Global Markets Rally on China Stimulus and Tech Optimism

North American Morning Briefing : New China Stimulus Pledge to Lift Stocks, Sentiment

Stock futures gained as investors awaited a slew of economic data, with Nasdaq futures boosted by Micron's premarket advance. Micron Technology said late Wednesday that robust artificial-intelligence demand gave its earnings and outlook a lift. Its shares jumped 15% premarket. Other chip players including Nvidia, Advanced Micro Devices and ASML also rose. "At a time of real growth fears, positive company estimates on future earnings are welcome news and can easily boost equity prices further," Nordea said. Elsewhere, indexes in mainland China and Hong Kong jumped, with property stocks some of the biggest gainers, after China's top leaders pledged stronger policy support for the economy, just days after a blitz of measures from the central bank. U.S. economic data could be a bigger focus over the remainder of the week. Weekly jobs data and durable-goods orders are due Thursday, plus a third estimate of GDP for last quarter. On Friday, there is closely watched data on personal income and spending trends, plus the Federal Reserve's preferred inflation gauge. Premarket Movers Pfizer is voluntarily withdrawing sickle-cell treatment Oxbryta from markets, two years after acquiring its developer in a $5.4 billion deal. Postmarket Movers Concentrix's earnings missed Wall Street estimates. Shares dropped 14%. H.B. Fuller cut its outlook after slowing demand resulted in lower-than-expected adjusted per-share earnings and revenue. Shares fell 10%. Telesis Bio and Beckman Coulter Life Sciences said they are collaborating to create efficient and scalable biofoundries, as well as offer solutions for sustainable and rapid on-premise synthesis of DNA. Shares more than doubled. Watch For: GDP, final 2Q Estimate; Durable Goods for August; Weekly Jobless Claims; Pending Home Sales for August The dollar traded steady ahead of Jerome Powell's speech and more economic data. The Swiss franc rose after the Swiss National Bank cut rates by 25 basis points to 1.0% and although the decision was largely expected, market participants had anticipated a possibility of a bigger reduction. Energy: Crude futures fell more than 2% on signs that supply disruptions in Libya could ease and reports that Saudi Arabia might abandon its oil price target. According to the U.N., representatives from Libya's rival administrations agreed on the process to appoint a central bank governor--a step that could help resolve a crisis over the control of the country's oil revenue and revive production. Meanwhile, Saudi Arabia is ready to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output, the Financial Times reported, citing people familiar with the matter. A firmer dollar and prospects of a potential temporary ceasefire between Israel and Hezbollah are also weighing on prices. Metals: Gold continued to edge higher as the latest data bolstered the case for another aggressive rate cut and heightened geopolitical tensions in the Middle East drove safe haven demand. "U.S. consumer confidence unexpectedly fell in August--by the most in three years--raising concerns about the labour market," ANZ said. "This saw swaps traders price in 75bp of cuts for the remainder of the year." Angel One said gold was likely to trade higher on the back of intensified geo-political tensions, and projected support for gold at $2,595-$2,644 and resistance at $2,735-$2,788. The intensifying conflict between Iran-backed Hezbollah in Lebanon and Israel is supporting the haven metal amid increasing fears of a wider conflict, it said. Base Metals Base metals continued to trade higher driven by China's latest stimulus measures, but gains were limited by skepticism on whether the move will be enough to revive the country's economy. Prices have also been supported by weakness in the dollar after the Fed rate cut. "A stronger USD has been a headwind for the sector this year; however, it is now on the verge of giving up all the gains this year," ANZ Research said. "This should support further gains in investor appetite." Industrial Metals China's stimulus package won't materially alter its commodity demand outlook, Capital Economics said. The measures are a step in the right direction, but won't drive a turnaround in economic activity which is needed to lift commodity demand, and an additional fiscal stimulus directed towards infrastructure spending could have a bigger impact on commodity demand. Even if policymakers manage to boost economic growth and commodity demand, any uptick is likely to be temporary given the country's aging population and slowing urbanization and these structural economic problems will remain a headwind for commodity demand ahead particularly for industrial metals, it added. TODAY'S TOP HEADLINES Mark Zuckerberg's AI Vision Makes Metaverse a Slightly