U.S. 10Y touches 5%, AI stocks tumble and oil stays above US$105 markets brace for tomorrow’s Fed decision Global markets enter Tuesday with three pressure points converging: U.S. borrowing costs briefly crossed 5%, oil remains above US$100, and the AI trade suffered a sharp reset overnight . The S&P 500, Dow and Nasdaq all closed lower Monday, while the Philadelphia semiconductor index plunged 5.9% . For Malaysian investors, there was one encouraging counterpoint: the FBM KLCI rebounded 0.66% to 1,698.01 , snapping four consecutive losing sessions despite the difficult global backdrop. 30-second market snapshot Market / Asset Latest 🇺🇸 S&P 500 7,619.98, -0.48% 🇺🇸 Dow Jones 52,421.20, -0.29% 🇺🇸 Nasdaq 26,186.41, -0.56% 🇲🇾 FBM KLCI 1,698.01, +0.66% 💵 USD/MYR ~4.04–4.05 🇺🇸 U.S. 10Y Treasury briefly >5%; ~4.98% later 🥇 Spot gold ~US$4,313/oz, -0.8% 🛢️ Brent US$105.68/bbl, +~1% ₿ Bitcoin ~US$79,150, +~2% Monday The dollar strengthened Mo...
Earnings Slump Due to Market Oversupply
- Lynas Rare Earths Ltd reported a net income of A$5.9 million (US$3.7 million) for the six months ending Dec 31, far below analyst expectations of A$32.2 million.
- Shares fell as much as 5.8% in Sydney following the disappointing results.
- No interim dividend declared as the company navigates weak market conditions.
Why Did Profits Drop?
- Rare earth prices have fallen nearly 70% since their 2022 peak, due to China’s strong output and economic slowdown.
- Despite a 30% recovery since March 2024, prices remain volatile.
- Lynas faces cost pressures as it expands operations in Australia, Malaysia, and the U.S.
Market Outlook & Strategic Positioning
- CEO Amanda Lacaze sees current market challenges as short-term but acknowledges price weakness.
- Jefferies analysts highlight Lynas’ strategic positioning to benefit from any future price rebounds.
- The U.S. and Australia continue efforts to reduce reliance on China, but price declines have slowed new project development.
Summary:
- Lynas' profit collapsed 85% to A$5.9M due to weak rare earth prices.
- Stock fell 5.8% as market oversupply and China’s dominance weigh on earnings.
- Despite challenges, Lynas is expanding operations in Australia, Malaysia, and the U.S.
- Future success depends on price recovery and disciplined financial management.
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