Daily Summary: Semiconductors lift Nasdaq to new highs; DJIA under pressure

The trading session in Europe was dominated by sellers:  The Euro Stoxx 50 fell by almost 1.2%, whilst the German DAX lost 1.2%. Despite this, sentiment on the US stock market remains strong: the Nasdaq 100 futures contract is up by almost 0.2% today and has surpassed the ‘psychological’ 30,000-point mark for the first time. The gains are being driven in particular by the semiconductor sector: Micron is up nearly 20% following a recommendation from UBS, whilst Sandisk shares are rising by 10% – memory chip manufacturers are the standout performers in the chip sector. Investors are not even deterred by oil prices rising by almost 4% and renewed tensions between the US and Iran.

Whilst the Nasdaq is rising, the Dow Jones Industrial Average (DJIA) futures contract is falling under pressure from UnitedHealth Group (UNH.US) and IBM (IBM.US) shares. It is interesting that, despite the almost exponential rise in the US100, an index closely linked to the health of the US economy is performing poorly. This may also be a warning sign, suggesting a ‘deteriorating’ market breadth, in which a narrow group of companies is shouldering an increasingly large share of overall growth, leading to ‘unhealthy’ imbalances that could result in a spike in volatility.

The Conference Board’s US Consumer Confidence Index rose to 93.1 points, compared with a forecast of 92 points and a previous reading of 92.8 points. The data points to US consumer sentiment being slightly better than expected. Meanwhile, the Dallas Fed Manufacturing Activity Index rose to 0.4 points, compared with a forecast of 0 points and a previous reading of -2.3 points. The data suggests a slight improvement in sentiment within the manufacturing sector in Texas.

Against the backdrop of solid US data, higher oil prices and the risk of potential interest rate hikes at the turn of 2026 and 2027, the dollar index is gaining ground today, whilst the EUR/USD exchange rate and precious metals are falling, with gold down by almost 2% and silver by nearly 3%.

Cocoa futures traded on ICE (COCOA) have rebounded by nearly 9%, as the market begins to reprice the weather risks associated with El Niño and a potential decline in harvests in West Africa. The movement is dynamic, and the gains have been bolstered by funds closing short positions, having previously bet on weakening demand and the increasing use of substitutes due to high prices.   However, the price decline observed over recent months has begun to improve demand signals, and the supply-sensitive market has reacted swiftly to weather risks and the need to reduce short positions.

Qualcomm has signed an agreement regarding AI chips with ByteDance, the owner of TikTok. ($QCOM) ByteDance is set to purchase millions of Qualcomm ASICs (application-specific integrated circuits), which are used, among other things, in AI computing and data centres. The company’s shares are up nearly 3% today. The news reinforces the narrative surrounding growing demand for AI infrastructure and the company’s expansion beyond the traditional and, until recently, ‘dominant’ smartphone market. White House adviser Kevin Hassett has stated that the US government is monitoring the development of new artificial intelligence models.  We are seeing speculative gains in the space sector, where shares in companies such as Redwire, Intuitive Machines and RocketLab USA are standing out.

US100 (H1 timeframe)