US Index Futures showed gains on Friday, which marks the close of the second quarter. Traders are watching data on personal consumption spending, a leading indicator used by the Federal Reserve to gauge inflation. In addition, a battery of economic data in Europe encouraged investors, showing resilience in activity and inflation on a downward trajectory.
By 6:56 AM, Dow Jones (DOWI:DJI) futures were up 109 points, or 0.32%. S&P 500 futures were up 0.41%, while Nasdaq-100 futures were up 0.51%. Yields on 10-year Treasuries are at 3.874%.
Elsewhere, China’s Purchasing Managers’ Index (PMI) of manufacturing activity improved to 49.0 in June, but indicated a contraction for the third straight month. The data reflects continued weakness in the Chinese economy as analysts revise their forecasts for the rest of the year. The non-manufacturing PMI also dropped to 53.2 in June, showing weaker growth in the services and construction sectors. China’s overall trading activity slowed in June, with the composite PMI falling to 52.3. Japan’s unemployment rate for May was unchanged from the previous month at 2.6%.
Britain’s economy grew by an unrevised 0.1% in the first quarter of this year from the initial estimate published last month. The ONS said Britain’s gross domestic product (GDP) in the first quarter of this year was 0.5% lower than in the last quarter of 2019, before the COVID-19 pandemic, also in line with a previous estimate.
Preliminary estimates showed that euro zone inflation slowed sharply to 5.5% in June from 6.1% in May, slightly below the consensus forecast of 5.6%. Month-on-month, consumer prices in the region rose by 0.3%. The euro zone unemployment rate is steady at 6.5% in the month of May and even lower compared to last year’s reading of 6.7% during the same period.
German retail sales rose more-than-expected in May from the previous month, rising 0.4% mom in real terms, although analysts said the surprise rise did not signal a change in depressed spending. Compared to the same month last year, May 2022, retail trade recorded a real drop in sales of 3.6% and a nominal increase in sales of 2.8%. Unemployment in Germany rose more than expected in June, showing that difficult economic conditions are taking their toll on the job market, official data showed on Thursday.
Elsewhere in commodities markets, West Texas Intermediate crude for August was down 0.04% to settle at $69.83 a barrel. Brent crude for August is close to $74.34 a barrel. September’s most-traded iron ore contract on China’s Dalian Commodity Exchange ended day trading down 0.7% at $113.35 a metric tonne, erasing earlier gains, although it was still on track to its biggest monthly gain in seven months – up about 17%.
On Friday’s US economic agenda, Personal Income and Personal Spending reports will be released at 8:30 am, Chicago PMI at 9:45 am, the Michigan Fed Consumer Survey at 10:00 am, and the Baker Hughes poll count at 1:00 pm.
At the close of Thursday, global stock exchanges recorded yet another lukewarm session, with no single direction. The Dow Jones rose 269.76 points or 0.80% to 34,122.42 points. The S&P 500 rose 19.58 points or 0.45% to 4,396.44 points, while the Nasdaq closed flat, down 0.42 points to 13,591.33 points. On the one hand, the market assessed the participation of central bankers from the USA, Europe and the United Kingdom at the Forum of the European Central Bank in Sintra, who, in unison, assessed that the battle with inflation had not yet been won and that, consequently, more interest rate hikes will be necessary. Naturally, this view also implies maintaining restrictive interest rates for a prolonged period of time in central economies, which was reflected in the yield curves.
On the other hand, the approval of the major US banks in the Fed’s Stress Test and the release of favorable numbers for activity in the world’s main economy continued to remove concerns about a tougher recession in the US. In addition to an upward revision of GDP in 1Q23, jobless claims fell to the lowest level since 2021. These figures corroborate a resilient economy, which, along with a favorable news flow at the corporate level, has supported risk appetite – the S&P 500, the main stock index in the US, is on track to close the first half of the year with a rally of almost 15%. In this environment, the adjustment of end-of-half positions has also contributed to positive performances.
Ahead of Friday’s quarterly results, traders will be watching a report from Constellation Brands, which brews Modelo Especial, the beer that was recently rated the top seller in the United States.
Wall Street Corporate Highlights for Today
Apple (NASDAQ:AAPL) – Apple is on track to reach a market value of $3 trillion, driven by the dominance of big tech companies. With a year-to-date rally that added more than $900 billion to its size, Apple shares are on the rise, taking its annual gain to 46%. This milestone highlights the company’s successful business strategy and its increasing control over consumers.
