China steals the show before US inflation

The S&P 50 and the Nasdaq rallied on Monday to their highest closing levels since April 2022, as investors were hopeful that inflationary pressures would show further signs of easing, supporting the case for a pause in the Fed’s interest rate hikes this week.  The rally has recently widened to include more economically sensitive sectors such as energy and industrials, as well as small-cap shares, as data continues to show a resilient US economy despite higher interest rates.  Elsewhere, in Europe, markets also ended the day higher, with the Euro Stoxx 50 Index rallying by 0.6% driven primarily by China-related names. 

Summary for 13.06.2023 

• Most Asian shares rose this morning tracking strong gains on Wall Street as markets bet that the Federal Reserve will pause its rate hike cycle this week, while an interest rate cut in China also boosted sentiment towards the region. Japanese indices continued to outpace their regional peers, with the Nikkei 225 up 2% to clock fresh 33-year highs, supported chiefly by high-value technology shares. 
• European shares are set to advance on hopes the Fed will put it’s tightening campaign on pause this week. Meantime, contracts for US benchmarks were also slightly higher after the S&P 500 and the Nasdaq overnight closed at the highest levels since April 2022 
• Oil prices rose on Tuesday, recovering a measure of steep losses from the prior session, although caution ahead of upcoming US inflation data and the conclusion of a Federal Reserve meeting kept markets on edge. 

• China’s central bank lowered a short-term lending rate for the first time in 10 months this morning, in a bid to restore market confidence and prop up a stalling post-pandemic recovery in the world’s second-largest economy.  The People’s Bank of China cut its seven-day reverse repo rate by 10 basis points to 1.90% from 2.00% on Tuesday, when it injected the equivalent of $279.97 million through the short-term bond instrument. 
• British chip designer Arm, backed by SoftBank Group, is in talks with potential strategic investors including Intel to anchor what will be one of the largest initial public offerings of the year.  Arm is looking to raise as much as $10 billion in its listing in New York later this year.  Shares of SoftBank rose more than 7% this morning in Tokyo. 
• After the bell yesterday, Oracle climbed 3.5% following its quarterly report.  In Monday’s session, it rose as much as 7% to an all-time high after J.P. Morgan hiked its price target.  Oracle announced adjusted EPS of $1.67 on revenue of $13.84 billion.  Analysts had anticipated an average EPS of $1.58 on revenue to $13.74 billion.  The bottom line was boosted by strong revenue growth in its cloud business.  
• Nasdaq Inc slumped almost 12% during Monday’s session after the exchange operator said it would buy software firm Adenza for $10.5 billion, which analysts called an expensive bet. 
• Biogen was up 1.5% during Monday’s session after a US FDA panel of advisers unanimously backed its Alzheimer’s drug, Leqembi, raising expectations that a traditional approval for the treatment might not come with major new safety warnings. 

• Broadcom Inc jumped 6.3% after Reuters reported the chipmaker was set to gain conditional EU antitrust approval for its $61 billion proposed acquisition of cloud computing firm VMware.  That helped lift the Philadelphia semiconductor index by 3.3%, bringing its recovery in 2023 to over 44%