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Wednesday 01 May 2024 5:38 am
FTSE 100 today: London stocks to stay subdued in light trading as Asia and Europe mark Labour Day holidays
Moving markets today: Asian equities mixed following Wall Street’s worst month since September; oil prices drop, gold stays subdued, Starbucks, AMD, and Supermicro shares decline; focus shifts to US Fed policy decision and Powell’s speech
US stocks had their worst month in seven months, while Treasury yields rose to their highest in five months amid concerns about slowing growth and persistent inflation. Asian markets were mixed following Wall Street’s poor performance. In Asia and Europe, markets closed for Labor Day. Oil prices fell for the third day due to increased US crude inventories. Gold prices remained subdued ahead of the Fed’s rate decision. Starbucks saw a drop in shares due to disappointing results and lower sales in China. AMD’s projection for AI chip revenue disappointed, causing a 7 per cent share decline. Super Micro’s stock, which had surged significantly since the start of the year, plummeted by over 10 per cent in after-hours trading. Japan’s factory activity contracted at a slower pace in April. Investors are now focused on the US central bank’s monetary policy decision and Fed Chair Jay Powell’s remarks. Here are five key takeaways for your day.
Starbucks stocks plunge as results fall short and China sales decline
Starbucks faced weaker results in its latest quarter, largely due to declining sales in China, its main growth market. This led to a significant drop of 10 per cent in the company’s shares during after-hours trading.
Globally, comparable store sales, a crucial industry metric, fell by 4 per cent compared to the previous year. In China specifically, the decline was even steeper at 11 per cent, as customers spent less and made fewer transactions.
AMD’s AI chip revenue projection disappoints, prompting 7 per cent share plunge
US chip designer AMD has offered conservative guidance for the ongoing quarter, forecasting revenue between $5.4 billion and $6 billion, in line with consensus estimates at the midpoint. The company’s sales and profits in the previous quarter both outpaced expectations slightly.
Advanced Micro Devices (AMD) saw its stock drop by almost 7 per cent to $147.43 in after-hours trading on Tuesday.
On the other hand, Super Micro Computer, a company specializing in server manufacturing, has revised its sales forecast for the full year upwards, indicating a surge in demand for AI chips. Teaming up closely with Nvidia, the company now anticipates sales ranging between $14.7 billion and $15.1 billion for the fiscal year ending in June, surpassing analysts’ projections of $14.6 billion.
In the latest quarter, Super Micro witnessed a remarkable 200 per cent increase in revenue compared to the same period last year, reaching $3.85 billion, although slightly below consensus estimates. Nevertheless, earnings per share exceeded expectations, rising by 15 per cent to $6.65 per share.
Super Micro’s stock, which has seen a remarkable increase of more than threefold since the start of the year, took a sharp downturn of over 10 per cent, dropping to $772 in post-market trading.
Japan’s factory activity slows its decline in April
Japan’s factory activity declined at a slower pace in April compared to previous months, according to a private survey. The final au Jibun Bank Japan manufacturing purchasing managers’ index (PMI) for April rose to 49.6 from March’s 48.2, though slightly lower than the initial estimate of 49.9. Despite remaining below the 50.0 threshold indicating expansion, it marked the slowest contraction in eight months.
What’s on the radar
The financial world is buzzing with anticipation over the imminent decision from the US Federal Reserve regarding interest rates, slated to be revealed later today. However, the prevailing expectation is that the Fed will likely maintain its current stance, given that inflation isn’t decreasing as rapidly as initially forecasted.
Some economists are now floating the possibility of a rate cut later in the year, potentially post the US presidential election in November.
All eyes will be on the insights shared during Fed Chair Jay Powell’s press conference following the meeting.
Additionally, a slew of economic data is on the horizon, including new employment figures from the US on Friday and international comparisons of manufacturing purchasing managers’ index (PMI) figures.
Most Asian markets will be shuttered on Wednesday due to the Labor Day holiday. The same goes for financial markets in China, Germany, and Ireland. Meanwhile, in the UK, mortgage lender Nationwide is gearing up to release its house price index for April. Across the Channel, there are no major releases scheduled.
As for earnings, several companies like DoorDash, Mastercard, and Qualcomm are gearing up to unveil their quarterly reports.
Asia-pacific equities mixed after Wall Street wraps up worst month since September
US stock markets took a hit, with the Dow Jones Industrial Average dropping by 1.49 per cent to 37,815.92, the S&P 500 losing 1.57 per cent to 5,035.69, and the Nasdaq Composite declining by 2.04 per cent to 15,657.82.
All 11 sectors within the S&P 500 saw declines, particularly in energy, consumer discretionary, materials, industrials, and technology.
Major companies like Tesla, Alphabet, Nvidia, Microsoft, and Amazon all ended lower, except for Amazon, which saw a 3.1 per cent increase in after-hours trading after reporting better-than-expected first-quarter results.
In Asia, Japan’s Topix index fell by 0.8 per cent, led by losses in the semiconductor sector, with Tokyo Electron Device experiencing a significant drop. On the other hand, South Korea’s Kospi index inched up by 0.2 per cent. The yen weakened against the offshore renminbi, hitting a record low, and against the dollar, settling at ¥157.82 after a volatile start to the week.
Hong Kong’s stock market remained closed for the Labor Day holiday, and mainland Chinese markets stayed shut for the entire week.
Oil prices continued their downward trend for the third consecutive day, driven by rising crude inventories and production in the US, as well as hopes for a ceasefire in the Middle East. Brent crude futures for July dropped by 0.82 per cent to $85.62 per barrel, while US West Texas Intermediate crude for June fell by 0.96 per cent to $81.14 per barrel.
Gold prices struggled for momentum as investors awaited the US Federal Reserve’s policy decision, which could offer clues about future interest rate adjustments. Spot gold remained relatively unchanged at $2,288.14 per ounce, rebounding slightly from a 2 per cent drop the previous day, its lowest level since April 5.
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