The Shanghai Composite index rose by over 1.5% on Tuesday as investors cheered Beijing’s stimulus pledge. It also rose after the rising speculation that the People’s Bank of China (PBoC) will continue cutting interest rates in 2025. The index was trading at CNY 3,456, 28% above the lowest point in September.

China trade surplus rises

The Shanghai Composite Index rose after the latest China trade data. According to the statistics agency, China’s exports rose by 6.7% in November, a big drop from the previous month’s 12.7%. This growth was also much lower than the median estimate of 8.5%. 

China’s imports also dropped sharply in November. They dropped by 3.9% in November after falling by 2.3% in the previous month. This decline was much lower than the median estimate of 0.3%.

Therefore, an increase in exports and a drop in imports led to a sharp increase in the trade surplus. The trade surplus rose from $95.2 billion in October to $97.4 billion last month. The year-to-date trade surplus stood at over $692 billion.

These numbers came as Beijing signaled that it will broaden its stimulus to support the economy as Donald Trump returns. In a statement on Monday, Xi Jinping’s Politburo vowed to maintain a moderately loose monetary policy in 2025. 

It also pledged a more proactive fiscal policy, meaning that Beijing may decide to rise the budget deficit to about 3% of GDP. 

The statement came as analysts raised their odds of more PBoC interest rate cuts in 2025. Top Wall Street banks like Goldman Sachs and Morgan Stanley have predicted that the bank will cut rates by 40 basis points in 2025. 

If that happens, it will be the biggest rate cut since 2015 and will bring interest rates to 1.1%.

Beijing has unveiled a series of stimulus measures to help the economy hit its 5% target, which seems unachievable for now.

Risks remain as Trump returns

The Shanghai Composite index is bracing for more volatility as Donald Trump returns to the White House.

He has already hinted that he will restart his trade war on the first day of his administration. He will impose a 25% tariff on Chinese goods in a bid to lower the large trade deficit.

The reality, however, is that tariffs are taxes that are passed to consumers. They often do little to reduce the deficit. Besides, China’s trade surplus with the US has widened after the last round of tariffs. 

A trade deficit is calculated by subtracting a country’s imports from exports. To a large extent, the problem is not that China is selling too much goods to the US. Instead, it is that the US is not selling more goods to China. Officials have also put in place trade restrictions that have reduced the high-tech goods to China. 

Most companies in the Shanghai Composite Index have done well this year. The most notable ones are Bank of China, which has jumped by 30% this year. Hua Xia Bank, China Merchants Bank, Industrial Bank, Bank of Beijing, and Agricultural Bank of China have soared by over 30% this year.

Shanghai Composite index analysis

The weekly chart shows that the Shanghai Composite index has recovered modestly in the past few weeks. It has risen from the double-bottom point at CNY 2,692 and then flipped the neckline at CNY 3,175. A double-bottom is one of the most bullish patterns in the market.

The Shanghai index has moved above the 50-week and 25-week Exponential Moving Averages (EMA). It has also risen above the key resistance level at CNY 3,417, its highest level in 2023.

Therefore, the outlook for the index is bullish as hopes of more stimulus rise. If this happens, the next point to watch being at CNY 3,675, the highest level this year. A drop below the support at CNY 3,350 will invalidate the bullish view.

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The ASX 200 index retreated on Tuesday as the market reacted to the latest Reserve Bank of Australia (RBA) interest rates. The index, which tracks the biggest companies in Australia, retreated to $8,375, down by 1.83% from its highest level this year.

RBA leaves interest rates unchanged

The ASX 200 index retreated after the RBA decided to leave rates unchanged at 4.35%, where they have been in the last 12 months.

Unlike other global central banks, the RBA has maintained a fairly hawkish tone, citing the stubbornly high inflation rate in the country.

Recent data showed that the headline Consumer Price Index (CPI) dropped from 3.8% in Q2 to 2.8% in Q3. This decline was higher than the median estimate of 2.3%.

The trimmed mean inflation, which excludes the most volatile food and energy prices, retreated to 3.5% from the previous 3.9%. These numbers meant that inflation was much higher than the RBA’s target of 2.0%. The statement said:

“While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high. Recent data on inflation and economic conditions are still consistent with these forecasts, and the Board is gaining some confidence that inflation is moving sustainably towards target.”

