Tag: World Markets

CNBC Daily Open: Lower rates might hurt banks

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JP Morgan headquarters at Canary Wharf financial district at the heart of Canary Wharf financial district on 6th February 2024 in London, United Kingdom.

Mike Kemp | In Pictures | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Unsteady markets
U.S. markets were mixed on Tuesday. The S&P 500 and Nasdaq Composite rose, buoyed by Oracle’s 10% surge, while the Dow slipped. Asia-Pacific stocks fell Wednesday. Japan’s Nikkei 225 lost around 1.4%, extending its seven-day losing streak. The Japanese yen strengthened to 141.17 against the U.S. dollar, its highest this year.

First Harris-Trump debate
In their first face-to-face meeting, Vice President Kamala Harris met former President Donald Trump for their first — and perhaps only – presidential debate. On the economic front, both candidates clashed over tariffs, fracking and China policy. After the debate, Taylor Swift endorsed Harris on Instagram, and signed off her post as “Childless Cat Lady.”

Tough environment for European companies
China’s environment for businesses is so thorny that European companies have grown discouraged with operating in the country, according to the EU Chamber of Commerce. If European companies were to invest in China further, Beijing must act on its pledges to improve the business conditions, the chamber’s paper wrote.

Big price reports
The U.S. consumer price index for August comes out later today, while the producer price index, which measures prices at the wholesale level, will be released a day later. They’re the last major economic data the Federal Reserve will receive — and hence influence its decision on the size of cuts — before its meeting next week.

[PRO] U.S.-listed global stocks
With the outlook for the U.S. economy looking uncertain, investors can turn their attention to global companies. At the same time, investors may want to stick with the safety of the U.S. stock market. CNBC Pro looked for companies headquartered overseas, but listed in the U.S. – and may experience over 100% upside, according to analysts.

The bottom line

Everyone loves lower interest rates.

As rates fall, borrowing becomes cheaper. For the consumer, that’s most felt in areas like housing; for companies, it tends to boost spending on expansion and investment.

Those acts trigger a virtuous cycle of spending, boosting consumption and growth, which in turns increases employment. The economy loves lower rates too and swells up.

There’s one industry, however, that generally enjoys higher interest rates: banking.

One way banks make money is through the net interest income. That’s the difference between the interest rate they charge on loans and the rate they offer on savings. As rates rise, banks can raise the former, which is a revenue source, while keeping the latter, a cost, low.

With rate cuts looming on the horizon, however, that age of abundance is coming to an end for big banks.

JPMorgan poured cold water on the market’s expectation of around $90 billion for NII in 2025. That number “is not very reasonable” because the Fed will cut rates, said JPMorgan President Daniel Pinto.

If the biggest bank in the U.S. thinks it can’t keep loan rates high, it’s hard to imagine smaller banks can maintain juicy NII of the previous years.

Investors didn’t take JPMorgan’s caution warmly. Its shares lost around 5% and weighed down the Dow Jones Industrial Average, which declined 0.23%.

On the other hand, the S&P 500 rose 0.45% and the Nasdaq Composite added 0.84%.

With rate cuts on the horizon, banks might experience a dip in NII revenue — but many are likely to see revenue and sentiment rise.

– CNBC’s Jeff Cox, Pia Singh and Brian Evans contributed to this story.

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September 10, 2024
CNBC Daily Open: Banks might not love lower rates unconditionally

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JPMorgan signage outside a Chase bank branch in New York, US, on Thursday, Jan. 12, 2023.

Stephanie Keith | Bloomberg | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Clawing back losses
U.S. markets were mixed on Tuesday. The S&P 500 and Nasdaq Composite rose, buoyed by Oracle’s 10% surge and technology stocks recouping some losses, while the Dow slipped. Europe’s Stoxx 600 index lost 0.54%, with autos dropping 3.8% as supplier Continental fell 10.5% and BMW plunged 11.15%.

Big price reports
The U.S. consumer price index for August comes out later today, while the producer price index, which measures prices at the wholesale level, will be released a day later. They’re the last major economic data the Federal Reserve will receive — and hence influence its decision on the size of cuts — before its meeting next week.

Endgame for Basel regulations
The Basel Endgame regulation, introduced in July 2023, was meant to increase capital requirements for big banks by around 19%. On Tuesday, however, a Federal Reserve official announced that regulatory institutions have agreed to resubmit the proposal, reducing the increase in capital requirement to just 9%.

Risk of stagflation
Jamie Dimon, CEO of JPMorgan Chase, said stagflation is a possibility for the U.S. The government’s budget deficit and high spending on infrastructure works are inflationary forces, he said. Separately, JPMorgan shares fell 5.19% after the bank’s president Daniel Pinto lowered expectations for next year’s net interest income.

[PRO] Underwhelming Apple Intelligence
Apple announced new iPhones yesterday. But Wall Street was more focused on the company’s artificial intelligence offerings, given their potential to start an iPhone-upgrade cycle and establish a new source of revenue. Unfortunately, analysts came away underwhelmed.

The bottom line

Everyone loves lower interest rates.

As rates fall, borrowing becomes cheaper. For the consumer, that’s most felt in areas like housing; for companies, it tends to boost spending on expansion and investment.

Those acts trigger a virtuous cycle of spending, boosting consumption and growth, which in turns increases employment. The economy loves lower rates too and swells up.

There’s one industry, however, that generally enjoys higher interest rates: banking.

One way banks make money is through the net interest income. That’s the difference between the interest rate they charge on loans and the rate they offer on savings. As rates rise, banks can raise the former, which is a revenue source, while keeping the latter, a cost, low.

