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London Quick Take - 5 Things to Know in Markets Today - 10 Nov
5 to Know in Markets Today
1.Tech shares bounce back
US stock futures were steady on Tuesday after Wall Street registered a sharp rebound on Monday. The Nasdaq-100 rallied just over 3%, touching its 200-day moving average at 28,000 before closing a little below this key level, as tech shares rallied strongly. The S&P 500 rallied 2.4%, its best day since April, while the Dow Jones was up 2.15%, the Nasdaq Composite climbed 2.74% and the small-cap Russell 2,000 outdid the lot with a gain of 3.15%.
Chipmakers led the gains as investors picked up some oversold names. Semis (SOXX) rose 7%, with AMD +13%, Broadcom almost 9% higher and Intel +5%. Higher-beta, badly mauled AI stocks were the biggest gainers with Marvell +9.5%, Applied Materials +11% and Lam Research +10%. Today, CoreWeave, Cisco and Applied Materials report later on. TSMC reported a 60% surge in October revenues on persistently strong AI demand. SoftBank swung to a $7bn net loss, with a $3.7bn writedown on its US data centres, but shares in Tokyo jumped almost 14% as joined the AI bounce in Asia overnight, which saw the Kospi rally over 4% as SK Hynix and Samsung bounced sharply. SoftBank has made a monster bet on AI – shares were down –63% peak-to-trough since June last week...if you wanted to short AI have you missed your chance?
Chipmakers led the gains as investors picked up some oversold names. Semis (SOXX) rose 7%, with AMD +13%, Broadcom almost 9% higher and Intel +5%. Higher-beta, badly mauled AI stocks were the biggest gainers with Marvell +9.5%, Applied Materials +11% and Lam Research +10%. Today, CoreWeave, Cisco and Applied Materials report later on. TSMC reported a 60% surge in October revenues on persistently strong AI demand. SoftBank swung to a $7bn net loss, with a $3.7bn writedown on its US data centres, but shares in Tokyo jumped almost 14% as joined the AI bounce in Asia overnight, which saw the Kospi rally over 4% as SK Hynix and Samsung bounced sharply. SoftBank has made a monster bet on AI – shares were down –63% peak-to-trough since June last week...if you wanted to short AI have you missed your chance?
2.Nvidia struggles amid spy allegations
The exception to this rebound in the AI trade is of course Nvidia, for what we could call idiosyncratic stock-specific reasons. Shares fell 4% after those China spying fears and the board launched its investigation of its CEO, Jensen Huang. The inevitable shareholder lawsuit has been lodged. Expect pressure to intensify and more scrutiny from congressional probes. Trump says the FBI is looking at the case. The overhang will persist for a while, which means the ~15% discount to the rest of the S&P 500 the shares are trading at might persist.
3.European stocks ride momentum and lower oil
Europe's major bourses caught the tailwinds from the risk-on AI bounce nicely with earnings providing further positive momentum. Infineon added 4% after seeing strong physical AI demand as the DAX rose around 1% in early trade on Tuesday to move closer to its record high struck last week. The FTSE 100 added around half a percent to move closer to 10,900 once more. European stock markets are getting a further lift this morning with oil prices backing off a further 2% with Brent crude to take a $91 handle, trades at its lowest since 1 September. The US administration has toned down its language a lot. The latest fillip came as President Trump said the war with Iran could end "fairly soon", that Tehran – whose military is "effectively over" was "talking very politely" with Washington.
Talk about climbing the wall of worry...while the Nasdaq is still nursing a 7% loss over the last month and still 11% off its intraday peak on 6 Oct, the Dow Jones and small caps are up 1-2% in that time. European shares have advanced across the board, with gains of around 6% for the DAX – which hit a record high last week, whilst the FTSE 100 is about 3% higher. While investors have rotated out of tech and AI, healthcare, staples and utilities have had a much better run. That's why the S&P 500 never really broke down in the same way as NDX.
Talk about climbing the wall of worry...while the Nasdaq is still nursing a 7% loss over the last month and still 11% off its intraday peak on 6 Oct, the Dow Jones and small caps are up 1-2% in that time. European shares have advanced across the board, with gains of around 6% for the DAX – which hit a record high last week, whilst the FTSE 100 is about 3% higher. While investors have rotated out of tech and AI, healthcare, staples and utilities have had a much better run. That's why the S&P 500 never really broke down in the same way as NDX.
4.Vodafone raises guidance
Vodafone shares rose then fell after the telecom giant upgraded its outlook but warned on the performance of its German business. The company raised its full-year earnings guidance to between €13.2bn and €13.4bn, up from a prior range of €13.0bn to €13.3bn, while its forecast adjusted free cash flow range was raised from €2.6bn-€2.9bn to between €2.8bn and €3.0bn. First half revenues were up 11%, with UK organic services +0.9%, though Germany was softer.
5.Focus on CPI
Attention today shifts to the US inflation report. With markets increasingly seeing a rate hike by the Fed next month as a done deal, it's going to take quite a big surprise either side to move the needle though. Markets currently see a roughly 82% chance the Fed raises rates at its 9 December meeting. For today, headline CPI is seen slowing to 0.3% month on month from 0.6%, with core inflation easing to 0.2% from 0.3%. The Cleveland Fed's Nowcasting model indicates the monthly increase on the headline rate as low as 0.2% rounded. A number of Fed speakers are due to speak after the release so could give some colour on what the data suggests for near-term monetary policy thinking.