmation of a September cut. The Dow Jones, Nasdaq, Russell 2000 and S&P 500 all climbed before and after the news.