With rate cuts looming on the horizon, however, that age of abundance is coming to an end for big banks.

JPMorgan poured cold water on the market’s expectation of around $90 billion for NII in 2025. That number “is not very reasonable” because the Fed will cut rates, said JPMorgan President Daniel Pinto.

If the biggest bank in the U.S. thinks it can’t keep loan rates high, it’s hard to imagine smaller banks can maintain juicy NII of the previous years.

Investors didn’t take JPMorgan’s caution warmly. Its shares lost around 5% and weighed down the Dow Jones Industrial Average, which declined 0.23%.

On the other hand, the S&P 500 rose 0.45% and the Nasdaq Composite added 0.84%.

With rate cuts on the horizon, banks might experience a dip in NII revenue — but many are likely to see revenue and sentiment rise.

– CNBC’s Jeff Cox, Pia Singh and Brian Evans contributed to this story.

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September 10, 2024
CNBC Daily Open: Did Apple’s shiny new things improve market sentiment?

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New models of the Apple iPhone 16 are displayed after Apple’s “It’s Glowtime” event in Cupertino, California, September 9, 2024.

Nic Coury | AFP | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Broad rebound
U.S. stocks rebounded on Monday after posting huge losses last week. It was a broad rally across assets: Oil prices gained 1% and bitcoin rose 4.42%. Asia-Pacific stocks were mixed Tuesday. The Hang Seng index added 0.42%, with Alibaba shares rising more than 5% after the company was added to Stock Connect. The scheme allows investors in mainland China and Hong Kong to trade and settle shares with each other’s market.

Export growth in China
China’s exports in August rose 8.7% year on year, in U.S. dollar terms, beating Reuters’ estimates of a 6.5% rise. Exports to the EU grew 13% from a year earlier, the most among China’s major trading partners, according to CNBC calculations of official data. Imports growth at 0.5% fell short of analysts’ expectations.

New iPhones
Apple unveiled lots of new products on Monday night. Highlights: the iPhone 16 Pro and Pro Max get larger screens, while their non-pro siblings finally get the Pro’s “action” button; the freshly redesigned Apple Watch Series 10; AirPods 4 earbuds. Apple’s AI features will launch in beta on the new iPhones — investors will monitor if they push up flagging iPhone sales.

$400 million hit to Goldman
Goldman Sachs will post a roughly $400 million pretax hit to its third-quarter results, said CEO David Solomon at a conference on Monday, as the bank winds down its ill-fated foray into consumer banking. Those ventures include Goldman’s GM Card business and a separate portfolio of loans.

[PRO] Stocks to ride out shaky September
September is historically the worst month for stocks. It’s the only month during which markets fell for four consecutive years. The volatility we’ve experienced at the start of the month seems to continue this unwelcome trend. Still, there are some steady stocks investors can consider to ride out September’s roller coaster.

The bottom line

Maybe all it takes are shiny new things to lift our mood and take our minds off recession fears.

I’m jesting — but just partially.

Apple on Monday launched sleek new iPhones, watches and earphones. The excitement of the event and the prospect of having something look forward to may have lifted market sentiment.

Detractors who think that’s a far-fetched assertion should remember Apple dominates more than half of smartphone shipments in the U.S., according to Counterpoint Research. Further, a 2023 Bloomberg survey found 79% of Gen Zers prefer iPhones over other smartphones, implying that Apple’s market share could grow more as that demographic gains earning power.

True, post-event, Apple shares just crawled up 0.04%. But, as CNBC’s Kelly Evans points out, the Cupertino-headquartered company’s stock tends to fall after product announcements.

This reversal of the trend offers a glimmer of hope that Apple’s plans to integrate AI into its phones will rejuvenate iPhone sales, which have been slumping amid increased competition from Chinese brands.

And when the S&P 500’s biggest constituent is experiencing favorable winds, other stocks will also benefit from its slipstream.

Nvidia jumped 3.5% after falling 14% last week. Broader markets rose as well. Both the S&P and the Nasdaq Composite climbed 1.16%, while the Dow Jones Industrial Average gained 1.2%.

Apart from Apple’s announcement, there wasn’t any other material news that would have impacted markets.

Of course, Apple’s event is not the sole reason markets rose yesterday. Last week’s broad sell-off presents investors with opportunities to pick up stocks at a relatively cheaper price, which would induce a rebound rally.

Markets are still largely driven by sentiment, as mentioned yesterday.

That said, the consumer and producer price index reports coming out Wednesday and Thursday, respectively, are concrete pieces of data that have the potential to affect markets dramatically.

They’ll also let us know if we can afford those shiny new things that Apple’s dangling in front of us.

– CNBC’s Pia Singh and Lisa Kailai Han contributed to this story.

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September 9, 2024
CNBC Daily Open: Did Apple’s shiny new things uplift markets?

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Attendees inspect the new iPhone 16 Pro and 16 Pro Max during an Apple special event at Apple headquarters on September 09, 2024 in Cupertino, California.

Justin Sullivan | Getty Images News | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Broad rebound
U.S. stocks rebounded on Monday after posting huge losses last week. It was a broad rally across assets: Oil prices gained 1% and bitcoin rose 4.42%. Europe’s Stoxx 600 index added 0.82%, its first positive movement in days. While the rally was quite broad, fashion houses fell out of favor with shares of Burberry, Hugo Boss and Kering retreating.

New iPhones
Apple unveiled lots of new products on Monday night. Highlights: the iPhone 16 Pro and Pro Max get larger screens, while their non-pro siblings finally get the Pro’s “action” button; the freshly redesigned Apple Watch Series 10; AirPods 4 earbuds. Apple’s AI features will launch in beta on the new iPhones — investors will monitor if they push up flagging iPhone sales.

