This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
What To Note Today
Nasdaq still lags behind other significant indexes.
Tuesday was the second day the Nasdaq Composite underperformed, as the S&P 500 and Dow Jones Industrial Average increased while the Nasdaq Composite fell. The majority of Asia-Pacific markets declined on Wednesday. Japan’s Nikkei 225 fell by 0.1% as the country’s business confidence improved, according to the January Reuters Tankan survey.
South Korea’s President Yoon arrested
The Corruption Investigation Office for High Ranking Officials in South Korea arrested President Yoon Suk Yeol on Wednesday. The arrest was the CIO’s second attempt, the first being blocked by the president’s security team and the first for a sitting South Korean leader. The announcement was met with a subdued response from South Korean equities.
Consequences of the worldwide bond sell-off
The possibility of fewer interest rate reductions in the United States and growing government debt are driving a sell-off in global bond markets, economists said CNBC. Higher rates make borrowing more expensive for both governments and corporations, which could lead to tax rises and a decline in corporate profits. In addition to exerting pressure on foreign currencies, the increase in U.S. yields makes it more difficult for central banks worldwide to lower interest rates.
Microsoft pauses hiring while Meta reduces jobs.
About 5% of Meta’s lowest-performing staff would be let go, CNBC confirmed on Tuesday. CEO Mark Zuckerberg told staff members about the decision in a memo published on the company’s internal forum on Tuesday. According to an internal memo, Microsoft also intends to stop hiring in some of its consulting business in the United States.
Musk is sued by the SEC for his Twitter shares.
Elon Musk was sued by the SEC on Tuesday.
The billionaire allegedly committed securities fraud in 2022 by keeping his active Twitter investment a secret, which enabled him to purchase shares at “artificially low prices.”
Bottom Line
The tech crash in the market is still going strong.
The Nasdaq Composite fell 0.23% for the second consecutive day, trailing the S&P 500 and Dow Jones Industrial Average, which increased 0.11% and 0.52%, respectively. The Magnificent Seven equities all experienced a decline, although Meta, Tesla, and Nvidia recorded the largest losses.
News of layoffs and hiring freezes coincided with the decline in tech shares, further compounding the sector’s suffering.
According to an internal memo, Microsoft plans to reduce marketing spending, travel expenses, and hiring in a portion of its consulting operation to save money.
Meanwhile, Meta declared in an internal message on Tuesday that it would be “letting go of about 5% of our worst performers.” (I guess it’s similar to how one “enters” free speech or “exits” fact-checking.) Additionally, Zuckerberg forewarned staff that 2025 would “be an intense year.”
Naturally, Zuckerberg’s warning was aimed at Meta. Still, it may also apply to tech firms struggling with significant investments in AI without the income to support such large expenditures.
However, as we move into the fourth quarter earnings season, there are indications of confidence in the business climate for this year.
Infrastructure Capital Advisors founder Jay Hatfield stated, “We do think earnings will be stronger.”
“In the fourth quarter, the economy is doing well. By then, businesses usually find out whether they have an issue, and since the Trump administration is pro-business, they are likely to be fairly hopeful about the future. Thus, we believe that the majority of CEOs have a rather positive outlook for 2025.”
On Tuesday, investors shifted from tech to utilities, financials, and materials, and the positive CEOs may guide other industries.
The consumer price index, expected to decline later today, will determine whether this sectoral rotation continues.
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