In its last decision of the year, the bank hinted that the first rate cut will likely come in the first or second quarter of the year. Historically, financial assets like stock indices do well when central banks are cutting interest rates.

The rate decision came at a time when the Australian dollar has slumped, with the AUD/USD pair falling from the year-to-date high of 0.6942 to a low of 0.6375, a 8.2% drop.

Read more: ASX 200 outlook after RBA decision; ANZ, NAB, REA earnings ahead

Top ASX 200 index movers

The RBA decision also happened as Australian stocks have done well this year, with the ASX 200 rising by almost 10% this year. It has underperformed other major global indices like the S&P 500 and Nasdaq 1o0 indices, which have soared by double digits.

Most ASX 200 constituents have done well this year. Mesoblast, a company that makes cellular medicines, has been the best performer as its stock jumped by over 400% this year.

Technology companies have also helped the index. Zip, a leading player in the buy now, pay later (BNPL) industry, has risen by 366% this year. This growth is in line with that of other BNPL companies like Affirm and Klarna.

Appen, a tech company in the AU and data industry, has jumped by 240% this year, as demand for AI solutions jumped. The other top companies in the index are Nuix, Pointsbet Holdings, and Netwealth Group.

Australian banks have done well this year, which has led to concerns about their valuations.

Westpac Banking stock price has jumped by 47% this year. Similarly, Commonwealth Bank of Australia (CBA) shares have jumped by 40%. The National Bank of Australia (NAB) stock has jumped by 23% this year, while ANZ has been the main laggard as it jumped by 13%.

Australian mining companies have largely underperformed the market this year as commodity prices fell. BHP Group’s stock retreated by 17%, while Fortescue Metals fell by almost 30%. Rio Tinto shares have fallen by 8.10%.

ASX 200 index analysis

ASX 200 index chart | Source: TradingView

The daily chart shows that the ASX 200 index has been in an uptrend in the past few months. It has formed an ascending channel shown in black, and is now a few points below the its upper side. This channel formed as the index formed a series of higher highs and higher lows.

The ASX 200 index has remained above the 50-day and 200-day Exponential Moving Averages (EMA). Also, the two lines of the MACD have made a bearish crossover pattern, while the Relative Strength Index (RSI) has pointed downwards.

Therefore, the index will likely waver, and then resume the uptrend. More gains will be confirmed if the index rises above the year-to-date high of $8,532. A drop below the 50-day moving average will invalidate the bullish view.

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The USD/JPY exchange rate wavered this week as investors reflected on Monday’s Japan economic data and the upcoming US inflation numbers. The pair was trading at 150, a few points above this month’s low of 148.75. 

US inflation data ahead

The USD/JPY pair tilted upwards after last Friday’s US jobs data. According to the Bureau of Labor Statistics (BLS), the economy created over 200k jobs, a big increase from the 30k it created a month earlier.

However, other parts of the jobs report were not all that good. For example, the labor participation retreated slightly, while the unemployment rate rose from 4.1% to 4.2% during the month.

These numbers mean that the labor market is a bit soft-ish since the big increase in job additions was because of the end of Boeing’s strike. Also, October’s jobs numbers were impacted by the hurricane season.

The next key USD/JPY data to watch will be the upcoming US inflation numbers scheduled for Wednesday. Economists expect the data to show that the headline CPI rose by 0.2% in November. They expect that the CPI will grow from 2.6% to 2.7%, moving further ahead of the Fed’s target of 2.0%.

Core inflation, which excludes the volatile food and energy prices, is expected to remain at 3.3% and 0.3% on a YoY and MoM basis, respectively. 

If these numbers are accurate, the Fed will likely maintain a more hawkish tone when it meets next week. In this, the bank will decide to leave interest rates unchanged and pledge to be more gradual when cutting.

Data by the CME, however, shows that the odds of a 0.25% cut are at 85.8%, while those of status quo are at 14.2%. This view is supported by Polymarket, which has placed the odds of a 0.25% cut at 86%.

BoJ rate hike ahead

The other important catalyst for the USD/JPY pair will be the upcoming Bank of Japan interest rate decision.

