Better than expected jobs figures have been followed by a turnaround for the ASX, which closed higher, but an industry analyst believes investors took their buying cue from elsewhere.
October 23, 2020
By Josh Horwitz and David Kirton
SHANGHAI (Reuters) – Huawei Technologies Co Ltd eked out a gain in third-quarter revenue as the impact of the COVID-19 pandemic added to supply-chain difficulties brought about by U.S. restrictions on doing business with the Chinese firm.
The figure comes a day after the telecommunications equipment maker announced its latest flagship smartphone, potentially its last in the high-end Android segment most dependent on U.S. technology.
It also comes after Sweden became the latest nation to ban Huawei from its fifth-generation (5G) network infrastructure, following U.S. suspicion of Huawei’s relationship with China’s communist government – which Huawei has dismissed.
Hinting at an end to at least four years of double-digit growth, revenue grew 9.9% in January-September versus the same period a year earlier to 671.3 billion yuan ($100.4 billion), the private company said in a statement on Friday without providing a segment breakdown.
Revenue for the third quarter alone rose 3.7% on year to 217.3 billion yuan, Reuters’ calculations showed.
Net profit margin for the nine months was 8.0%, versus 8.7% over the same period a year earlier, Huawei said.
The United States in the spring effectively cut off Huawei’s access to U.S. software and chip-making equipment, following similar measures in May 2019 that are gradually taking effect.
Huawei’s line of Kirin chips, designed in-house, helped catapult the firm to the top of the global handset market.
Earlier this year, however, Consumer Business Group Chief Executive Richard Yu said U.S. restrictions meant Huawei would soon stop making high-end Kirin chips. Analysts expect its stockpile of the chips to run out next year.
On Thursday, Yu in a livestream unveiled Huawei’s latest flagship smartphone series, the Mate 40.
The device, priced at 4,499 yuan for the feature-light version, comes equipped with the Kirin 9000 chipset, manufactured at the 5nm process node that only Apple Inc <AAPL.O> and Qualcomm Inc <QCOM.O> have been able to bring to market at scale.
The Mate 40, however, could be the company’s last device of its kind. Already, consumers in China have rushed to buy Huawei smartphones on concerns over the availability of newer models.
Meanwhile, overseas, sales have been sluggish due in part to U.S. restrictions blocking Huawei’s access to Alphabet Inc’s <GOOGL.O> Google Mobile Services.
Mo Jia, who tracks the global smartphone sector at researcher Canalys, said the Mate 40 will likely sell well in China though total sales will suffer from supply-chain issues.
“Huawei won’t find it hard to sell the Mate 40 series, as most of the shipment will go to China,” Jia said. “But it can only produce limited units powered by the Kirin 9000 series, which will impact the number of the Mate 40 phones it can ship.”
Reflecting its manufacturing difficulties, Reuters reported last week that Huawei was talking to Digital China Group Co Ltd <000034.SZ> and others to sell parts of its Honor budget handset business in a deal that could fetch up to 25 billion yuan.
Premium rival Apple began selling two of its latest flagship iPhones in stores worldwide on Friday, with analysts expecting the U.S. firm to take market share from Huawei as the pair dominate the high-end handset segment in China.
(Reporting by David Kirton in Shenzhen and Josh Horwitz and Brenda Goh in Shanghai; Editing by Miyoung Kim and Christopher Cushing)
October 16, 2020
By Stephen Culp
NEW YORK (Reuters) – The S&P 500 posted a nominal gain on Friday as further clarity regarding the timeline for the development of a coronavirus vaccine and much better-than-expected retail sales data and brought buyers back to the market.
The Dow also joined the S&P in positive territory, both indexes snapping a three-day losing streak driven by halted vaccine trials and continued wrangling in Washington over a new pandemic relief package. But the Nasdaq ended the session lower.
Even so, they all posted gains on the week.
Pfizer Inc announced it could apply for U.S. authorization for the COVID-19 vaccine it is developing with German partner BioNTech in November. Pfizer’s stock gained 3.8%.
“The two highest-level market movers are the vaccine timeline and stimulus optimism,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky. “Sometimes the market gets a reality check that even if we get a vaccine early next year that’s an incredibly aggressive and optimistic timeline.”
Retail sales in September blew past analyst expectations and consumer sentiment for the current month surprised to the upside, according to two separate economic reports. But with previous stimulus having run its course, the outlook is uncertain unless Washington can reach an agreement on a fresh round of fiscal aid.
“It’s important from the retail sales data to see that the consumer is not just limping a long but exceeding expectations,” Mayfield added. “I don’t know how long this can continue without stimulus but it’s heartening to see the consumer has held up pretty well despite some dire expectations.”
On the stimulus front, U.S. Treasury Secretary Steven Mnuchin told House Speaker Nancy Pelosi that President Donald Trump would “weigh in” with Senate Majority Leader Mitch McConnell if an agreement is reached on a new pandemic relief package. House Republican leader Kevin McCarthy, however, said he does not expect an agreement to be reached ahead of the Nov. 3 election as long as Pelosi is involved.
The Dow Jones Industrial Average rose 112.11 points, or 0.39%, to 28,606.31, the S&P 500 gained 0.47 points, or 0.01%, to 3,483.81 and the Nasdaq Composite dropped 42.32 points, or 0.36%, to 11,671.56.
Of the 11 major sectors in the S&P 500, seven ended the session in the black. While utilities had the largest percentage gain, energy suffered the biggest loss.
Third-quarter reporting season burst from the starting gate this week, with 49 of the companies in the S&P 500 having reported. Of those, 86% have cleared the low bar set by expectations, according to Refinitiv.
Oil services company Schlumberger NV posted its third straight quarterly loss due to falling crude prices and plunging demand. Its shares dropped 8.8%.
Railroad operator Kansas City Southern shed 2.7% and transportation and logistics company J.B. Hunt Transport Services Inc tumbled 9.7% after the companies’ quarterly results were hit dropping shipping demand.
The Dow Jones Transport index, considered a barometer of economic health, fell 1.3%.
Shares of fitness company Peloton Interactive Inc lost 3.7% after announcing a recall of faulty pedals on its popular exercise bikes.
Declining issues outnumbered advancing ones on the NYSE by a 1.30-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored decliners.
The S&P 500 posted 50 new 52-week highs and no new lows; the Nasdaq Composite recorded 98 new highs and 20 new lows.
Volume on U.S. exchanges was 8.82 billion shares, compared with the 9.31 billion average over the last 20 trading days.
(Reporting by Stephen Culp; Editing by Marguerita Choy)