Easier Sell Mark Zuckerberg's metaverse show has become an AI show. The makeover is apt. The chief executive of Meta Platforms kicked off the company's annual developers conference on Wednesday, showing off its latest headsets that now employ a mix of virtual reality and augmented reality technology. That has been the historic aim of the event, at least since the company once known as Facebook spent $2 billion to acquire VR headset maker Oculus in 2014. But the VR business mostly has been a dud. Meta's Reality Labs division that includes VR generated just over $2 billion in revenue for the 12 months ended in June-about what the company's core advertising operation generates every five days. Commerzbank Confirms Independent Strategy, Raises Returns Targets Commerzbank plans to improve its profitability and boost shareholder returns in the coming years, the German lender said as it confirmed its independent strategy while it grapples with a possible takeover attempt by Italy's UniCredit. The board of the Frankfurt-based group, which is the country's leading bank for small and medium-sized companies, on Thursday unanimously confirmed the strategy to 2027 it outlined in November and said that its implementation is progressing rapidly and on schedule. Fed's Rate Cut Is Jolting Small Businesses to Spend Again A tire seller will open more stores. A maker of gun safes plans to boost advertising. A candle maker is looking at taking out a $20,000 loan to expand for the holidays. Some small-business owners have begun to recalibrate their spending and investment plans in response to the Federal Reserve's decision to cut interest rates by half a percentage point. Investors have poured $126 billion into money-market funds since the Federal Reserve's jumbo-size interest-rate cut. That sent assets in such funds to a record $6.76 trillion as of Tuesday, based on Crane Data going back to 1998. China Pledges More Support for Economy China's top leaders surprised markets by pledging even more support for the economy, sparking hopes that policymakers are readying the sort of fiscal stimulus analysts say is key to the country's recovery. The Politburo, China's highest decision-making body, on Thursday said it would extend additional fiscal and monetary measures to boost the economy, according to state media Xinhua. That comes days after the central bank unveiled a raft of aggressive easing measures, underscoring a rising sense of urgency among policymakers to revive the world's second-largest economy. China Market Support May Fizzle Out If Key Issues Remain Unsolved China's over $100 billion push to bolster its stock markets has stirred optimism, but begs the question of whether investors and businesses will take the bait amid lingering doubts about the economy's underlying weakness. In an unprecedented move, the People's Bank of China vowed to invest 800 billion yuan of liquidity, equivalent to $113.77 billion, into Chinese stock markets through new swap and loan facilities, a move cautiously welcomed by analysts. Swiss Central Bank Delivers Third Straight Rate Cut Switzerland's central bank on Thursday cut its key interest rate for the third straight meeting as it pivots away from worries about high inflation toward concerns about the impact of a strong currency on exporters. The Swiss National Bank lowered its key rate to 1%from 1.25%, having cut borrowing costs by the same amount in June. Three months earlier, it became the first central bank from a rich, developed economy to ease policy since the start of the global inflation surge in 2021. China-Linked Hackers Breach U.S. Internet Providers in New 'Salt Typhoon' Cyberattack Hackers linked to the Chinese government have broken into a handful of U.S. internet-service providers in recent months in pursuit of sensitive information, according to people familiar with the matter. The hacking campaign, called Salt Typhoon by investigators, hasn't previously been publicly disclosed and is the latest in a series of incursions that U.S. investigators have linked to China in recent years. The intrusion is a sign of the stealthy success Beijing's massive digital army of cyberspies has had breaking into valuable computer networks in the U.S. and around the globe. U.S. and Allies Call for Three-Week Pause to Head Off Israel-Hezbollah Ground War WASHINGTON-The Biden administration is urgently pressing for Israel and Hezbollah to pause their escalating aerial attacks into and from Lebanon for 21 days, hoping to head off a full-scale ground war that appears increasingly likely, according to U.S. officials. Despite a growing buildup along Israel's northern border, U.S. officials think Prime Minister Benjamin Netanyahu's government doesn't want a wider war and is looking for a diplomatic resolution and that Hezbollah wants breathing room after Israel decimated its leadership and degraded its weapons arsenal in recent weeks.