Debate over rate cuts
Economists such as George Lagarias of Forvis Mazars think a 50-basis-points rate cut “might send a wrong message to markets.” Michael Yoshikami, CEO of Destination Wealth Management, however, thinks it would be “a very positive sign,” echoing Nobel Prize winner Joseph Stiglitz’s opinion that a 50-point cut should be on the table.

$400 million hit to Goldman
Goldman Sachs will post a roughly $400 million pretax hit to its third-quarter results, said CEO David Solomon at a conference on Monday, as the bank winds down its ill-fated foray into consumer banking. Those ventures include Goldman’s GM Card business and a separate portfolio of loans.

[PRO] Macro factors don’t sway Buffett
In recent weeks, markets have gyrated because of concerns over the U.S. economy’s health, the state of the labor market, the trajectory of rate cuts, among many other factors. To Warren Buffett, however, none of those macroeconomic factors matters when he invests.

The bottom line

Maybe all it takes are shiny new things to lift our mood and take our minds off recession fears.

I’m jesting — but just partially.

Apple on Monday launched sleek new iPhones, watches and earphones. The excitement of the event and the prospect of having something look forward to may have lifted market sentiment.

Detractors who think that’s a far-fetched assertion should remember Apple dominates more than half of smartphone shipments in the U.S., according to Counterpoint Research. Further, a 2023 Bloomberg survey found 79% of Gen Zers prefer iPhones over other smartphones, implying that Apple’s market share could grow more as that demographic gains earning power.

True, post-event, Apple shares just crawled up 0.04%. But, as CNBC’s Kelly Evans points out, the Cupertino-headquartered company’s stock tends to fall after product announcements.

This reversal of the trend offers a glimmer of hope that Apple’s plans to integrate AI into its phones will rejuvenate iPhone sales, which have been slumping amid increased competition from Chinese brands.

And when the S&P 500’s biggest constituent is experiencing favorable winds, other stocks will also benefit from its slipstream.

Nvidia jumped 3.5% after falling 14% last week. Broader markets rose as well. Both the S&P and the Nasdaq Composite climbed 1.16%, while the Dow Jones Industrial Average gained 1.2%.

Apart from Apple’s announcement, there wasn’t any other material news that would have impacted markets.

Of course, Apple’s event is not the sole reason markets rose yesterday. Last week’s broad sell-off presents investors with opportunities to pick up stocks at a relatively cheaper price, which would induce a rebound rally.

Markets are still largely driven by sentiment, as mentioned yesterday.

That said, the consumer and producer price index reports coming out Wednesday and Thursday, respectively, are concrete pieces of data that have the potential to affect markets dramatically.

They’ll also let us know if we can afford those shiny new things that Apple’s dangling in front of us.

– CNBC’s Pia Singh and Lisa Kailai Han contributed to this story.

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September 9, 2024
Japan stocks lead gains in mixed Asia-Pacific markets with Nikkei up more than 2%

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The momentum in Japan markets were largely driven by the country’s technology and financial sector.

Doctoregg | Moment | Getty Images

Japan’s major indexes gained more than 2% on Tuesday as markets resumed trading after a holiday.

The benchmark Nikkei 225 jumped 2.72% higher and breached 36,000 for the first time since Aug. 2. The broader Topix gained 2.25%.

The momentum was largely driven by the country’s technology and financial sectors, with Rakuten Group and Trend Micro leaping more than 8% and 6%, respectively.

The country’s parliament plans to hold a special session next week to discuss the Bank of Japan’s decision to raise interest rates last month, Reuters reported, citing government sources.

Japan’s producer price index rose 3% in July from a year earlier, climbing at a faster pace compared to 2.9% in June.

South Korea’s Kospi dipped 0.2%, while the small-cap Kosdaq lost 1.57%.

Wages in Australia rose 0.8% in the quarter ended June, the slowest pace since the same quarter a year earlier, compared with estimates of a 0.9% rise. Wages rose 4.1% on an annual basis.

Australia’s S&P/ASX 200 climbed 0.16%.

Hong Kong’s Hang Seng index kicked off the trading day with a 0.4% gain, while mainland China’s CSI 300 opened 0.06% higher.

In Southeast Asia, Singapore reported its economy grew 2.9% in the second quarter from a year ago, in line with the advance gross domestic product estimate released in July. The Ministry of Trade and Industry cited strength in the wholesale trade, finance and insurance as well as the information and communication sectors. The city-state also said it sees 2024 GDP growth of 2% to 3%, versus its previous forecast of 1% to 3%.

U.S. markets grappled with a choppy session overnight as investors braced for key inflation data.

The S&P 500 concluded the day flat at 5,344.39, while the tech-heavy Nasdaq Composite climbed 0.21% to close at 16,780.61, led by shares of Nvidia soaring 4%. On the flipside, the Dow Jones Industrial Average fell 140 points or 0.36% to conclude at 39,357.01.

Traders await Wednesday’s consumer price index for July, a key indicator of the health of the U.S. economy. Investors will analyze the data for indications the Federal Reserve can begin cutting rates in September.

—CNBC’s Brian Evans and Tanaya Macheel contributed to this report.

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August 12, 2024
Europe stocks close 2.2% lower amid global downturn as volatility index spikes to Covid-era high

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LONDON — European markets fell sharply at the start of the new trading week, though pared losses towards the end of the session amid a global stock sell-off.