Analysts expect that the BoJ will opt to implement the third interest rate cut of the year. If this happens, the bank will increase rates to 0.50% in its next week’s meeting.

Data released this week showed that Japan’s economy did relatively well in the third quarter. It expanded by 0.3% in Q3, higher than the median estimate of 0.2%. The annualized GDP growth was about 1.2%, higher than the expected 0.9%.

Private consumption rose by 0.7%, while capital expenditure fell by 0.1% during the quarter. More data showed that Japan’s bank lending rose by 3% in November, while the adjusted current account rose to over 2.4 trillion. 

A BoJ rate hike will largely invalidate the carry trade that has excited in the past few yars. A carry trade is a situation where investors borrow from a low-interest-rate country to invest in a high-interest-rate one. 

USD/JPY technical analysis

The daily chart shows that the USD/JPY exchange rate has remained on edge in the past few days. It has continued to consolidate at the 50-day and 100-day Exponential Moving Averages (EMA).

The pair has remained slightly above the first support of the Andrew’s pitchfork tool. It has also moved between the 38.2% and 23.6% Fibonacci Retracement levels.

The USD to JPY exchange rate is also forming a bearish flag pattern. This pattern is made up of a vertical line and a consolidation at the bottom. More downward trend will be confirmed if the pair drops below the month-to-date low of 148.74. A break below that level will raise the odds of the pair falling to 145.

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Rocket Lab stock price has suffered a harsh reversal recently, falling for two consecutive weeks. It has dropped by over 17% from its highest level this year, meaning that it has entered a technical correction.

Growth trajectory continues

Rocket Lab is a leading company in the space industry with a market cap of over $12 billion.

Established in 2006, the firm has become one of the closest competitors to SpaceX, the giant firm started by Elon Musk. It also competes with Jeff Bezos’ Blue Origin, and Intuitive Machines.

Rocket Lab launches its satellites in the United States and New Zealand. All of its current work uses the Electron rocket, which carries small and medium-sized satellites to space. 

The company is now working on Neutron, which will have a low earth orbit load of up to 15,000 and a geostationary transfer orbit (GTO) payload of 8,000 kilograms. Neutron hopes to compete better with Elon Musk’s rockets, which are the current market leaders. 

Rocket Lab hopes that the Neutron rocket will be ready in 2025, further than the expected this year. It has already secured a few contracts for the Neutron. The company hopes that it will have one flight in 2025, three in 2026, and then scaling up further in the next few years. 

Neutron has already received a $24.35 million contract from the Space Force, a government agency that was developed by Donald Trump. It has also received deals with the US Transportation Command and the Air Force Research Laboratories.

Read more: Rocket Lab stock: RKLB Could rise or fall 40% after earnings

Growth is continuing

Rocket Lab’s business is growing as demand for satellite launches rises. The most recent results showed that the company’s revenue rose by 55% in the third quarter to over $105 million. 

Most importantly, the closely-watched backlog figure rose to $1.05 billion, a 80% annualised increase. The company expects that its fourth-quarter revenue will be between $125 million and $135 million, the biggest quarter ever. 

Rocket Lab’s fundamentals are also improving as the price for its launches has continued rising. The electron average sale price has jumped by about 67% since its debut in 2017. A single launch has grown from about $5 million to $8.4 million.

The biggest challenge for Rocket Lab is that it is still making huge losses and burning substantial sums of money. Its most recent financial results showed that the net loss stood at $51.9 million, a big increase from the $39 million it lost in the same period last year. 

Rocket Lab’s net loss for the first three quarters of the year stood at $137 million, higher than the $132 million it lost a year earlier. This loss-making trajectory will continue in the next few years as it ramps up its neutron product. 

These numbers mean that Rocket Lab may be forced to raise cash in 2025 since it ended the quarter with $695 million in current assets. Its cash and equivalents stood at $292 million, while its marketable securities were $149 million.

This means that it may raise cash later in 2025, a move that will dilute existing shareholders. Rocket Lab’s total outstanding shares have risen to about 500 million from 475 million last year.

Read more: Avoid Virgin Galactic stock: buy Rocket Lab instead

Rocket Lab stock price analysis

RKLB chart by TradingView

The RKLB share price has dropped sharply after Donald Trump appointed Jared Isaachman, an Elon Musk ally as the head of NASA. The theory is that he will favor Elon Musk’s SpaceX in terms of NASA launch contracts. However, in reality, these fears may be overblown.

