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In today’s edition,
- iPhone 16 sales in China
- TSMC rides AI wave
- Netflix’s solid performance
- China’s economic push
- The crypto ETF challenge
Market Snapshot
US stocks concluded another strong week, marking their sixth consecutive weekly gain and reaching new record highs. The S&P 500 index closed at a record 5,864.67, up 0.85% for the week, while the Dow Jones Industrial Average also hit a new peak at 43,275.91, increasing by 0.96%. The Nasdaq Composite, buoyed by a significant rally in Netflix after impressive earnings, finished at 18,489.55, up 0.80%.
Lower crude oil prices and falling Treasury yields helped lift market spirits, as did positive economic indicators. US retail sales showed strength and jobless claims fell, suggesting a resilient economy. Additionally, early third-quarter earnings reports have been encouraging, with an average earnings per share (EPS) growth of over 6.7% among the first 15% of S&P 500 companies reporting, surpassing Wall Street expectations.
Overall, solid corporate earnings and favourable economic conditions drive investor optimism, maintaining the upward momentum of US stock markets.
Stock market closing data for the week of Oct 14th to Oct 18th, 2024
News Summaries
The iPhone 16 has hit the ground running in China with a notable 20% sales increase in its first three weeks compared to last year’s model. This surge is especially strong in the pricier Pro and Pro Max models, which have jumped by 44%. Why this uptick? Well, Apple managed a smoother production this year without the hiccups that troubled the iPhone 15. Plus, their pricing strategy hasn’t wavered, which seems to resonate well with consumers. Despite facing stiff competition from local giants like Huawei, and upcoming launches from Vivo and Xiaomi, the iPhone 16’s early days are looking bright. Apple’s stock has even climbed to record highs, buoyed by optimism about new AI features in these phones. However, with China’s economic challenges and upcoming Singles’ Day sales, it’s a wait-and-watch to see if this momentum holds.
TSMC, the top chipmaker globally, has updated its growth forecast, now expecting a nearly 30% revenue increase this year. This boost is driven by a sharp rise in demand for AI-related chips. TSMC’s CEO, CC Wei, shared with investors that this demand seems not just strong but sustainable, likely to persist for years. This view comes as the tech world faces uncertainties. A recent sell-off followed a report of low orders at ASML, a key chipmaking tech player. TSMC is thriving despite industry concerns. Its third-quarter profit jumped 54% to NT$325.3 billion ($10.2 billion), beating forecasts. Competitors like Intel and Samsung are falling behind. However, TSMC’s wide client base, including Amazon and Microsoft, keeps it safe. Still, TSMC is careful with its spending. It plans to keep capital spending high but selective, mainly on advanced technologies that depend on ASML’s solutions.
Netflix has reported a healthy 15% increase in revenue, reaching $9.8 billion this quarter, which is a bit more than what analysts expected. The Hollywood strikes last year hurt the release of “must-see” shows. Still, Netflix added 5.1 million subscribers, beating estimates and showing its resilience. The shares even jumped 5% in after-hours trading. What’s helping? Well, Netflix has been cracking down on password sharing, which has given their subscriber numbers a nice bump, though there’s talk about when this boost might taper off. On top of that, they’re diving into live sports, like WWE and NFL games, bringing a new kind of “must-watch” content that’s different from their rivals and seems to be attracting more viewers and ad dollars. Looking ahead, Netflix is eager about its fourth-quarter lineup, filled with major releases and events. The company is optimistic about sustaining strong revenue and profit growth into 2025. Its focus is on enhancing current content and diving into advertising and gaming. Netflix forecasts an 11-13% revenue increase next year. It aims to balance spending to ensure growth while protecting profits.
China’s economy grew by 4.6% last quarter, the slowest pace in 1.5 years. In response, the People’s Bank of China swiftly acted to stabilize the market and support sectors like real estate and stocks. Meanwhile, September brought improvements. Retail sales rose, driven by government subsidies, leading to a 3.2% increase in consumer spending. This uptick in sales, especially in automotive and home appliances, suggests that the stimulus is beginning to have an effect. The central bank introduced a new lending facility to boost share buybacks. This move led to a 3.6% rise in the stock market, indicating renewed investor confidence. Thus, China shows its commitment to its growth target and tackling economic challenges.
From the World of Crypto
The push for broader access to digital assets through exchange-traded funds (ETFs) is seeing a surge, but the SEC’s response shows some scepticism.
Investment firms, sensing a big opportunity, are actively proposing new types of crypto ETFs. Just recently, Grayscale aimed to convert its existing fund into an ETF, while Canary Capital put forward a proposal for a Litecoin-focused ETF. Earlier in the month, Bitwise took a shot with a filing for an XRP ETF. These efforts underscore the industry’s eagerness to create more accessible and regulated investment paths for both retail and institutional players.
However, the SEC’s historical reluctance casts a long shadow over these new proposals.
The agency has consistently demonstrated wariness towards integrating crypto into mainstream financial products. Bitcoin and Ether are the only cryptocurrencies with approved ETFs, thanks to legal pressure on the SEC. However, SEC Chair Gary Gensler warns this doesn’t mean other crypto assets will get approved. The agency still has concerns.
In terms of market response, the existing crypto ETFs show a split scenario.
Bitcoin ETFs, especially BlackRock’s IBIT, have been very successful. It quickly reached $10 billion, surpassing early gold ETFs. However, Ether ETFs have not fared as well. They attracted less interest and investment. This shows the volatile and speculative nature of crypto investments.
The crypto community hopes for newer assets like Solana. Its rising on-chain activity and use in apps have sparked interest in it.
Despite this momentum, the path to an SEC-approved Solana ETF is fraught with uncertainty, given the agency’s stringent stance.
In essence, the push for crypto ETFs is gaining momentum. There are relentless submissions to the SEC. But, a skeptical regulatory environment tempers the journey.The industry’s determination is akin to the early days of Bitcoin ETFs. Back then, persistence overcame initial resistance. Now, it’s uncertain if this will lead to wider acceptance of crypto ETFs. Yet, the sector’s resolve is evident.