The regional Stoxx 600 index closed 2.17% lower, pulling back from declines of more than 3% as the technology sector clawed back some ground to end 0.9% lower.

All sectors and major bourses nonetheless finished in the red, with utilities and oil and gas stocks both losing over 3%.

Strategists pointed to several causes for the downturn across Europe, Asia and the U.S. which began last week, including fears of a U.S. recession and rapid Federal Reserve Rate cuts, the recent hawkish pivot by the Bank of Japan and crash in the yen “carry trade,” and an ongoing re-rating of the tech sector.

The VIX, a measure of expected market volatility, jumped more than 100% to 64.06 during Monday trade before cooling to around 35, still its highest level since 2020.

U.S. stocks saw steep losses through the morning, with the Dow Jones Industrial Average losing nearly 1,000 points, or 2.5%, as the tech-heavy Nasdaq Composite fell 2.6%.

Asia-Pacific markets had led the sell-off on Monday. Japan stocks entered a bear market, with the Nikkei 225 losing 12.4% to log its worst day since 1987.

The broad-based Topix also saw a rout, tumbling 12.23%, while heavyweight trading houses such as Mitsubishi, Mitsui and Co., Sumitomo and Marubeni all plunged more than 14%.

The yen, meanwhile, rose to its highest level against the dollar since January as U.S. Treasurys gained.

On the data front, demand for U.K. services rose in July, increasing to 52.5 from 52.1 the previous month, fresh purchasing managers’ index data showed Monday. Corresponding data for Italy and Spain also pointed to sustained growth in the sector but at a slower pace than previous months.

Stock picks and investing trends from CNBC Pro:

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August 5, 2024
Japan stocks plunge 5% with Asia markets broadly lower after Wall Street sell-off

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An electronic stock board displayed inside the Kabuto One building in Tokyo, Japan, on Thursday, June 27, 2024.

Bloomberg | Bloomberg | Getty Images

Japan’s Nikkei 225 nosedived almost 5% on Friday, with most Asia-Pacific markets lower after a sell-off on Wall Street overnight.

The Nikkei extended its 2.62% slide on Thursday to lead losses in the region and reach its lowest level since February. The Topix also plunged more than 5%.

Some heavyweight names that are seeing losses include Softbank Group, which tumbled over 7%. Trading houses Mitsui and Marubeni saw losses of over 9% and 7%, respectively.

Japanese government bond yields fell, with the yield on the benchmark 10-year JGB falling below the 1% mark and hitting it lowest level since June 20.

South Korea’s Kospi tumbled 2.6%, while the small-cap Kosdaq plunged 2.56%.

However, K-pop stocks were a bright spot for the market. Shares of three of the four listed K-pop companies defied the broader sell-off to climb on Friday, led by Hybe after the firm announced its new business strategy on Thursday after market hours.

Australia’s S&P/ASX 200 was down 2.02% , retreating from its all-time high achieved on Thursday.

Hong Kong’s Hang Seng index futures were at 17,047, lower than the HSI’s last close of 17,304.96.

Separately, South Korea’s inflation numbers for July came in slightly higher than expected, with the country’s consumer price index climbing 2.6% year on year, compared to the 2.5% expected by economists polled by Reuters.

The gloomy sentiment in Asia markets comes after a sell-off on Wall Street in Thursday’s trading session, which saw all three major U.S. indexes plunge on recession fears.

The Dow Jones Industrial Average dropped 1.21%, while the S&P 500 shed 1.37% and the tech heavy Nasdaq Composite slipped 2.3%.

The Russell 2000 index, the small-cap benchmark that has rallied lately, dropped 3%.

In the U.S., fresh data stoked fears over a possible recession and apprehensions that the Federal Reserve could be too late in cutting interest rates.

Initial jobless claims rose the most since August 2023. The ISM manufacturing index, a barometer of factory activity in the U.S., came in at 46.8%, worse than expected and signaling economic contraction.

After these data, the 10-year Treasury yield dropped below 4% for the first time since February.

—CNBC’s Pia Singh and Samantha Subin contributed to this report.

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August 1, 2024
Asia-Pacific markets climb, tracking gains on Wall Street; yen intervention suspected

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Cherry trees in bloom near the Nippon Budokan in Tokyo, Japan, on Sunday, April 7, 2024.

Bloomberg | Bloomberg | Getty Images

Asia-Pacific markets rose on Wednesday after the Dow Jones Industrial Average and the S&P 500 closed at record highs overnight as traders become increasingly bullish on interest rate cuts.

Japan’s Nikkei 225 rose 0.23%, while the Topix was up 0.44% after the Reuters Tankan survey showed an increase in business optimism among large Japanese manufacturers.

The manufacturing index was at +11, up from +6 in the previous month. However, confidence among non-manufacturers dipped from +31 to +27.

Separately, Japanese authorities likely intervened in the currency market last Thursday and Friday, spending a total of 6 trillion yen ($37.9 billion) over the two days, according to Reuters.

The yen is currently at 158.3 against the U.S. dollar. The currency weakened to 161.82 last Wednesday before strengthening to as much as 157.41 the following day.

Australia’s S&P/ASX 200 gained 0.29%, just shy of its all time high of 8,037.3 points.

South Korea’s Kospi was trading close to the flatline, and the small-cap Kosdaq climbed 0.14%.

Hong Kong’s Hang Seng index futures were at 17,843, higher than the HSI’s last close of 17,727.98.

Singapore’s non-oil domestic exports slipped more than expected in June, marking a fifth straight month of declines. They fell 8.7% year on year compared to a 1.2% decline expected by economists polled by Reuters.

