On Friday, the S&P 500 and Nasdaq 100 dipped 0.1%, while the Dow saw a slight increase. Tech equities, including Nvidia, fell sharply, while Apple declined due to EU regulatory concerns. Amazon lifted the consumer discretionary sector with a 1.6% rise, and Alphabet gained 1.4%. Strong S&P PMI data countered fears of an economic slowdown. Meanwhile, European equities, represented by the Stoxx 50, closed 0.7% lower with ASML and banks like Santander and BBVA leading losses, while Carlsberg dropped significantly on a failed takeover bid by Britvic.

Summary for 24.06.2024

Most Asian shares fell on Monday, led by Chinese markets due to fears of a trade war with the EU. Chinese shares, including Hong Kong, suffered losses, while Japan's markets saw modest gains. Broader Asian markets were flat to low, with investors eyeing key US inflation data for interest rate cues.

European markets are set to start the week in mixed territory while US equity futures eased as investors awaited fresh catalysts, with attention on PCE inflation data and upcoming earnings reports from the likes of FedEx, Micron Technology and Nike.

Oil prices fell in Asian trade this morning due to a stronger dollar and profit-taking after recent gains. The market is focused on US inflation data, with expectations of sustained high rates impacting the dollar and oil demand. Prices had seen two weeks of gains driven by improved demand and geopolitical risks.

China urged the EU to scrap provisional tariffs on Chinese EVs by 4th July, following an agreement for new trade talks. The EU plans duties of up to 38.1% while investigating alleged subsidies. China warned of countermeasures, emphasising negotiation to avoid a tariff war and potential "lose-lose" outcomes.

Foreign direct investment (FDI) into China fell 28.2% year-on-year to CNY 412.5 billion in January-May 2024. High-tech manufacturing received CNY 50.41 billion, up 2.7 points. Investment in smart consumer equipment and technical services surged. German and Singaporean FDI rose 24.2% and 16.2%. May FDI dropped to CNY 52.3 billion from April's CNY 58.5 billion.

US Existing home sales dropped 0.7% month-on-month in May to 4.11 million units, the lowest in four months, slightly above forecasts. Median sales prices surged to a record $419,300, contributing to a widening gap between property owners and potential first-time buyers. Increased inventory may alleviate price pressures in the future, according to NAR Chief Economist Lawrence Yun.

Meta Platforms is reportedly in discussions with Apple to integrate its generative AI model into Apple's new AI system for iPhones. This move is part of Apple's broader strategy to incorporate technologies from various AI companies, potentially including Alphabet's Google. Discussions with other AI firms like Anthropic and Perplexity are also underway to enhance Apple's AI offerings.

Eli Lilly announced on Friday that its popular weight-loss drug Zepbound helped resolve moderate to severe obstructive sleep apnea in up to 52% of patients in two late-stage trials. The drug, known chemically as tirzepatide, showed significant reductions in sleep apnea symptoms and related biomarkers, pending FDA approval with global submissions expected soon.

Apple will postpone the launch of three new artificial intelligence features—Phone Mirroring, SharePlay Screen Sharing enhancements, and Apple Intelligence—in the EU due to regulatory uncertainties stemming from the EU's Digital Markets Act (DMA). The company cited concerns about compromising user privacy and data security under the act's interoperability requirements.

Amazon is reportedly considering a significant overhaul of its decade-old Alexa service, aiming to integrate conversational generative AI with two service tiers. According to Reuters, the revamped voice assistant, internally named "Banyan" and dubbed "Remarkable Alexa," may include a premium version with a monthly fee around $5. CEO Andy Jassy is driving the initiative to rejuvenate Alexa by August, promising enhanced capabilities.

ByteDance is collaborating with US chip designer Broadcom to develop a 5nm AI processor, outsourcing manufacturing to Taiwan's TSMC. This partnership aims to secure a stable supply of high-end chips amid US-China tensions and export restrictions, crucial for ByteDance's AI advancements across its apps, including TikTok.

Britvic plc, a prominent British soft drinks producer listed on the London Stock Exchange, rejected two acquisition offers from Carlsberg, including a cash bid of £12.50 per share, valuing the company at approximately £3.1 billion. Britvic, known for brands like Robinsons and Tango, and licensed PepsiCo and 7UP, deemed the proposals undervalued, leading to a notable 7% rise in its share price to £10.83 amidst anticipation of a potential improved offer before the July 19 deadline.

CarMax reported a 33% decline in first-quarter profit, attributing it to lower vehicle margins amid increased competition from new car offers and trade-in deals. Revenue fell short of expectations, with used vehicle sales declining 5.4%. The company cited ongoing affordability challenges for consumers due to inflation, higher interest rates, and tightened lending standards.

Linda Yaccarino, CEO of social media platform X, has made significant leadership changes under pressure from owner Elon Musk to improve sales and reduce costs. She dismissed Joe Benarroch, head of business operations and communications, with Nick Pickles assuming expanded responsibilities amid tensions and financial challenges at X.

Bank of America analysts upgraded European auto and airline shares from Underweight to Marketweight due to recent underperformance since mid-April, despite maintaining a negative outlook on European equities overall. They anticipate a slowdown driven by weakening US consumption and easing inflation, suggesting defensive sectors may fare better amid rising equity risk premia.

Mizuho analysts praised Adobe Systems as a "true AI winner," citing underappreciated potential in its AI technology and room for significant growth. They highlighted Adobe's strategic use of AI across products like Firefly and its recent strong performance as catalysts for renewed investor interest, maintaining a Buy rating with a $640 price target.

Citi analysts upgraded Microsoft's price target to $520 from $495, maintaining a Buy rating. They view recent OpenAI developments positively for Azure's growth but believe consensus models might underestimate losses from Microsoft's OpenAI stake in non-operating expenses, potentially impacting EPS estimates by $0.04-$0.05 in upcoming quarters.

Baird analysts raised their Amazon price target to $213, citing potential margin pressures at AWS due to increased expenses supporting new infrastructure and lower-margin GenAI workloads. They foresee North American Retail margins returning to low single digits and expect International Retail to achieve profitability within 2-3 years, while advertising continues to provide strong margin support.

Oppenheimer upgraded Nike to Outperform from Perform, increasing its price target for the equity to $120 from $110 per share. The investment firm acknowledged recent challenges but believes Nike's valuation and near-term financial outlook have stabilised. They anticipate a gradual rebound driven by leadership's focus on product innovation and brand-building efforts.

Deutsche Bank strategists predict a potential pullback for the S&P 500, citing high equity positioning nearing historical highs, prolonged fund inflows indicating excessive risk appetite, and an upcoming buyback blackout period. They previously accurately forecasted a market pause in April, noting a subsequent 4.6% decline in the index.

In the upcoming week, key US data focuses include PCE Prices, personal income and spending, Q1 GDP growth, durable goods orders, home sales, consumer confidence, and Fed speeches. Globally, interest rate decisions, inflation rates, and major economic indicators from Germany and Japan will attract attention. Australia's consumer confidence data will also be notable. Elsewhere, the first US presidential debate between Joe Biden and Donald Trump is scheduled toward the end of the week and then the first round of voting in the French legislative elections takes place over the weekend.

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