The Rocket Lab stock price has remained significantly higher than the 50-day and 100-day Exponential Moving Averages (EMA). That is a sign that bulls are in control for now.

However, it also means that there is a possibility of mean reversion happening. Mean reversion happens when an asset drops back closer to the moving averages, and is a common occurrence in the financial market.

Therefore, with the stock up by 400% in the last 12 months, there is a likelihood that it will retreat in the coming months. If this happens, the next level to watch will be at $16.9, its lowest swing in November. A move above the year-to-date high of $28 will confirm the bullish trend.

Read more: Rocket Lab stock price to enter beast mode with a 46% upside

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The Intel stock price has imploded as concerns about the fallen angel continue. INTC shares have dropped to $20.8, its lowest level since September, and 60% below the highest point this month.

Intel has continued to underperform other semiconductor companies like AMD, NVIDIA, and Qualcomm. On the other hand, the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) have risen by 48% and 21%, respectively, this year.

Intel has become a big fallen angel

Intel, a company that led the semiconductor industry for decades, has become a fallen angel. Its market cap of about $89 billion is much smaller than that of many chip companies it inspired. 

For example, Qualcomm is now twice the size of Intel because of its $180 billion market cap. Intel is also much smaller than other top companies like Applied Materials, Texas Instruments, and Analog Devices.

This is a big fall from grace for a company that introduced most of the concepts in the semiconductor industry today. For example, Gordon Moore, one of its co-founders, introduced the concept of Moore’s Law, which explains why the number of transistors in an integrated circuit doubles every two years. 

Intel has been forced to go through a tough turnaround strategy that will see over 15,000 employees leave the company. 7,000 of these workers took an early retirement package. Pat Gelsinger, the CEO, has already left the company. He has called for his X followers to fast and pray for Intel and its workers. 

Intel is now being overseen by David Zinsner and MJ Holthaus, the CFO and chief of products.

Intel faces a difficult future ahead

The reality is that Intel faces a difficult future ahead because of the rising competition from the likes of AMD and NVIDIA. 

AMD has become a major competitor in the CPU industry, while NVIDIA is the market leader in the GPU industry. While Intel has launched its own GPUs, most customers are opting for those made by NVIDIA and AMD, which has gained a 10% market share in the industry.

The most recent data showed that the company’s revenue dropped by 6% to $13.3 billion as demand for its products waned. In contrast, NVIDIA’s revenue surged by over 80% to over $35 billion in the same period. 

Intel’s margins have dropped, with the gross margin falling by 27.5 basis points to 15%. The company made a big loss, which it attributed to restructuring costs, as it seeks to save about $10 billion in costs. 

Intel also issued another weak forward guidance. It expects that its quarterly revenues will be between $13.3 billion and $14.3 billion, down by about $1.6 billion from the same period last year. 

Intel also sees its gross margin falling by 9.3% to 39.5%, and its earnings per share falling to 12 cents. 

Intel hopes that its ongoing turnaround strategy will pay off. It has decided to change its business by making its foundry business a subsidiary, a move that will enable it to have access to external funding.

Intel’s hope to become a big player in the foundry business is one of the reasons why it has underperformed the market over time. It has spent over $50 billion building its fabs in the US, Israel, and Germany. 

Most of the top successful chip companies like AMD and NVIDIA focus on design and then let fabricators like GlobalFoundries and Taiwan Semiconductor do the hard work. A good example of this is AMD, which spun its foundry business to what is now GlobalFoundries.

Read more: Intel stock price forecast: don’t buy when there’s blood in the street

Intel stock price analysis

The weekly chart shows that the INTC stock price has been in a strong downward trend since 2021 when it peaked at $62.25. Its attempts to rebound have always found a major roadblock, with the most recent one being at $50, the highest level on December 26.

Intel stock has remained below the key support at $23.5, its lowest level in October 2022. It has also moved below the 50-week and 100-week Exponential Moving Averages (EMA).

Therefore, the Intel share price will likely continue falling as sellers target the next key psychological level at $15. While Intel’s stock will rebound, this recovery will take time as the turnaround continues.

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