On a month-on-month basis, Singapore’s non-oil domestic unexpectedly dropped 0.4%, compared with a expectations of a 4.1% growth.

Overnight, the Dow blue-chip index gained 1.85%, closing at 40,954.48, while the broad-based S&P 500 added 0.64% to wrap the day at 5,667.20. The Nasdaq Composite rose 0.20%.

—CNBC’s Pia Singh contributed to this report.

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July 16, 2024
French stocks rise 0.5% after left-wing coalition clinches surprise election win

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LONDON — French stocks moved higher on Monday as markets reacted to a surprise win for the left in the country’s parliamentary election.

The CAC 40 erased earlier losses to rise 0.5% by 10:00 a.m. London time (5 a.m. ET). The euro was flat against the dollar, and trading in bond markets was also relatively muted.

The U.K.’s FTSE 100 was steady, while Germany’s DAX was 0.43% higher and the FTSE MIB was up around 1%. The pan-European STOXX 600 was 0.3% in the green.

France’s left-wing New Popular Front won the largest number of seats in this weekend’s parliamentary elections, scuppering an expected surge for the far-right. However, the coalition failed to secure an absolute majority, early data showed, leaving markets digesting the possibility of a hung parliament.

François Digard, head of French equity research at Kepler Cheuvreux, said a hung parliament was what the market was expecting.

“You have a hung parliament as expected so last week, the market has played this out … It was just expected to be more right-wing and at the end it is left-wing,” he told CNBC on Monday.

Deutsche Bank strategists added that markets will be suspicious of the New Popular Front’s “fiscally aggressive” spending and taxation plans.

“Last night the far-left were already talking about wealth taxes and increases on taxes on corporates which won’t be market-friendly. However trying to build a government that has any kind of stability looks a very high bar this morning. Political paralysis for the next 12 months seems the most likely outcome,” they added.

It comes after a general election in Britain last week, in which the opposition Labour Party win a landslide victory, unseating the Conservatives after 14 years.

In corporate news, soft drinks maker Britvic has agreed a takeover bid of £3.3 billion ($4.2 billion) from Carlsberg, at an offer of 1,290 pence per Britvic share. This was an improved bid from Carlsberg which first offered 1,200 pence per share but was rejected.

There are no major corporate earnings due out on Monday. It’s also quiet on the data front, with just German trade data due.

In Asia-Pacific, stocks were mixed Monday. In the United States, futures ticked lower as investors looked ahead to inflation data for hints on this year’s market rally and the next steps by the Federal Reserve. The June consumer price index is due Thursday, with producer price index data due Friday.

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July 8, 2024
Asia-Pacific markets open higher ahead of business activity data from the region

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A block of industrial factories sits among newer apartment buildings along a canal in Tokyo, Japan.

Photo By Michael Russell | Moment | Getty Images

Asia-Pacific markets opened higher on Wednesday, after U.S. Federal Reserve Chair Jerome Powell noted progress on inflation, but reiterated patience on cutting rates at a central banking forum.

Traders in Asia await June business activity data from India, Japan and China which is set for release later in the day.

Japan’s Nikkei 225 was up 0.45% extending its run above the 40,000 mark, while the broad-based Topix was up 0.11%.

South Korea’s Kospi started the morning up 0.50%, while the Kosdaq Index rose 0.8%.

Australia’s S&P/ASX 200 opened up 0.17% in early trade.

Hong Kong Hang Seng index futures were at 17,764, lower than the HSI’s last close of 17,769.14.

Overnight in the U.S., the Dow Jones Industrial Average gained 0.41%, the S&P 500 gained 0.62%, and the Nasdaq Composite jumped 0.84%. Both the Nasdaq and the S&P 500 hit record high closes.

Tesla shares helped lift the S&P 500 after Elon Musk’s electric vehicle company beat expected deliveries for the second quarter.

—CNBC’s Pia Singh and Sarah Min contributed to this report.

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July 2, 2024
CNBC Daily Open: U.S. seeks Boeing guilty plea

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The Dow Jones Industrial Average rose about 3.8% in the first six months of the year, lagging way behind the Nasdaq, up 18.1%, and the S&P 500, which jumped 14.5% — as investors plowed into artificial intelligence-related stocks.

Brendan Mcdermid | Reuters

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Dow lags tech rally
The Dow Jones Industrial Average rose about 3.8% in the first six months of the year, lagging way behind the Nasdaq, up 18.1%, and the S&P 500, which jumped 14.5% — as investors plowed into artificial intelligence-related stocks. On Friday, the S&P 500 and Nasdaq hit record highs before pulling back. The yield on the 10-year Treasury rose as investors digested the latest inflation data. U.S. oil prices rose for the third straight week amid fears of a war between Israel and the Iran-backed militia Hezbollah.

Boeing ‘guilty plea’
U.S. prosecutors plan to seek a guilty plea from Boeing over a charge related to two fatal 737 Max crashes in 2018 and 2019, attorneys for the victims’ family members said. The Justice Department is reviewing whether Boeing violated a 2021 settlement that shielded the company from federal charges. Boeing agreed then to pay a $2.5 billion penalty for a conspiracy charge tied to the crashes. The DOJ revisited the agreement after a door panel blew out of a new 737 Max 9 in January, sparking a new safety crisis.

Under fire
Nike CEO John Donahoe faces growing discontent as the company’s stock plummeted 20% on Friday, its worst day since 1980, after forecasting a significant decline in sales. As Wall Street digested the dismal outlook from the world’s largest sportswear company, at least six investment banks downgraded Nike’s stock. Analysts at Morgan Stanley and Stifel took it a step further, specifically calling the company’s management into question.