EMEA Morning Briefing : Stock Futures Rise Amid Tech Optimism; Powell Speech Awaited

EU money supply in euro area; Germany GfK consumer climate survey; trading updates from H&M, Old Mutual, Halma Opening Call: European stock futures advanced, as strength in tech stocks boosted sentiment. Asian stock benchmarks gained; the dollar and Treasury yields steadied; oil futures rose and gold edged lower. Equities: Stock futures advanced, tracking Asian equities higher amid fresh signs of strength in technology stocks, after Micron stock jumped in late trading following the company's strong earnings. The memory-chip maker cited AI demand in posting better-than-expected quarterly results and issued guidance ahead of Wall Street expectations. Economic data could play a bigger role in driving markets over the remainder of the week. German consumer sentiment and U.S. jobless claims are on the docket for later Thursday, as well as speeches by a number of Federal Reserve officials, including Chair Jerome Powell. Forex: The dollar could weaken amid Fed rate-cut hopes. A weaker-than-expected U.S. Conference Board consumer confidence reading, together with a cooling labor market, are a growing worry among policymakers and investors, said Lloyd Chan, senior currency analyst at MUFG Bank. Markets are currently pricing in a 59% chance of another large 50bp rate cut by the Fed at the November meeting, Chan added. Bonds: The Fed's half-point rate cut last week is already observably working to ease financial conditions, Deutsche Bank said. The bank's financial-conditions index--a high-frequency version of an indicator that the Fed itself publishes--has eased considerably since before last week's Fed meeting to reach its lowest levels since 2022. In addition to the Fed's rate cut itself, downstream aftershocks such as falling mortgage rates, lower Treasury yields, lower rates on new corporate borrowing and a weaker dollar are all combining to ease the economy's broad financing burden, Deutsche Bank said. Easing continued this week "as Fedspeak seemed to convey that the bar for further 50bp cuts may be lower," it added. Energy: Oil futures advanced in Asia, supported by a fall in U.S. stockpiles. The EIA reported that U.S. commercial crude inventories declined for a second week in row, by 4.5 million barrels for the week ended Sept. 20. The data are seemingly bullish for oil, said Fawad Razaqzada, market analyst at City Index and FOREX.com. However, this week's U.S. economic data has been "far from great," casting a shadow over the demand outlook for the world's biggest oil-consuming country, he added. Metals: Gold is still robust as expectations for further monetary easing by the Fed grow, said Joseph Dahrieh, managing principal at Tickmill. Data released earlier this week showed a bigger-than-expected decline in U.S. consumer confidence, reinforcing dovish remarks from Fed officials, Dahrieh said. Hence, markets now expect 75 bps worth of rate cuts by year-end, with their focus now on coming data such as the PCE price index, the Fed's preferred inflation measure, Dahrieh added. - Copper prices rose slightly in early Asian trade as sentiment continued to be buoyed by China's stimulus measures. The stimulus released by the People's Bank of China this week has supported market sentiment on copper, Citic Futures said. Tightening supply and higher demand ahead of China's national holiday in October have also given a boost to prices, it added. Citic forecasts a continuing rebound in copper prices over the near term. - Iron ore has extended a rally on hopes that China's recent huge stimulus package would prompt more demand, ANZ said. "The market will now be watching for signs that the measures are translating into a real pick--up in demand for steel and iron-ore" in China, ANZ said. Federal Reserve Gov. Adriana Kugler expects a series of interest-rate cuts ahead, justified by declining inflation and a cooling labor market. She sees a resilient-but-slowing U.S. economy that the Fed doesn't want to weaken any further. "While future actions...will depend on data we receive on inflation, employment, and economic activity, if conditions continue to evolve in the direction traveled thus far, then additional cuts will be appropriate," Kugler said on Wednesday, speaking at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School in Cambridge, Mass. Congress Approves Bill Averting Government Shutdown Before Election WASHINGTON-The House and Senate passed a measure late Wednesday funding federal agencies until late