The Bank of England cut interest rates to 5% for the first time in four years. Amazon predicts a dip in online shopping due to distractions like the Olympics. Apple's earnings beat expectations despite China struggles. Intel's stock falls after announcing layoffs and dividend suspension. Don Lemon sues Elon Musk over a cancelled deal. All this and more on this edition of World Street.
Rate Relief
The Bank of England cut interest rates by a quarter point to 5% amid slower inflation. Britain’s central bank lowered rates the first rate cut since March 2020 when the coronavirus pandemic shut down large parts of the economy. The decision is likely to bring some relief to mortgage holders and business owners who have been stung by the rising cost of borrowing.
Distraction Dip
Amazon expects a slippage in online shopping this quarter as consumers are distracted due to the busy news cycle, Paris Olympics and the lead-up to the U.S. presidential election, said finance chief Brian Olsavsky. The disappointing guidance, coupled with a revenue miss for the second quarter, sent Amazon shares sliding more than 7 percent in extended trading on Thursday.
Apple Tops
Apple Inc.'s third-quarter earnings surpassed analysts' expectations on both top and bottom lines despite a year-over-year decline in iPhone sales.
Wall Street closely monitored Apple's performance in China, a crucial market, as the company struggled to regain market share from local competitors like Huawei, but fell short in the region. However, CFO Luca Maestri noted that overall sales are improving in China.
Intel Implodes
Intel's stock plummeted after announcing plans to lay off nearly 17,000 employees and suspend its dividend as part of a major cost-cutting strategy.
The chipmaker aims to "resize and refocus" its 116,500-strong workforce to save $10 billion in response to challenging market trends. The growing demand for AI chips from companies like Nvidia has reduced Intel's non-AI product sales by 1% to $12.8 billion.
Lemon Lawsuit
Former CNN anchor Don Lemon has filed a lawsuit against Elon Musk, accusing the billionaire of making false promises to lure him into a cancelled deal to host a show on Musk’s social media platform.
The lawsuit claims that Musk, who acquired Twitter for $44 billion in late 2022 and later renamed it X, used the announcement of a partnership with Lemon to enhance the media company's profile, then backed out of the deal without compensation.
Tokyo Tumble
Japanese shares saw their steepest decline since 2020, with the Topix index dropping over 10% from its July peak due to tighter monetary policy's impact on one of the world's top-performing markets. Exporters were affected by the yen's rally, while financials retreated over fears their recent gains were excessive.
The benchmark fell as much as 5.7%, marking an 8% two-day drop following the Bank of Japan’s unexpected rate hike on Wednesday and Governor Kazuo Ueda’s hawkish stance.
Inflation Itch
South Korea's consumer inflation rose in July due to supply-side pressures, ending a three-month decline and exceeding market expectations. The consumer price index (CPI) increased by 2.6% from a year earlier, up from June's 11-month low of 2.4%.
This rise aligns with the finance minister's recent comments, attributing the temporary uptick to abnormal weather conditions and base effects before expected stabilization in August.
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