Nvidia, megacaps comeback power market recovery

On Tuesday, the S&P 500 and Nasdaq rebounded, halting a three-day decline with gains of 0.4% and 1.2% respectively, while the Dow dropped 296 points. Tech stocks, including Nvidia (+6.7%), led the recovery despite Microsoft facing EU antitrust charges. Apple, Amazon, Meta, and Alphabet also rose. In Europe, the Stoxx 50 slipped 0.3% due to Airbus's 10% decline after revising financial targets and announcing a €900 million charge for its space activities.

Summary for 26.06.2024

Asian equities mostly rose on Wednesday, led by tech sector gains. Japan's Nikkei 225 increased by 0.9%, and South Korea's KOSPI by 0.3%, driven by chipmakers like Advantest and SK Hynix. Australian shares dropped 1% as high inflation raised interest rate hike concerns. Chinese markets fell 0.4% amid trade tensions, while Indian markets showed optimism.

European equity markets are heading for a positive open while US equity futures were steady on Wednesday as investors awaited earnings from General Mills and Micron Technology, and the US PCE inflation gauge on Friday, following gains in tech shares and significant surges in Rivian and FedEx.

Oil prices dipped slightly in Asian trade on Wednesday, extending previous losses due to concerns over global demand and an unexpected build in US inventories. Despite recent geopolitical tensions boosting prices, fears of high US interest rates and a strong dollar limited gains.

Australian CPI rose by 4.0% year-on-year in May, up from 3.6% in April and above forecasts. The increase was driven by higher transport, fuel, and housing costs. Inflation also rose for clothing, footwear, alcohol, and tobacco, while easing for communications and food. Core inflation eased slightly to 4.0% but remained above the RBA's 2-3% target range. The high inflation rate raises concerns that the Reserve Bank of Australia will maintain a hawkish stance.

FedEx shares surged by almost 14% in extending trading yesterday after surpassing Q4 earnings expectations with an EPS of $5.41 and $22.1 billion in revenue. The strong performance is attributed to strategic initiatives like the DRIVE program, which aims for $2.2 billion in cost reductions. FedEx forecasts an EPS of $20.00 to $22.00 for fiscal 2025.

Volkswagen plans a significant investment of up to $5 billion in Rivian Automotive, aiming to establish a joint venture focused on electric vehicle architecture and software development. This strategic partnership is set to enhance Volkswagen's EV capabilities and global reach, pending regulatory approvals and technical feasibility reviews.

Microsoft is facing an EU antitrust fine over accusations of unfairly tying its Teams app with Office, following a complaint from Slack. The European Commission claims Teams' bundling hindered competition, seeking remedies like selling Office without Teams at a lower price. Microsoft's efforts to separate Teams globally may not fully satisfy regulators' concerns.

Carnival Corp raised its 2024 profit forecast to approximately $1.18 per share, up from 98 cents, citing strong booking momentum and record customer deposits of $8.3 billion. Despite high debt levels and increased cruise costs, Carnival benefits from robust demand and higher ticket prices driven by strong booking volumes for 2025 sailings.

LVMH, continues to bolster its presence in luxury markets with strategic moves. Alongside acquiring Swiss clock maker L'Epee 1839 to enhance its high-end watchmaking capabilities, LVMH has also acquired a stake in Richemont, owner of Cartier, underscoring Bernard Arnault's interest in prestigious jewellery brands. Despite chairman Johann Rupert control over Richemont's voting rights, Arnault's acquisitions reflect LVMH's strategy to expand into experiential luxury amidst a slowdown in the luxury market.

Boeing has reportedly offered to acquire Spirit AeroSystems for about $4.08 billion, primarily funded by equity valued at around $35 per share. This represents a nearly 6% premium over Spirit's recent share price and a 22.4% increase from its February closing price. Talks are nearing completion with an announcement expected soon.

DoorDash Inc, a prominent US meal delivery company, reportedly approached Deliveroo Holdings, a leading British food delivery service listed in London, last month for a potential acquisition. However, talks stalled due to valuation disagreements. Currently, there are no active negotiations between the two companies.

Novo Nordisk has gained approval for its weight-loss drug Wegovy in China, targeting a market grappling with rising obesity rates. Despite potential legal challenges over its patent, Novo anticipates launching Wegovy soon, initially focusing on patients willing to pay out-of-pocket. The company faces competition from Eli Lilly in expanding production to meet global demand, bolstered by a new $4.1 billion US facility.

Lufthansa will impose an environmental charge of up to €72 on flights departing from EU countries, Britain, Norway, and Switzerland, effective from January 2025. The charge aims to offset rising costs associated with new EU regulations mandating sustainable aviation fuel, amid concerns over increased ticket prices impacting travel demand.

Stifel initiated coverage on Tesla with a Buy rating and a $265 price target, citing strong growth prospects driven by upcoming vehicle releases and the potential of its AI-based Full Self-Driving technology. They highlighted Tesla's leadership in the EV market, robust technology portfolio, and global manufacturing capabilities, despite acknowledging short-term risks.

JPMorgan analysts are optimistic about Micron Technology, expecting robust performance despite the Taiwan earthquake's impact on near-term revenues. They anticipate strong growth driven by Nvidia's HBM ramp and rising prices for DRAM and NAND memory, projecting gross margins to exceed expectations. JPMorgan suggests Micron's shares could reach around $200 amid a bullish earnings outlook.

Commerzbank rates Mastercard's shares as a "strong buy" due to its robust growth potential driven by global electronic payment trends. They highlight its strong international presence, significant service revenues, and defensive qualities in economic slowdowns. Despite risks like economic fluctuations and legal issues, Commerzbank sets a price target of $555.00, implying a 21.5% potential return from current levels.

Goldman Sachs initiated coverage on major US media companies, highlighting Walt Disney and Fox Corporation with Buy ratings for their strong sports and news focuses. Comcast also received a Buy despite cable challenges, while Paramount Global was rated Sell due to reliance on general entertainment. Warner Bros. Discovery and Stagwell Inc earned Neutral ratings amid varied industry outlooks.

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