December, voting overwhelmingly to take a politically risky government shutdown off the table until after the election. House lawmakers voted 341 to 82 to approve the measure, despite continued grumbling from some rank-and-file GOP members over the lack of spending cuts and leaders' routine use of short-term patches. Under fast-track procedures employed by Republican leaders to bypass disagreements within the party, the measure required a two-thirds supermajority. China Market Support May Fizzle Out If Key Issues Remain Unsolved China's over $100 billion push to bolster its stock markets has stirred optimism, but begs the question of whether investors and businesses will take the bait amid lingering doubts about the economy's underlying weakness. In an unprecedented move, the People's Bank of China vowed to invest 800 billion yuan of liquidity, equivalent to $113.77 billion, into Chinese stock markets through new swap and loan facilities, a move cautiously welcomed by analysts. Stocks are poised for something that hasn't happened since the days of the dot-com bubble The S&P 500 is flirting with what would be a rare accomplishment: rising 20% or more during two consecutive calendar years. At least, that was the case as of Tuesday's close, when the U.S. benchmark saw its year-to-date advance top 20% for the first time since the start of 2024, according to Dow Jones Market Data. The achievement happened to coincide with the index's 41st record close of the year. DP World Is Seeking to Build a Trade Hub in Mexico Port terminal operator DP World is talking to Mexico's government about allowing it to start operations in the country, which would enable the Dubai-based business to handle cargo heading into the U.S. from the south. DP World hasn't been able to extend its ambitious global growth plan to the U.S. since hitting political roadblocks some two decades ago. Instead, it has invested in five terminals on Canada's East and West coasts that feed into the U.S. from the north. U.K. Car Manufacturing Falls Sharply Amid Factory Transitions for EVs U.K. car manufacturing fell sharply in August as companies continued to retool their factories for new electric models, in line with forecasts for a global slowdown in auto production this year. Overall production fell 8.4% on year to 41,271 cars, the Society of Motor Manufacturers & Traders said Wednesday. U.S. and Allies Call for Three-Week Pause to Head Off Israel-Hezbollah Ground War WASHINGTON-The Biden administration is urgently pressing for Israel and Hezbollah to pause their escalating aerial attacks into and from Lebanon for 21 days, hoping to head off a full-scale ground war that appears increasingly likely, according to U.S. officials. The U.S.-brokered plan calls for a halt in the fighting that would last several weeks, one of the officials said. Micron Stock Jumps on Strong Outlook. 'Robust AI Demand' Is Boosting Chip Revenue. Micron Technology stock jumped in late trading on Wednesday after the company reported strong earnings and provided guidance above Wall Street expectations. For the quarter ending Aug. 29, the memory chip maker reported revenue of $7.75 billion-up 93% versus the prior year-and adjusted earnings of $1.18 per share. Wall Street was expecting revenue of $7.65 billion with adjusted EPS of $1.11. OpenAI to Become For-Profit Company OpenAI is planning to convert from a nonprofit organization to a for-profit company at the same time it is undergoing major personnel shifts including the abrupt resignation Wednesday of its chief technology officer, Mira Murati. Becoming a for-profit would be a seismic shift for OpenAI, which was founded in 2015 to develop AI technology "to benefit humanity as a whole, unconstrained by a need to generate financial return," according to a statement it published when it launched. The Celebrities Lending Their Voices to Meta's New AI Meta Platforms is splashing out on celebrity star power to persuade users to embrace new artificial-intelligence tools. The tech company announced deals with actors Awkwafina, John Cena, Judi Dench, Kristen Bell and Keegan-Michael Key on Wednesday that will allow it to use their voices in a new AI assistant. Meta is paying stars millions of dollars for use of their likeness, people familiar with the negotiations said. 06:00/NOR: Aug Labour force survey SA, incl unemployment 07:30/SWI: Swiss National Bank monetary policy assessment 08:00/GER: ifo Joint Economic Forecast of German economic research institutes All times in GMT. Powered by Onclusive and Dow Jones.