Alphabet (NASDAQ:GOOGL) – Google announced Thursday that it will block Canadian news on its platform in Canada in response to a new law requiring payments to local news publishers. The move follows a similar decision taken by Facebook. Canada’s media industry seeks tighter regulation of internet giants. Google finds the law impractical and will end its News Showcase program in the country.
Microsoft (NASDAQ:MSFT) – Artificial intelligence startup Inflection AI has raised $1.3 billion in investment, including stakes from Microsoft and Nvidia (NASDAQ:NVDA), valuing the company at $4 billion. In other news, the Department of Justice of Canada concluded that the acquisition of Activision Blizzard (NASDAQ:ATVI) by Microsoft will “likely” result in less competition in the gaming console and multi-game subscription services industries, according to a court filing. Microsoft is working with antitrust authorities to address the concerns raised. Elsewhere, Microsoft’s appeal against Britain’s veto of its takeover deal will stand at the end of July as scheduled. The Competition Appeals Court rejected the postponement request made by the Competition and Markets Authority.
Snap Inc (NYSE:SNAP) – Snap Inc’s Snapchat+ subscription service has reached 4 million members since its launch last June. For a monthly fee of $3.99, subscribers get access to exclusive features, including pre-releases. Paid users also got early access to Snapchat for the web and the My AI chatbot, which uses OpenAI’s ChatGPT technology.
ASML Holding (NASDAQ:ASML) – From September, Dutch companies that manufacture machines for the production of advanced chips will be required to obtain an export license before selling abroad. The measure aims to restrict China’s access to these technologies, due to concerns of military use. ASML, the main company in the sector, will be especially affected. The Dutch government has prevented the export of its machines to China since 2019. The new regulation seeks to protect national security, without disrupting global chip production.
Nike (NYSE:NKE) – Nike forecast first-quarter revenue below Wall Street expectations due to cost-conscious consumers in North America. However, the company recorded strong growth in China. The company’s fourth-quarter revenue rose to $12.83 billion and beat estimates of $12.59 billion, while earnings per share of 66 cents were 1 cent short of estimates. Shares of the company are down -3.6% in Friday’s premarket trade.
Shein – Chinese fast fashion company Shein has denied reports that it has confidentially requested a US initial public offering. Reuters had reported that the listing could take place later this year. Shein was recently valued at $64 billion but faces accusations of violating US tariff law and avoiding human rights reviews of her imports.
Alibaba, JD.com (NASDAQ:JD) – Shares of Chinese companies traded in the US were poised to fall on Friday, reflecting signs of economic difficulties in China. Alibaba was down 0.77% premarket, while JD.com was down 0.3%. Hong Kong’s Hang Seng Index closed down 0.1%. Survey data indicated a contraction in manufacturing and a slowdown in services growth, with employment falling. These numbers added to concerns as the government is not expected to take more aggressive measures to stimulate growth. In addition, tensions in the technology war between the US and China are also affecting market sentiment.
Alibaba (NYSE:BABA) – Freshippo, Alibaba’s supermarket unit, announced on Friday that it will expand its number of physical stores in China, opening 12 new units in cities including Beijing, Shanghai and Guangzhou. The company seeks to combine e-commerce with the traditional shopping experience. The expansion comes after Alibaba split into six separate business units, allowing them to raise outside capital and become independent companies. Freshippo has over 300 stores in 27 Chinese cities.
Virgin Galactic (NYSE:SPCE) – An Italian crew flew aboard a Virgin Galactic rocket in New Mexico, marking the company’s first commercial flight for paying customers. The three men, including two Italian Air Force officers, performed a brief suborbital walk, collecting scientific data. Virgin Galactic becomes yet another company offering commercial spaceflight, joining Blue Origin and SpaceX.
Spirit AeroSystems (NYSE:SPR) – Spirit AeroSystems announced it will resume operations at its Wichita, Kansas, plant after union workers voted in favor of a new contract and ended a week-long strike. The deal is a boon for Boeing (NYSE:BA) as the factory produces critical components for its planes, including the 737 MAX. The four-year contract includes salary increases and employee benefits.
Chevron (NYSE:CVX) – Chevron is offering oil and gas properties in New Mexico and Texas for sale, seeking to downsize assets after major acquisitions. The combined value of the properties is approximately US$100 million, with production estimated at approximately 770,000 barrels of oil and liquid gas.
Tesla (NASDAQ:TSLA) – Tesla is set to release second-quarter delivery numbers on Sunday. Analysts estimate deliveries will reach around 445,000 cars, setting a new quarterly record. In the first quarter, the company delivered 423,000 vehicles. Tesla shares are already up 109% this year. In other news, Volkswagen (USOTC:VWAGY) is in talks with Tesla to adopt its charging technology in North America, while Volkswagen subsidiary Electrify America has already agreed to use the system. Additionally, Polestar (NASDAQ:PSNY) has entered into an agreement with Tesla to make its charging network available to customers in the US and Canada.
