Dollar strength, Broadcom, Musk charges

-- Wall Street is Japanese foreign exchange dealer picturesseen trading slightly higher Friday, helped by positive guidance from chipmaker Broadcom. The dollar is on course for a positive week, while Elon Musk appears to be in the crosshairs of the SEC once more. 

1. Dollar remains in demand

The dollar is on track for its best week in a month, having earlier climbed to a 2 1/2-week high against its major peers, as traders scaled back expectations for aggressive US policy easing next year even with the Federal Reserve set to cut interest rates next week.

At 03:50 ET, the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher to 106.870, up more than 1% over the course of the week.

This followed the release of a stronger than expected headline figure, which added to concerns of prices remaining sticky into the new year as incoming President Donald Trump threatens trade and tax policies which could prove to be inflationary.

The idea of a more cautious approach to Fed easing over 2025 contrasts with the likely moves by the US central bank’s main rivals following a rash of rate cuts over the past few days, with outsized 50 bp moves in Switzerland and Canada and a 25 bp easing by the European Central Bank.

2. Futures push higher; Broadcom shines

US stock futures edged higher Friday, bouncing after a losing session, helped by strong results from semiconductor Broadcom. 

By 03:50 ET (08:50 GMT), the contract was up 90 points, or 0.2%, climbed 14 points, or 0.2%, and rose by 115 points, or 0.5%.

The main Wall Street indices closed lower Thursday, with the blue chip dropping 0.5%, falling for a sixth consecutive day and marking its longest losing streak since April. The fell 0.7% and the slipped 0.5%.

For the week, the Dow is heading for a 1.6% decline and the S&P 500 a drop of 0.6%, while the Nasdaq is set to gain 0.2%. 

The economic data slate is largely empty Friday, while on the corporate front the likes of chip giant Broadcom (NASDAQ:), home furnishings company RH (NYSE:) and retailer Costco (NASDAQ:) will be in the spotlight after reporting their quarterly results after the close Thursday.

3. Broadcom soars on AI-induced demand

Broadcom stock soared premarket after the chipmaker forecast higher-than-expected revenue for the current quarter, citing increased chip demand from growing interest in artificial intelligence. 

The upbeat forecast and optimistic comments from executives during the earnings call saw investors largely look past softer-than-expected quarterly revenue. 

Broadcom is trading up over 60% for 2024, and is seen climbing to an indicated record high, having benefited greatly from increased AI-fueled demand for its network equipment, which plays a crucial role in setting up infrastructure for the industry. 

Broadcom CEO Hock Tan highlighted the significant role AI played in the company’s growth. “Semiconductor revenue was a record $30.1 billion, driven by AI revenue of $12.2 billion,” Tan said. “AI revenue grew 220% year-on-year, fueled by our leading AI XPUs and Ethernet networking portfolio.”

4. SEC preparing more charges against Musk

The feud between Elon Musk and the Securities and Exchange Commission has taken another turn, after the billionaire posted a letter on X that said the agency is investigating his brain-computer interface company, Neuralink.

The letter stated that Musk had a 48 hour deadline to accept a monetary payout settlement, or face “charges on numerous counts.” 

The letter did not specify the nature of these charges, but stated that the SEC’s demands came after a multi-year investigation. 

Musk has a long history with the SEC, having paid the agency $20 million in 2018 over his Tweets claiming that Tesla (NASDAQ:) will go private, and that he had secured the necessary funding. 

Musk is also facing an investigation over his Twitter takeover, while lawmakers were also looking into Tesla’s self-driving claims. 

5. Oil heading for weekly rise

Crude prices edged higher Friday, heading for their first weekly rise since the end of November, as additional sanctions on Iran and Russia ratcheted up supply worries. 

By 03:50 ET, the US crude futures (WTI) gained 0.2% to $70.18 a barrel, while the contract rose 0.2% to $73.55 a barrel.

Both contracts are on track for a weekly gain of more than 3% following concerns about supply disruption from tighter sanctions on Russia and Iran, after US Treasury Secretary Janet Yellen stated that a weaker global oil market could present a chance for additional action.

The crude market was also boosted by expectations that China's key policy meeting over the week would result in more stimulus measures, although its conclusion has so far been greeted with relative silence.

This has overshadowed the Organization of the Petroleum Exporting Countries again cutting its forecasts for oil demand growth in 2024 and 2025, and US oil inventories unexpectedly growing more than expected.

 

 

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