The S&P 500 gained 0.25% on Tuesday, achieving a second consecutive record close, driven by a surge in Nvidia shares, while the Nasdaq marked its 7th straight record and the Dow rose 56 points. Investors monitored economic data and Fed comments, with mixed signals on retail sales and industrial production. In Europe, the Stoxx 50 rose 0.8%, led by ASML Holding and UniCredit, while megacaps like LVMH and L'Oréal fell.

Summary for 18.06.2024

Asian equity markets mostly rose on Wednesday, following Wall Street gains driven by Nvidia's rally. Japanese exports exceeded expectations, boosting sentiment despite a dip in manufacturing confidence. Shares in Australia, Japan, South Korea, and Hong Kong advanced, while Chinese equities declined amid concerns over higher material and import costs.

With US markets closed for the Juneteenth National Independence Day today, trading activity is expected to be subdued, particularly in European markets. Investors are likely to focus on regional economic data and global geopolitical developments influencing sentiment amid the lack of major cues from Wall Street.

Oil prices rose slightly this morning due to concerns over escalating conflicts in Europe and the Middle East, despite demand worries following an unexpected increase in US crude inventories. Both benchmarks had gained over a dollar in the previous session after a Ukrainian drone strike caused an oil terminal fire in Russia.

US retail sales edged up 0.1% in May 2024, below the 0.2% forecast, indicating cooling consumer sentiment. Notable increases were in sporting goods (2.8%), clothing (0.9%), and motor vehicles (0.8%), while sales at gasoline stations fell 2.2%. Excluding gasoline, sales rose 0.3%, and GDP-related sales rose 0.4%.

In May, the Euro Area's annual inflation rate increased to 2.6% from 2.4%, driven by rebounding energy prices and accelerated services inflation. Major economies like Germany, France, and Spain saw varying inflation trends, while Italy experienced a slight decrease. Meanwhile, Malta's inflation eased slightly to 2.3%, with moderated price increases across sectors and a decrease in clothing and communication costs, alongside a monthly inflation decrease to 1.6%.

Mohamed El-Erian argues for the Federal Reserve to initiate interest rate cuts promptly, emphasising that the timing of the first cut is crucial for shaping the overall impact on the economy. Delaying could necessitate more aggressive cuts later, risking economic stability and growth, akin to past policy missteps.

Nvidia surged to become the world's most valuable company, surpassing Microsoft and Apple, with a market capitalisation reaching $3.335 trillion. Fuelled by strong demand for its AI processors, Nvidia's shares have nearly tripled this year, though concerns about supply constraints and market volatility accompany its meteoric rise.

Apple has reportedly paused development on its high-end Vision headset amid concerns over slowing sales of the $3,500 device. Instead, the company is shifting focus to a more affordable model expected by late 2025. Apple aims to expand sales of the existing Vision Pro into new markets, including China and Japan.

Qualcomm agreed to a $75 million settlement in a class-action lawsuit accusing the company of deceiving shareholders about anticompetitive practices. The lawsuit claimed Qualcomm inflated its share price by misrepresenting its chip sales and licensing as separate entities. Qualcomm and former executives deny wrongdoing but agreed to settle pending court approval.

Ferrari plans to launch its first electric car priced at around €500,000, aiming to boost production by up to 30% with a new plant in Maranello. The move underscores confidence in wealthy clientele despite competitors slashing EV prices. A second EV model is in development as Ferrari expands beyond traditional luxury sports cars.

Stellantis is recalling 1.16 million vehicles in North America due to software issues preventing rearview cameras from displaying, which could increase crash risk. The recall affects various models including Dodge, Chrysler, Jeep, and Ram vehicles from 2021-2023, with over-the-air updates already applied to a significant portion of affected vehicles.

Bernstein analysts are optimistic about the semiconductor sector's 2024 prospects, driven by memory market recovery, strong PC and smartphone demand, and AI growth. They favour Broadcom and NVIDIA for their AI exposure, view Qualcomm positively in smartphones, but hold cautious views on analog chipmakers due to valuation concerns.

Rosenblatt Securities raised Nvidia's price target to $200, marking a new Wall Street high. They emphasised the potential of its Hopper, Blackwell, and Rubin series to capture market share and highlighted the pivotal role of software enhancements in driving hardware capabilities. Analysts foresee Nvidia achieving $5.00 EPS by 2026, supporting a higher valuation.

JPMorgan analysts raised Apple's price target to $245, driven by anticipated EPS growth from an AI-focused iPhone upgrade cycle spanning from the iPhone 16 to 17, with projected volumes of 250 million in 2025 and 275 million in 2026. Meanwhile, Phillip Capital downgraded Apple to Neutral despite increasing their target to $220, highlighting strong demand prospects fuelled by Apple Intelligence innovations at WWDC.

Morgan Stanley raised Taiwan Semiconductor's price target to NT$1,080, citing increased demand for AI semiconductors driven by Apple's new AI strategy. Despite potential margin pressures and short-term sales challenges, TSMC is expected to benefit from Apple's expanding use of its chips, including future advancements in server-based AI models.

Stifel maintained a Buy rating and $200 price target for AMD despite recent underperformance compared to Nvidia and broader market concerns. Analysts cited optimism in AMD's potential growth from AI infrastructure investments, x86 CPU market share gains, and an anticipated AI-driven PC refresh cycle, supporting their bullish outlook.

Wedbush analysts reaffirmed an Outperform rating on Micron, raising their target price from $130 to $170 ahead of the company's earnings report next week. They anticipate continued strong performance due to ongoing undersupply in memory chips, driven by limited investment in new technologies like NAND and DDR5, boosting ASPs, revenues, margins, and EPS.

Needham & Company raised Reddit's price target to $75 from $63, maintaining a Buy rating. The firm cited strong advertising fundamentals, exceeding user additions, and slower-than-expected cost growth. Expectations are bolstered by Reddit's data licensing revenues, including a new deal with OpenAI, set to enhance revenue and free cash flow from Q3 2024 onward.

Barclays analysts believe recent declines in French shares like BNP Paribas, Edenred, Veolia, Vinci, and Sanofi may be overstated amidst political uncertainty. They rate these equities "overweight" with targets: BNP Paribas at €80, Edenred at €61, Veolia at €38, Vinci at €140, and Sanofi at €105, suggesting buying opportunities. Telecoms Orange and Bouygues are deemed more vulnerable due to their heavy reliance on the French market.

A US official urged Japan and the Netherlands to strengthen restrictions on semiconductor equipment exports to China, aiming to limit Chinese military modernisation efforts. Discussions involve expanding lists of restricted Chinese chipmaking facilities and controlling additional equipment, despite challenges in halting servicing contracts in China by firms like ASML.

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