Both US and European shares closed at new highs on Wednesday. The S&P 500 and Nasdaq advanced 1% and 1.2%, respectively, driven by Nvidia and major tech shares, while the Dow surged 429 points. Traders bet on a September rate cut following Jerome Powell's comments on economic cooling. In Europe, the Stoxx 50 rose 1.2% to 4,960, led by gains in auto producers like Stellantis and BMW, and strong performances in banks such as Santander and BNP Paribas.

Summary for 11.07.2024

Asian equities rose on Thursday, buoyed by tech shares on the back of robust earnings from TSMC. Regional markets mirrored gains from Wall Street, bolstered by Fed Chair Powell's indications of upcoming rate cuts. Japan's Nikkei 225 achieved a record high, with broader markets also advancing amid optimism surrounding potential US rate reductions.

European and US equity futures held steady this morning as investors awaited key inflation data, potentially confirming expectations for a September Federal Reserve rate cut.

Oil prices rose in Asian trade on Thursday, supported by a weaker dollar and an unexpected draw in US oil inventories. However, optimism was tempered by a rise in US distillate inventories and weak inflation data from China. Traders anticipate tighter US markets due to ongoing summer travel and potential disruptions from hurricane Beryl.

President Joe Biden encountered growing opposition from within his own party on Wednesday, with a Senate Democrat joining House lawmakers in urging him to resign. Though influential party members have not yet abandoned him en masse, these calls underscore the precariousness of Biden's political standing.

Costco Wholesale announced its first membership fee hike in seven years, effective 1st September, raising fees by $5 to $65 for "gold star" and business members, and to $130 for executive members. The move, affecting 52 million members, aims to boost revenues and was welcomed by investors, with shares rising 2.5% in extended trading.

Apple Inc plans to ship at least 90 million units of its iPhone 16 in the latter half of 2024, aiming for a 10% growth over iPhone 15 shipments in 2023. The tech giant is banking on AI features to stimulate demand, despite facing competitive challenges from rivals like Samsung and Xiaomi, and projected revenue dips.

Samsung launched its latest foldable smartphones, the Galaxy Z Fold 6 and Galaxy Z Flip 6, featuring upgraded AI capabilities and advanced health monitoring features. Complementing these releases, Samsung introduced the Galaxy Ring, priced at $399, which monitors heart rate and stress levels and can be worn continuously during activities such as swimming, integrating seamlessly with Samsung phones for enhanced control functionalities.

AMD shares rose more than 3% on Wednesday following its announcement of acquiring Silo AI for approximately $665 million in cash. This acquisition is integral to AMD's strategy in AI, leveraging Silo AI's expertise in developing advanced AI models on AMD platforms. Silo AI's capabilities will enhance AMD's ability to deliver comprehensive AI solutions globally, marking a significant expansion in AI computing.

Porsche AG's shares surged 3.9% yesterday after positive brokerage notes following an investor call. Analysts highlighted sequential margin improvement and better cash conversion in Q2, suggesting resilience in luxury car margins amid challenges in China. Goldman Sachs reaffirmed a "buy" rating, expecting normalised performance after Q1 disruptions with model transitions.

Taiwan Semiconductor Manufacturing reported a robust second-quarter revenue of NT$673.5 billion, exceeding expectations with a 40% growth driven by strong demand for AI chips. This performance helped TSMC's US-listed shares climb 3.5% in yesterday’s trading to a new record high of $191.05, highlighting its resilience amid geopolitical tensions and recovery in smartphone sales.

An analysis of pharmacy claims in the US revealed that only 25% of patients prescribed Novo Nordisk's Wegovy or Ozempic for weight loss remained on the medications after two years. Reasons for discontinuation include side effects, cost concerns, and supply shortages, raising questions about the long-term effectiveness and cost-effectiveness of these treatments.

Baidu's US listed shares surged by over 11% over the past two days, driven by optimism surrounding its Apollo Go autonomous-driving initiative amid anticipated policy developments in China favouring robotaxis. Analysts foresee potential profitability by 2025 due to scale benefits and lower operational costs.

Needham & Company raised Apple's price target to $260, citing a $110 billion buyback plan and potential in an advertising business. They express concern over Apple's single-digit revenue growth risk, proposing entry into the advertising market, which could significantly boost revenue and margins without raising device prices.

Needham & Company also upgraded Carvana to Buy from Hold, setting a price target of $160 per share. Analysts foresee robust growth prospects driven by increased retail unit sales and enhanced profitability metrics. They anticipate Carvana leveraging its digital-first approach and expanding its physical footprint effectively, positioning it as a profitable growth story in the automotive retail sector.

KeyBanc analysts upgraded Netflix and Spotify, citing positive outlooks driven by strong content and growth potential. For Netflix, they anticipate robust earnings supported by pricing power and subscriber stability. They raised the price target to $735. For Spotify, despite short-term challenges, they see underestimated long-term revenue and margin potential, setting a new target of $410.

Bank of America downgraded Visa and Mastercard from Buy to Neutral, citing limited upside potential in their valuation multiples and estimates despite their strong business models. The analysts highlighted concerns over crowded investor positioning, regulatory risks, and macroeconomic impacts, while acknowledging the companies' pivot towards new revenue streams amid varying growth challenges.

Morgan Stanley increased its valuation of Tesla's energy storage business to $50 per share as part of a $310 price target, attributing this rise to anticipated global demand growth in energy, bolstered by advancements in artificial intelligence. The brokerage suggested that Tesla Energy's profitability potential could outpace its auto segment, even as it adjusted down its projections for 2030 vehicle sales.

Nomura downgraded Super Micro Computer to Neutral from Buy, citing limited potential for share price appreciation despite strong performance in previous quarters. They highlighted uncertainties around supply easing and GPU transitions, though they acknowledged SMCI's competitive edge in liquid cooling solutions and expectations of stable gross profit margins.

Morgan Stanley upgraded IAG to Overweight from Underweight, citing improved capacity growth that supports pricing, particularly in the North Atlantic and broader network. They anticipate a 7% EBIT growth rate for FY24 to FY26, with potential for higher margins to drive a 14% CAGR if targets are met, emphasizing British Airways' margin turnaround potential.

Barclays analysts foresee Big Tech maintaining its dominant role in the upcoming Q2 earnings season, with expected EPS expansion of nearly 32% compared to 3.3% for the rest of the S&P 500. They anticipate continued strong performance despite a projected slowdown in year-over-year growth, while noting potential market volatility in Q3.

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