North American Morning Briefing : Investors Take Stock After Tuesday's Records

Stocks were poised for a potential pullback Wednesday, a day after the S&P 500 closed at its 41st record of the year. Big tech stocks in particular are taking some pain, with Tesla and Broadcom each down premarket. Globally, the picture was mixed. Chinese shares climbed again after China's central bank added to its stimulus blitz with another rate cut . The data and earnings calendar is light Wednesday. The main scheduled event will be a fresh look at the housing market, with data on new home sales, followed by earnings from Micron after the close. Premarket Movers SAP was down in U.S. trading after Bloomberg reported that it is being investigated by the Justice Department over potential price fixing. Trump Media & Technology shares advanced more than 3%. The stock is down more than 30% this month, however. Postmarket Movers Commvault Systems is buying Clumio for about $47 million, a company that specializes in working with Amazon Web Services infrastructure. Shares rose 1.9%. KB Home posted lower-than-expected profits. Shares fell 6.4%. Progress Software earnings topped analysts' estimates and the company raised its profit and revenue outlook. The stock gained 5%. Stitch Fix reported lower revenue and a deep drop in its active client base. Shares fell 24%. Today's Headlines/Must Reads: - World Economy on Track for Slight Pickup as Inflation Is Tamed - China Says It Test-Fired Intercontinental Ballistic Missile - Harris to Outline Economic Vision to Counter Trump's The dollar fell after China's stimulus boosted emerging market currencies and weaker-than-expected consumer confidence data fueled concerns about an economic slowdown, ING said. "The jury is out on whether this China stimulus story is an enduring one for global FX." However, investors seem to have shifted to a sell-dollar mindset on mounting evidence of a slowdown, it said, adding that the currency might continue trading on the soft side ahead of Friday's core PCE price index data. UOB said the dollar was likely to continue falling against the offshore Chinese yuan, with the weekly chart indicating a lack of support below 6.9960, with the next substantial support at 6.8100. The euro could extend its gains after receiving a boost from China's stimulus measures, as the European Central Bank is unlikely to accelerate interest rate cuts as some expect, MUFG Bank said. "Increased global growth optimism will help and the stimulus measures announced by China will certainly add to dollar selling momentum," MUFG said. Market expectations for an October ECB rate cut are rising but until underlying inflation is closer to target, the ECB is likely to continue with a cautious approach to rate cuts despite weaker growth, MUFG said. Energy: Oil prices fell as demand concerns kept a lid on the boost from China's stimulus package. "The rising geopolitical tensions and the Chinese stimulus measures strengthen the oil bulls' hands, but the $72.85-a-barrel level is yet to be cleared to send the price of a barrel into the medium-term bullish consolidation zone," Swissquote Bank said. Sucden Financial said Tuesday's gains, on the back of China's plans, are expected to be short-lived and unlikely to significantly affect the price trend in the near term. HSBC Global Research said a detailed analysis of the potential impact of China's central bank rate cuts on copper and aluminum prices shows that the two metals are likely to be range bound in this rate cycle and rally when demand picks up. Lithium Lithium has little scope to rebound further, as supply remains abundant relative to demand, HSBC Global Research said separately. TODAY'S TOP HEADLINES GE Vernova CEO Appraises Nuclear Power Prospects, Offshore Wind Business The nuclear power industry is set to add "gigawatts upon gigawatts" of capacity heading into the 2030s, while offshore wind in the U.S. sorts out its business model, according to GE Vernova CEO Scott Strazik. Strazik leads General Electric's spinoff of its power and wind business, which started trading as a stand-alone company in April. The energy company has emerged at a crossroads for the nuclear energy industry as companies contend with managing aging reactors while exploring newer reactor technologies-along with alternative energy sources such as onshore and offshore wind energy. Skael Co-Founder Faces U.S. Fraud Charges The former chief executive of Skael faces criminal charges and