Day: 1 November 2024

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China’s manufacturing output expands in October 2024 according to survey

Exports China

China’s factory activity jumped back into expansion among smaller manufacturers in October 2024, according to a private survey report released on Friday 1st November 2024.

In October 2024, the Caixin/S&P Global manufacturing purchasing managers’ index reached 50.3, surpassing the prediction of 49.7.

The index stood at 49.3 in September 2024, 50.4 in August, and 49.8 in July. A PMI figure above 50 signifies an expansion in activity, whereas one below 50 suggests a contraction.

Following the release of the official PMI data on Thursday 31st October 2024, which showed the first expansion in the country’s manufacturing activity since April 2024, the Caixin measure, which typically reflects the performance of exporters and private sector firms, contrasts with the official PMI that includes larger and state-owned enterprises.

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Apple, Amazon and Intel all post positive results 31st October 2024

Apple

Apple’s fourth-quarter results surpassed Wall Street forecasts for revenue and earnings per share. However, net income declined due to a one-time charge related to a tax settlement in Europe.

iPhone sales and overall sales both rose by 6%.

Apple one year stock chart

Amazon

Amazon’s shares soared in after-hours trading following the announcement of earnings and revenue that exceeded expectations. The firm’s cloud services and advertising divisions demonstrated significant expansion.

Amazon one year stock chart

Intel

Intel has reported earnings that surpassed expectations and provided improved guidance. The company is currently undergoing a significant restructuring initiative.

Intel one year stock chart

However, Intel has now lost over half its market value.

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Super Micro Computer drops 33% after disclosing ‘auditor’ resignation – 30th October 2024

Stock chart down

Super Micro Computer’s shares dropped 33% in premarket trading 30th October 2024, following the announcement in a regulatory filing that Ernst & Young had stepped down as its accounting firm.

The filing revealed that EY had expressed doubts about the AI server company’s “commitment to integrity and ethical values” during accounting reviews.

Super Micro had been included in the S&P 500 index in March 2004.

Super Micro one month chart snapshot 30th October 2024

Further update – 1st November 2024

Super Micro’s sell-off persisted on Friday, November 1, 2024, with the stock falling an additional 10%, culminating in a 44% loss for the week.

The most significant drop occurred on Wednesday 30th October 2024, following the company’s announcement of losing its second auditor in under two years.

Super Micro, currently behind schedule in submitting its latest annual report, has announced it will deliver a ‘business update’ for the most recent quarter on Tuesday 5th November 2024, coinciding with Election Day in the U.S.

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Volkswagen profit plunges 42% in third quarter

Car manufacture

Volkswagen’s operating profit fell to 2.86 billion euros ($3.1 billion), with third-quarter sales revenue experiencing a 0.5% year-on-year decrease to roughly 78.5 billion euros.

These figures come after Volkswagen lowered its annual outlook for 2024 last month, which was the second adjustment within a few months.

The company has recently encountered several challenges, including potential plant closures in Germany and the cancellation of many labour contracts with local workers in September 2024.

According to Volkswagen, vehicle sales reportedly dropped by 8.3% in the third quarter of 2024, compared to the same period the previous year.

Reports indicate that the Volkswagen Group’s net liquidity was negative 160.6 billion euros at the end of September 2024. At the end of 2023, the company’s net liquidity was negative 147.4 billion euros.

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Microsoft and Meta both indicate future AI spending will cut into next quarter profits

Microsoft and AI

Microsoft’s significant investment in OpenAI is impacting its earnings – 30th October 2024

The company reportedly indicated, following the quarterly earnings report, that Microsoft anticipates a $1.5 billion reduction in income for the current period, primarily due to projected losses from OpenAI.

Microsoft’s nearly $14 billion investment in OpenAI, the creator of the widely popular ChatGPT assistant, has catalysed the emergence of the generative artificial intelligence industry, leading to billions in new revenue for Microsoft.

Despite this, OpenAI is experiencing substantial financial losses. It is projected to incur $5 billion in losses this year, excluding stock-based compensation, against $4 billion in revenue, according to reports from earlier this month.

Microsoft’s stock declined following weaker-than-expected revenue guidance, despite exceeding earnings expectations.

The company’s revenue reportedly increased by 16% in the fiscal first quarter, outpacing analyst predictions.

Earnings from Azure and other cloud services reportedly rose by 33%, exceeding forecasts.

Nevertheless, the projected revenue growth did not meet analyst expectations.

Meta

Meta’s third-quarter earnings report, released on Wednesday 30th October 2024, disclosed user numbers that fell short of expectations.

The company reported $3.29 billion daily active users for the quarter, marking a 5% increase from the previous year but still below the anticipated $3.31 billion by analysts.

Meta also projected a substantial increase in capital expenditures for 2025.

Additionally, Meta indicated a significant rise in AI spending for 2025.

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U.S. inflation rate hits 2.1% in September 2024

Inflation saw a modest rise in September 2024, edging closer to the Federal Reserve’s target, as reported by the Commerce Department on Thursday 31st October 2024.

The personal consumption expenditures (PCE) price index recorded a seasonally adjusted increase of 0.2% for the month, and the year-over-year inflation rate stood at 2.1%, aligning with predictions. The PCE index is the Fed’s preferred inflation measure, although officials monitor various other indicators as well.

The Fed aims for a 2% yearly inflation rate, a benchmark not met since February 2021.

Despite the main figure indicating that the central bank is approaching its objective, the inflation rate, excluding food and energy, was at 2.7%. This core inflation metric rose by 0.3% monthly, with the annual rate exceeding expectations by 0.1 percentage points.

This report arrives as markets strongly anticipate the Fed will reduce its benchmark short-term interest rate at the upcoming meeting. In September 2024, the Fed made a significant half-percentage-point rate cut, a rare action during an economic upturn.

Officials remain optimistic that inflation will realign with their target, yet they are wary about the labour market’s condition, even as most data suggests steady hiring and low layoff rates.