Bitcoin windfall
Mt. Gox, a bankrupt Japanese bitcoin exchange, is set to repay creditors nearly $9 billion worth of Bitcoin following a 2011 hack. The court-appointed trustee overseeing the exchange’s bankruptcy proceedings said distributions to the firm’s roughly 20,000 creditors would begin this month. The payout is likely to be a windfall for those who waited a decade, with Bitcoin’s value surging from around $600 in 2014 to over $60,000 today. One claimant, Gregory Greene, could potentially receive $2.5 million for his $25,000 investment.

Inflation cooling
A key inflation measure, watched closely by the Federal Reserve, slowed to its lowest annual rate in over three years in May, with the core personal consumption expenditures price index rising 2.6% from a year ago. “This is just additional news that monetary policy is working, inflation is gradually cooling,” San Francisco Fed President Mary Daly told CNBC’s Andrew Ross Sorkin during a “Squawk Box” interview. “That’s a relief for businesses and households who have been struggling with persistently high inflation. It’s good news for how policy is working.”

[PRO] Rally will broaden
The tech sector has driven market performance in 2024, with the S&P 500 tech group up 28% and Nvidia soaring 149%, while small-caps have lagged. Oppenheimer’s chief market strategist John Stoltzfus believes the rally will broaden. CNBC’s Lisa Kailai Han looks at the reasons behind his call.

The bottom line

The New York Times editorial board has lost faith in President Joe Biden, calling for him to step aside. Iranians will need another go at electing a new president, French voters cast their votes in the first round of snap elections that saw big gains for Marie Le Pen's far-right party and Brits will go to the polls on Thursday.

It's a busy political environment for markets to navigate. Wall Street has shown remarkable resilience thanks to the AI-powered rally in the first half of the year, which has seen the Nasdaq soar 18% so far. Nvidia is up almost 150%. There could be more to come; Bank of America believes Nvidia and Apple could still deliver "superior returns."

While one of the biggest bulls on the Street expects the rally to broaden away from the megacaps, Wall Street wasn't feeling any love for Nike's CEO. The company had its worst day of trading since its IPO in December 1980, losing $28 billion in market cap on Friday after slashing its sales forecasts.

John Donahoe was brought in from eBay to transform the athletic apparel giant's digital channels. The company ditched its retail partners, became too dependent on its aging sneaker ranges and lost ground to new contenders Hoka and On. It'll certainly make an interesting case study for MBA programs for all the wrong reasons. As Wall Street questioned Donahoe's position, he still had the approval of its founder.

Friday also saw the Fed's favored inflation measure come in line with expectations, raising the prospect of interest rate cuts later this year.

"I really think the Fed should tee up a cut at the July 31 meeting, confirm it at Jackson Hole in August and do it in September," Wharton finance professor Jeremy Siegel told CNBC's "Squawk on the Street." He added that one or maybe one-and-a-half rate cuts have already been priced in.

"I actually think there will be more because there might be a little bit more softness in the economy and better inflation numbers, both of those feeding better rates," he continued. Siegel also said it is "hard to say" where the bull market's trajectory currently stands.

In a four-day trading week — markets are closed for the July 4 Independence Day holiday — the big economic number to watch is the June jobless data on Friday. CNBC's Sarah Min has more on what to expect.

— CNBC's Lisa Kailai Han, Yun Li, Jeff Cox, Leslie Josephs, Gabrielle Fonrouge, Hakyung Kim, Brian Evans, Spencer Kimball, Ryan Browne and MacKenzie Sigalos contributed to this report.

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June 30, 2024
CNBC Daily Open: Micron slides, Amazon’s $2 trillion

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A trader works on the floor of the New York Stock Exchange (NYSE) during morning trading on March 4, 2024 in New York City.

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This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Clinging on
The S&P 500 and the Dow Jones Industrial Average just about finished the session in positive territory. The Nasdaq Composite, on course for an 18.6% gain in the first six months of the year, rose 0.49%. After trading mostly in negative territory, Nvidia made a small gain following the previous session’s 7% surge. The yield on the 10-year Treasury rose as investors parse comments from Fed officials and await key inflation data due Friday. U.S. oil prices rose amid escalating tensions in the Middle East.

Micron slides
Shares of Micron fell almost 8% in extended trading on Wednesday as its revenue forecast failed to top analysts’ expectations. The computer memory and storage maker expects revenue of $7.6 billion in the current quarter, in line with estimates. Micron’s shares have doubled in the past year as its most advanced memory is needed for AI graphics processing units. CEO Sanjay Mehrotra said the company’s AI-oriented products were likely to increase in price and its data center business grew 50% on a quarter-to-quarter basis.

$2,000,000,000,000
Amazon‘s market capitalization surpassed $2 trillion for the first time on Wednesday, joining the ranks of tech giants like Apple and Microsoft. The surge in megacap tech stocks has been driven by investor excitement around generative AI. Amazon’s stock has risen 26% this year, outpacing the Nasdaq’s 18% increase. The stock rose 3.9% on Wednesday. Separately, CNBC’s Annie Palmer reports Amazon plans to launch a discount store in bid to fend off Temu and Shein.

Southwest cuts guidance
Southwest Airlines cut its second-quarter revenue forecast due to difficulties adapting its revenue management to recent booking trends. Despite the revised outlook, the airline still expects record quarterly operating revenue. Activist investor Elliott Management reiterated calls for leadership changes, “Southwest is led by a team that has proven unable to adapt to the modern airline industry.” Higher costs and increased capacity have impacted fares and profits across the industry, while competitors like Delta and United have benefited from the return of international travel. Southwest shares fell 4% before recovering to end the session just 0.2% lower.

