Morning Markets
September E-Mini S&P 500 futures (ESU23) this morning are down -0.20%, and Sep Nasdaq 100 E-Mini futures (NQU23) are down -0.38%.
Nvidia (NVDA) and other AI chip stocks are leading the markets lower this morning after the Wall Street Journal late Tuesday reported that the Biden administration is considering more restrictions on the export and sales of AI chips to China and may also restrict leasing of cloud services to Chinese AI firms.
Blackrock, in a mid-year report, introduced a bullish call on AI, saying, “We implement an overweight to AI as a mega force. New AI tools could analyze and unlock the value of the data gold mine that some companies may be sitting on.”
Bloomberg is reporting today that some hawkish ECB officials are weighing options for speeding up the reduction of the ECB’s balance sheet, including the slowdown of the reinvestment of maturing securities or even the sale of securities. Bloomberg said that no decision is imminent and there has been no formal discussion of such measures in the ECB Governing Council. The ECB is currently reducing the size of its balance sheet by allowing an average of 15 billion euros worth of securities to roll off each month. The ECB plans to fully halt the reinvestment of maturing securities under its Asset Purchase Program next month. The decline in the ECB’s balance sheet causes a reduction in reserves and liquidity for the Eurozone banking system, which is bearish for stocks.
Today’s Eurozone economic reports were mixed. The July German GfK consumer confidence index fell by -1.0 point to -25.4, weaker than market expectations for an increase to -23.0. The June French consumer confidence index rose +2 points to 85, slightly stronger than expectations for a +1 point increase to 84. Italy’s June May EU-harmonized CPI eased to +6.7% y/y from May’s +8.0% y/y and was slightly weaker than expectations of +6.8% y/y.
The 10-year T-note yield this morning is down -3.3 bp at 3.731%. The markets are currently discounting the odds at 72% for a +25 bp rate hike at the next FOMC meeting on July 25-26 and are fully anticipating that +25 bp rate hike by November.
Overseas stock markets steady to higher. The Euro Stoxx 50 is up +0.80%. China’s Shanghai’s Composite index today closed unchanged. Japan’s Nikkei Stock Index today closed up +2.0%.
Pre-Market U.S. Stock Movers
Nvidia (NVDA) is down -3.6% in pre-market trading on the WSJ report that the Biden administration is considering increased export restrictions on AI-related chips and cloud services. Nvidia gets about one-fifth of its revenue from China. AMD (AMD), the other major AI chip manufacturer, is down -2.9%. WSJ reported that the Biden administration might extend restrictions to less powerful chips that don’t currently require export licenses.
Netflix (NFLX) is up +1.6% in pre-market trading after Oppenheimer raised its price target on Netflix to $500 from $450 due to expectations for a higher number of subscribers stemming from its password crackdown campaign and the phase-out of its lowest-priced ad-free tier.
Delta (DAL) is up +1.1% after Morgan Stanley reinstated research coverage as its Top Pick within its U.S. airline coverage.
Walgreens Boots Alliance (WBA) is down -0.2% on a downgrade by Deutsche Bank to hold from buy due to the company’s disappointing fiscal-year 2024 guidance released earlier this week.
Snowflake (SNOW) is up +4.2% after Wall Street analysts spoke positively about the company after it discussed new products and affirmed a revenue target.
Today’s U.S. Earnings Reports (6/28/2023)
Dakota Gold Corp (DC), UniFirst Corp/MA (UNF), General Mills Inc (GIS), Micron Technology Inc (MU), Worthington Industries Inc (WOR), HB Fuller Co (FUL), Franklin Covey Co (FC), Concentrix Corp (CNXC).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
