Before the bell: record territory

In Japan, interest rates are rising, the Hong Kong market is soaring, and there’s a takeover bid for an Italian bank. Texas Instruments warns of a weak quarter.

Wall Street saw further gains, with the S&P 500 adding 0.5% and the Nasdaq up 0.2%. Although the year is still young, the Nasdaq has already gained 3.9%, the S&P 500 4%, and the Dow Jones even outperformed with a 4.8% rise. The biggest winners and losers are companies reporting earnings. GE Aerospace (+6.6%) exceeded profit expectations and expressed optimism for 2025. Meanwhile, American Airlines (-8.8%) took a hit. While the last quarter was better than expected, the airline anticipates significant losses this quarter. European markets posted an average daily gain of 0.2%. The Bel20 remained flat, with Sofina (+1%) and KBC (+2%) climbing higher, while Proximus (-4.4%) and Elia (-4.6%) fell. Gimv (-5%) saw its rights for the capital increase go ex-rights. In Amsterdam, the index lost 0.6% due to strong selling pressure on chipmakers ASML (-4.4%) and BE Semiconductor (-5%).

The Bank of Japan raised its policy interest rate on the yen from 0.25% to 0.50% this morning. The Topix index remained unchanged. Hong Kong, however, had a solid day, gaining 2%. Later today, data on business confidence in the eurozone will be released. Swedish telecom giant Ericsson reported mixed fourth-quarter results, with positive contributions from the U.S. but a decline in Asia. Meanwhile, Banca Monte dei Paschi di Siena, the world’s oldest bank, launched a bid for competitor Mediobanca. On Wall Street, all eyes will be on Verizon and American Express, which are both set to report earnings before the market opens.

Foreign exchange

You can earn solid profits on the stock market even when share prices hardly move. Take Tokyo, for example. While the market only edged up by 0.1% this morning, you could still achieve a daily gain of 1%. No magic or leverage is required—just benefit from the yen’s appreciation. The Japanese currency gained 1% against the euro this morning. As Japanese interest rates are expected to rise while rates elsewhere fall, the yen could strengthen further. Won’t higher rates hurt Japanese companies? Not necessarily. Inflation in Japan is currently 3.6%, and the policy rate is rising only modestly, from 0.25% to 0.50%. As a result, the “real interest rate”—the nominal rate (0.50%) minus inflation (3.6%)—remains negative.

Dallas isn’t everything

Texas Instruments knows a thing or two about numbers and was quick to report its earnings. In the fourth quarter, the company outperformed expectations with earnings of 1.3 dollar per share, compared to the 1.21 dollar forecast. However, the company warned that this quarter could disappoint. Analysts expect earnings of 1.22 dollar per share, but the company estimates a range of 0.94 to 1.16 dollar. Shares gained 1.8% yesterday, but with results published after the market closed, selling pressure is anticipated when Wall Street opens.

Did you know…

Cathie Wood is a fan of Tempus AI? Since the beginning of the year, she has added 600,000 shares of the U.S.-based technology company to Ark Invest. Listed on the Nasdaq, Tempus AI shares have already gained 62% this year, currently trading at 54.84 dollar. The stock debuted in June at 37 dollar.

This article was translated from Dutch and was originally published on Spaarvarkens.be.