Asian stocks fall, yen weakens
Japan’s export-heavy Nikkei 225 and the broad-based Topix fell as the yen weakened to a 38-year low against the U.S. dollar, raising the prospect of intervention. Finance Minister Shunichi Suzuki warned the country was “deeply concerned about FX impact on economy,” per Reuters. Elsewhere, Hong Kong’s Hang Seng index led the rest of the Asia-Pacific region lower, tumbling 2%, and mainland China’s CSI 300 was down 0.6%. Australia’s S&P/ASX 200 dropped 0.58% and South Korea’s Kospi dipped 0.37%

[PRO] Investing in India
India’s unexpected election results haven’t dampened Causeway Capital Management’s bullish outlook. Although portfolio manager Arjun Jayaraman predicts modest short-term returns for the BSE Sensex index, he suggests ETFs that could benefit from higher returns.

The bottom line

There was a surge of activity in the auto industry that may have been overshadowed by Volkswagen's $5 billion investment in the loss-making EV maker Rivian. While VW makes solid cars, its electric vehicles are plagued with glitchy software. As CNBC's Sophie Kiderlin notes this investment will take years to yield returns. Analysts, however, are wary of the current "EV winter" marked by tepid demand and increased competition. Despite these challenges, Rivian's stock surged 23%, reflecting investor optimism.

Elsewhere in the industry, Waymo, Alphabet's self-driving car unit, expanded its robotaxi service to all users in San Francisco. Meanwhile, General Motors's Cruise autonomous vehicle division appointed former Amazon and Microsoft executive Marc Whitten as its new CEO. This leadership change follows a series of collisions that led to investigations and the suspension of Cruise's license in California, heightening public skepticism about driverless technology.

While Waymo is steadily rolling out its services and Cruise is restarting its operations, Tesla has yet to introduce its long-promised robotaxi. Elon Musk's projections for a 2020 launch and fully autonomous driving by 2018 have yet to materialize. Nevertheless, Musk envisions Tesla as a potential $7 trillion robotaxi enterprise. The unveiling of Tesla's robotaxi on Aug. 8 will be closely watched to gauge its competitive edge.

Rivian shareholder Amazon joined the exclusive $2 trillion market cap club, alongside Alphabet, Nvidia, Apple and Microsoft. This milestone comes as Amazon aggressively cuts costs.

While enthusiasm for AI remains high, Wall Street experienced a more measured session as investors sought to lock in profits from the Nvidia-driven surge. Despite the current optimism, strategists caution that the S&P 500 might face a correction over the summer. CNBC's Sarah Min explores the factors behind Citi's projections and a series of recent upgrades.

— CNBC's Hakyung Kim, Brian Evans, Alex Sherman, Samantha Subin, Annie Palmer, Ece Yildirim, Michael Wayland, Sophie Kiderlin, Spencer Kimball, Leslie Josephs, Sarah Min, Sheila Chiang and Lim Hui Jie contributed to this report.

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June 26, 2024
Asia-Pacific markets mostly rise ahead of Australia’s May inflation data

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Sydney Harbour taking in the Harbour Bridge, Opera House and ferries at sunrise during the COVID-19 pandemic on April 20, 2020 in Sydney, Australia.

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Asia-Pacific markets mostly rose Wednesday as investors anticipate Australia’s inflation numbers for May and Singapore’s May manufacturing output data.

Australia’s core inflation rate is expected to come in at 3.8% in May, according to a Reuters poll of economists. This is higher than the 3.6% recorded in April.

Should inflation come in higher than expected and spur the Reserve Bank of Australia to raise rates, it would be the first major Asia-Pacific central bank to do so in an environment where investors are waiting for rate cuts, barring Japan. RBA Governor Michelle Bullock recently revealed the central bank discussed hiking rates at its last meeting.

The RBA has two inflation readings to consider — June 26 and July 31— before its next meeting on Aug. 6.

Singapore’s May factory output will also be released Wednesday, with a Reuters poll of economists predicting a 2% year-on-year growth rate, as compared to a 1.6% decline recorded in April.

Australia’s S&P/ASX 200 lost 0.70% Wednesday.

Japan’s Nikkei 225 gained 0.50% in morning trade while the broad-based Topix was up marginally. South Korea’s Kospi gained 0.16% while the small-cap Kosdaq traded close to the flatline.

Hong Kong Hang Seng index futures were at 17,958, lower than the HSI’s last close of 18,072.9.

Overnight in the U.S., the Dow Jones Industrial Average declined, shedding 0.76% and closing at 39,112.16. Led by an Nvidia rebound, the broad market S&P 500 added 0.39% while the Nasdaq Composite advanced 1.26%, with both indexes ending three-day losing streaks.

— CNBC’s Hakyung Kim and Samantha Subin contributed to this report.

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June 25, 2024
Japan stocks rise after cooler-than-expected core inflation data; India’s Nifty hits fresh record

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Pedestrians cross an intersection in the Shibuya district of Tokyo, Japan, on Tuesday, April 25, 2023. Photographer: Kentaro Takahashi/Bloomberg via Getty Images

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Asia-Pacific markets fell Friday after Japan’s May core inflation data came in slightly cooler than expected.

The country’s core inflation rate — which strips out prices of fresh food — came in at 2.5%. A Reuters poll of economists expected the May core inflation reading to come in at 2.6%, compared with April’s 2.2%.

