USA
- Thursday’s session on Wall Street began with heavy declines, at times nearing 3% on the NASDAQ 100. Selling pressure eased over time, and losses were reduced to around 1% on the major indices. US500 is down about 0.6%, and US100 is down 1%. US30 and US2000 are performing better, with valuations up around 0.2%.
- The clear divergence between indices points to a concentrated nature of market concerns. The focal point is hyperscale and SaaS companies; it is negative for the broader market’s pricing that these companies account for more than half of the main indices.
- JPMorgan also points to deleveraging by retail investors; this move is particularly intense in technology stocks.
- The market considers the conflict in Iran to be practically over, which is reflected in prices. Work is ongoing to sign a final agreement, with both sides having time until August 21.
- Micron (MU.US): The memory manufacturer posted phenomenal results; the stock is up 20% at the open, reduces growth to 10% as the trading procedes.
- The company generated USD 41.46 billion in revenue and EPS of USD 25.11, representing an increase of over 100% versus the previous quarter and coming more than a dozen percent above the median market expectations. The strong results are also supporting other producers in the sector.
- A potential issue is that further hyperbolic increases in memory prices signal growing pressure on the investment budgets of hyperscale companies, which weighs on the broader market.
- Euphoric sentiment toward semiconductors is also boosting Qualcomm, which is forecasting USD 15 billion in data-center segment sales, lifting the stock by 8%.
- BlackBerry (BB.US): The company released optimistic year-end guidance, with revenue expected to be supported by infrastructure spending. The stock is up 7%.
- Wendy’s (WEN.US): The company continues rebounding from valuation lows on a wave of retail buying, amid optimism about the future performance of a new “meme stock.” The stock is up about 10%.
- IBM (IBM.US): The company demonstrated the first prototype chip using sub-1nm technology.
- Apple (AAPL.US): The company raised product prices, citing major shortages of memory chips, for which consumer electronics must compete with AI data centers. The market sees potential margin pressure and/or lower sales; the stock is down about 5%.
- PCE inflation rose to 4.1%, in line with market expectations. This should not dramatically affect the priced-in rate path in the US. It is worth noting that core PCE inflation is not only significantly lower, but also stabilized earlier, which may imply the price increase is temporary.
- Economic growth surprised to the upside: US GDP (Q1) rose 2.1% versus the expected 1.6%.
- Wages and personal spending also rose by 0.7%.
- Jobless claims stayed above 200k, but came in below expectations.
- Concerns may relate to consumer spending and durable goods orders, which were clearly below expectations.
- European indices are posting moderate gains, driven mainly by rapidly falling oil prices. Gains range from 0.5% to 1.2%, with Germany leading. DE40 is up more than 1.2%.
- Semiconductor sentiment is also spilling over into Europe. ASML Holding and Infineon Technologies are rising clearly, up about 3%.
- Spain’s economic growth came in at 2.7% y/y, in line with market expectations.
- In the FX market, the pound is leading gains. This follows the priced-in path of a transfer of power after Keir Starmer’s resignation. Andy Burnham is the favorite. The pound is strengthening by about 0.2% versus the dollar and the yen.
- New Zealand and Australian currencies are also gaining after a surprising rise in employment in Australia. The Australian dollar and New Zealand dollar are up about 0.2% against the USD.
- Among agricultural commodities, cocoa is posting strong gains. The nearly 5% rise is driven by concerns over the next harvests in West Africa.
- Energy commodities are seeing slight gains; oil is up 2%. Despite Iraq’s threats to leave OPEC to increase production, another large drop in US oil inventories offsets that impact. Brent returns to USD 75 per barrel.
- Solid US economic data is supporting industrial metals; copper is up 2%. Among precious metals, silver is up more than 1%.
- The cryptocurrency market is showing increasing signs of weakness and/or a possible breakdown.
- Bitcoin falls below USD 60,000.
- Ethereum loses more than 3% and drops to around USD 1,560.
- Solana falls to USD 66.
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