a lawsuit from the Securities and Exchange Commission for allegedly lying to investors about the business-automation startup's revenue figures. Between January 2021 and February 2022, the SEC alleged in a lawsuit filed Tuesday, Skael co-founder and CEO Baba Nadimpalli managed to raise more than $30 million from investors in the San Francisco-based startup by claiming it had as much as $7 million in annual recurring revenue when the actual figure was no more than $170,000. Meta Platforms Kicks Off Its Connect Developers Conference Today. What to Expect. Meta's annual developer Connect conference kicks off on Wednesday. Meta Platforms CEO Mark Zuckerberg's keynote starts at 1 p.m. ET and will be streamed live on Facebook. He is expected to share the company's vision for artificial intelligence and Meta's latest product announcements. The High-Stakes Spat Over How Much Oil the World Really Needs What's 1.1 million barrels between adversaries? The Organization of the Petroleum Exporting Countries and the International Energy Agency don't see eye to eye on much. The latter was basically founded as an anti-OPEC 50 years ago to represent energy consumers a year after that cartel's oil embargo quadrupled global crude prices. But now the gulf between their forecasts of how much oil the world will need in 2024 is oddly wide, especially for this late in the year. Stock-market indicator with a near-perfect track record is flashing a 'buy' signal One closely-watched stock-market indicator is flashing a bright-red buy signal as more companies' shares join the rally. A sharp increase in a measure known as the McClellan Summation Index is sending a signal that has predicted further gains for the S&P 500 with near-perfect accuracy, according to Dean Christians, a senior research analyst at SentimenTrader. Senate Report Details Security Failings That Almost Got Trump Killed Shortly before Donald Trump was nearly assassinated at a July 13 campaign rally, a Secret Service sniper watched from a rooftop perch as local officers ran with guns drawn toward a building about 400 feet from where the former president spoke. The frantic scene prompted snipers to place their rifles in tripods and start searching through their scopes. But the counter-sniper team leader didn't radio Trump's detail to have the former president removed from the rally stage in Butler, Pa. "The thought did not cross my mind," he recalled to Senate investigators. Middlefield Global Real Asset Fund Approves Merger Into Real Estate Split Corp Other News: French President Emmanuel Macron meets Canadian Prime Minister Justin Trudeau 23:01/UK: Aug UK monthly automotive manufacturing figures 23:30/JPN: Jul Final Labour Survey - Earnings, Employment & Hours Worked All times in GMT. Powered by Kantar Media and Dow Jones. Expected Earnings for Wednesday AGF Management Ltd - Class B (AGF.B.T) is expected to report $0.36 for 3Q. Akoustis Technologies Inc (AKTS) is expected to report $-0.14 for 4Q. Espey Manufacturing & Electronics Corp (ESP) is expected to report for 4Q. HB Fuller Co (FUL) is expected to report $1.10 for 3Q. Jefferies Financial Group Inc (JEF) is expected to report $0.78 for 3Q. Meta Materials Inc (MMAT) is expected to report for 2Q. Micron Technology Inc (MU) is expected to report $0.82 for 4Q. Natural Alternatives International Inc (NAII) is expected to report for 4Q. RM2 International Inc (RMTO) is expected to report for Interim. Rave Restaurant Group Inc (RAVE) is expected to report for 4Q. Raymond James Financial Inc (RJF) is expected to report. Banc of California Raised to Outperform From Neutral by Wedbush Catalent Cut to Neutral From Outperform by Baird Columbia Banking System Raised to Outperform From Neutral by Wedbush Comerica Raised to Outperform From Neutral by Wedbush Costco Cut to Hold From Buy by Truist Securities Customers Bancorp Cut to Neutral From Outperform by Wedbush Equinix Cut to Hold From Buy by CFRA Equity Residential Cut to Neutral From Buy by B of A Securities Essex Property Cut to Neutral From Buy by B of A Securities Exxon Mobil Cut to Neutral From Buy by Redburn Atlantic First Citizens Bancshares Cut to Neutral From Outperform by Wedbush First Horizon Cut to Neutral From Outperform by Wedbush Insperity Cut to Market Perform From Outperform by William Blair Invitation Homes Cut to Neutral From Buy by B of A Securities Kenvue Cut to Sector Perform From Outperform by RBC Capital Leonardo DRS Cut to Neutral From Buy by B of A Securities