Chipmakers Fuel Gains in Stocks, Oil Fluctuates: Markets Wrap
(Bloomberg) — Technology stocks lifted equity markets after SK Hynix Inc. drew strong demand ahead of its US listing. Oil fluctuated as traders debated whether the escalation between the US and Iran may lead to a return to war.
S&P 500 futures rose 0.2%. Semiconductor stocks advanced in Asia, Europe and US premarket trading, with SK Hynix’s sale of American depositary receipts more than seven times oversubscribed. The deal would raise about $24.5 billion for the memory giant, Bloomberg calculations showed. Nasdaq 100 contracts climbed 0.8%.
Brent crude, meanwhile, traded about 0.7% higher near $78.60 a barrel after swinging between gains and losses. The uncertainty comes amid renewed fighting in the Middle East, threatening prospects for a lasting US-Iran deal.
The US military hit about 90 Iranian targets Wednesday to degrade Tehran’s ability to attack commercial shipping in the Strait of Hormuz. Strategists said the tensions reflect the fragile nature of the truce between the sides, but were questioning whether they would want to return to a full-scale conflict.
“Near term, we think that we will get some version of a deal, even if it’s a fudge, that would enable oil to flow,” noted Mohit Kumar, chief economist and strategist for Europe at Jefferies International. “Medium term, tensions may flare up again.”
Global bonds were modestly higher. The yield on two-year Treasuries eased two basis points to 4.20%. The dollar was little changed.
After Wednesday’s minutes of the Federal Reserve’s June meeting showed that some committee members saw a case for a rate increase, traders will now wait for next week’s inflation data and Chair Kevin Warsh’s testimony to lawmakers for another steer on the path for interest rates. New York Fed President John Williams will take part in a moderated discussion later on Thursday.
“The only reason the July meeting wasn’t live was because oil prices were basically where they started the war,” Bob Elliott, chief investment officer at Unlimited Funds, told Bloomberg TV. “That’s changed. The conflict in Iran and the Hormuz problem has not really been resolved.”
PepsiCo Inc. narrowly missed estimated for second-quarter organic sales growth as the earnings season for the June quarter got underway. Levi Strauss & Co. fell 6% in premarket trading after raising its full-year forecast less than investors expected.
After a blistering second-quarter rally in chipmakers, massive spending commitments are set to sustain the investment theme around artificial intelligence for two to three years, according to BlackRock Inc.’s Helen Jewell. This will happen even as tech giants gradually turn cash-flow negative and start raising debt to fund their buildouts.
“From an investment perspective, you lean into the AI theme, you do the secondary beneficiaries of that, but you need to diversify those portfolios,” Jewell told Bloomberg TV. “Healthcare, Latam, even the UK.”
Corporate News:
Meta Platforms Inc. plans to start manufacturing its AI chip in September, Reuters reports, citing an internal memo from the company. SK Hynix Inc.’s US listing is more than seven times oversubscribed, according to people familiar with the matter, as the South Korean memory chipmaker prepares to price its offering Thursday. AstraZeneca and Ionis Pharmaceuticals Inc.’s gene silencer drug Wainua failed to help prevent heart problems in patients with a rare and potentially fatal disease of the organ. AstraZeneca’s shares slumped. Porsche AG deliveries slumped 16% in the first half, dragged down by weak demand in its biggest market of North America and a decline of nearly a third in China, adding to the gloom enveloping Germany’s autos sector. Deutz AG agreed to buy military vehicle maker Flensburger Fahrzeugbau Gesellschaft mbH for €1.6 billion ($1.8 billion), expanding further into the defense sector to benefit from Europe’s rearmament drive. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 7:58 a.m. New York time Nasdaq 100 futures rose 0.8% Futures on the Dow Jones Industrial Average were little changed The Stoxx Europe 600 rose 0.3% The MSCI World Index rose 0.1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1429 The British pound was unchanged at $1.3389 The Japanese yen was little changed at 162.48 per dollar Cryptocurrencies
Bitcoin rose 1.1% to $62,730.16 Ether rose 0.5% to $1,743.03 Bonds
The yield on 10-year Treasuries was little changed at 4.59% Germany’s 10-year yield advanced two basis points to 3.11% Britain’s 10-year yield declined three basis points to 4.95% Commodities
West Texas Intermediate crude rose 0.7% to $74 a barrel Spot gold rose 0.8% to $4,108.05 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Cecile Gutscher.
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