Ferrari (NYSE:RACE) – Ferrari has launched two new limited series plug-in hybrid models based on the SF90 Stradale. The SF90 XX Stradale and SF90 XX Spider models feature a 4-litre, 8-cylinder combustion engine combined with three electric motors. Ferrari plans to produce 799 units of the SF90 XX Stradale and 599 units of the SF90 XX Spider. Planned production is sold out. The new models offer an electric range of 25 kilometers.
Lordstown Motors (NASDAQ:RIDE) – Lordstown Motors received a delisting notice from Nasdaq due to non-compliance with listing rules. The company filed for bankruptcy protection and put itself up for sale after a dispute with Foxconn (USOTC:FXCOF), accusing it of fraudulent conduct and broken investment promises.
Credit Suisse (NYSE:CS) – Credit Suisse has appointed an investment banking management committee to oversee its integration with UBS (NYSE:UBS) following completion of the emergency acquisition. The committee will be led by Credit Suisse’s head of investment banking and will include other key executives.
Morgan Stanley (NYSE:MS) – Morgan Stanley’s board will focus on choosing the next CEO during its summer and fall meetings. Bank co-presidents Ted Pick and Andy Saperstein are seen as the frontrunners, along with Dan Simkowitz. James Gorman, the current CEO, will seek to resolve key regulatory issues before stepping down.
HSBC (NYSE:HSBC) – HSBC cut its oil price forecasts, falling in line with other major Wall Street firms. Now, Brent crude is expected to hit $80 a barrel in the second half, down from $93.50 earlier. HSBC cited macroeconomic concerns as driving the market, but still predicts a tighter market going forward due to factors such as supply cuts and robust demand.
Coinbase (NASDAQ:COIN) – Coinbase has taken the next step in its legal battle with the SEC, arguing in court that the tokens it offers are not securities. While that battle could take months or years, another action less watched by investors could be decided as early as the next few weeks. A group of state securities regulators has filed lawsuits against Coinbase, claiming its staking product is a security that needs to be registered. Coinbase has 28 days to prove the product is not a security or discontinue it, which would significantly affect its revenue. The company has already faced similar challenges with its staking offering.
Moderna (NASDAQ:MRNA) – Noubar Afeyan, co-founder of Moderna, has seen his fortunes rise again with the success of another long-term bet. Sigilon Therapeutics, in which Afeyan’s venture capital firm has a stake, was up 438% following acquisition by Eli Lilly (NYSE:LLY). While Sigilon needs to meet certain requirements to reach full payout, the closing share price indicates investor optimism. Afeyan, a biochemical engineer with a long history of success in the life sciences industry, has over 100 patents and is known for his work in developing startups.
Canopy Growth (NASDAQ:CGC) – Canopy Growth completed the sale of its Modesto, California facility as part of its divestments to raise funds and improve its liquidity. To date, the company has generated C$81 million through asset sales and expects to earn C$150 million in total divestment proceeds by September 2023. The company faces financial challenges and a US SEC investigation.
Market view
Apple (AAPL) – Citi Research analyst Atif Malik began coverage of Apple with a “Buy” rating, citing the company’s ability to expand margins and its growth in the Indian market. He set a price target of $240 for Apple stock.
Amazon (NASDAQ:AMZN) – JPMorgan analyst Doug Anmuth reiterated his “Overweight” rating on Amazon stock, projecting that this year’s Prime Day event will result in $7 billion in revenue. Amazon improved its infrastructure and implemented strategies to improve performance and customer satisfaction. Amazon shares fell 1.1% on Thursday. Wall Street is generally bullish on Amazon shares, with most analysts recommending a buy.
Carnival (NYSE:CCL) – Jefferies raised its rating on Carnival to “Buy” and raised the share price target from $9 to $25. equity expansion plans will boost the company’s performance. Despite the strong performance so far, it is believed that there is still potential for long-term growth. Carnival shares are up 113% this year.
Nvidia (NASDAQ:NVDA) – Daiwa analysts upgraded Nvidia’s stock rating to “Outperform” from “Neutral” and raised the price target to $475 from $408 previously, according to the fly report. In the year 2023, Nvidia shares accumulate a 179% appreciation.
FREYR Battery (NYSE:FREY) – Shares in FREYR Battery jumped 20% on Thursday after the battery cell production company was elevated by Morgan Stabley to “Overweight” from “Equal Weight”.