The so-called “core-core” inflation, which strips out prices of fresh food and energy, came in at 2.1%. This is lower than April’s reading of 2.4%. The metric is considered by the Bank of Japan when formulating the country’s monetary policy.

Japan’s headline rate rose to 2.8%, higher than April’s figure of 2.5%.

Japan’s Nikkei 225 rose 0.03%, while the broad-based Topix gained 0.21%.

Softbank — the third heaviest weighted stock on the index — saw shares drop 2.87% after Softbank Group CEO Masayoshi Son said the company needed “immense capital” to develop AI robotics.

The yen weakened for a seventh straight day, declining to 158.95 against the U.S. dollar.

Japan’s chief currency diplomat, Masato Kanda, said the government was ready to make a move against the volatile currency market that has hurt the economy, Reuters reported.

The U.S. Treasury Department placed Japan on its currency “Monitoring List,” but did not classify it as a currency manipulator.

India’s benchmark Nifty 50 index gained 0.1% to hit a new record high.

HSBC flash Composite Purchasing Managers’ Index for India rose to 60.9 in June from 60.5 in May. The data complied by S&P Global showed that growth was stronger at goods producers compared to service providers.

South Korea’s Kospi fell 0.94%, while the small-cap Kosdaq lost 0.54%.

Separately, the country announced that the finance ministers of South Korea and Japan will meet on June 25 to discuss bilateral and multilateral cooperation, as well as their views on the global economy. The meeting will be held two months after both parties agreed to manage excessive currency volatilities during their meeting in Washington.

Mainland China’s CSI 300 dipped 0.60%, while Hong Kong’s Hang Seng index declined 1.71%.

Australia’s S&P/ASX 200 ticked up 0.18%

Overnight in the U.S., the S&P 500 closed 0.25 % lower after hitting a new high. The Nasdaq Composite dipped 0.79%, while the Dow Jones Industrial Average climbed 0.77%. Nvidia slipped 3.5% after rising earlier in the trading day.

—CNBC’s Samantha Subin and Brian Evans contributed to this report.

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June 20, 2024
CNBC Daily Open: Nvidia pushes past $3 trillion

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This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Nvidia powers S&P 500 to record
The S&P 500 rose to a record after Nvidia crossed through the $3 trillion barrier for the first time and softer-than-expected jobs data raised hopes for an interest rate cut. The Nasdaq Composite also set a record, climbing almost 2%, with technology stocks Hewlett Packard Enterprises and CrowdStrike soaring on better-than-expected sales and earnings, respectively. The Dow Jones Industrial Average lagged behind, adding just under 100 points. The yield on the 10-year Treasury slipped, while U.S. oil prices rose from four-month lows.

Nvidia passes Apple
Artificial intelligence chipmaker Nvidia surpassed the $3 trillion market capitalization mark, pushing past Apple to become the second most valuable company behind Microsoft. Nvidia’s shares have risen 24% since its blockbuster earnings report in May, while Apple’s shares are up only 5% this year as sales growth stalled in recent months.

Baron backs Musk’s pay deal
Billionaire investor Ron Baron has publicly defended Elon Musk’s controversial $56 billion Tesla pay package. The Baron Capital chairman and CEO argues the package, tied to “aggressive” performance targets, is justified as without Musk “there would be no Tesla.” Baron previously revealed that his firm has made about 20 times its investment in Tesla since he first bought the stock in 2014. The package, previously voided by a Delaware judge, will face a shareholder vote on June 13.

Elliott retakes SoftBank stake
Elliott Management, an activist investor, has taken a $2 billion stake in SoftBank and is pushing for a $15 billion share buyback. This marks the second time Elliott has taken a stake in the Masayoshi Son-led firm. In 2020, at Elliott’s urging, SoftBank launched a $20 billion share buyback and asset disposal program. Elliott believes another buyback would boost SoftBank’s share price and signal confidence in CEO Son’s plans, particularly in AI.

Electric air taxi gets FAA signoff
Shares of Archer Aviation soared 6% after the Federal Aviation Administration granted the electric air taxi maker a key certification that would allow the company’s aircraft to eventually carry passengers. Archer, which has won orders and backing from United Airlines, is building electric vertical takeoff and landing aircraft for urban areas, which could reduce carbon emissions. Archer has partnered with automaker Stellantis to produce hundreds of the electric air taxis.

[PRO] Buy the dip
While investors are concerned about this biotech company’s potential loss of exclusivity and rising competition, Goldman Sachs sees an upside of more than 60%. The Wall Street bank believes investors should buy the dip and consider its “overlooked” pipeline.

The bottom line

Billionaire investor Ron Baron's support of Elon Musk's $56 billion compensation package almost feels like looking in the rearview mirror. Nonetheless, it's a crucial intervention just ahead of next week's vote on what would be corporate America's biggest compensation package.

Shareholder advisory firms, Glass Lewis and ISS, have told investors to reject the award. In voiding the original package, the judge said the process was flawed because of the close relationship the compensation committee had with Musk. For example, Robyn Denholm, the chair of Tesla, sold some of her Tesla options for $280 million between 2021 and 2022 — a "life-changing" transaction, as she described it. Other members of the team had relationships with Musk going back 15 years or more and regularly vacationed together.

The package has no salary or cash bonus and sets rewards based on Tesla's market value rising to as much as $650 billion over the 10 years from 2018. The court also found the defendants did not prove the package was necessary to retain Musk.

At its height, Tesla reached a market capitalization of $1.2 trillion in November 2021. Since then, the EV market has slowed and competition has intensified. Its current market cap is $560 billion. While Baron remains bullish and has made and expects to make a lot more money from Tesla, other investors expect the company's stock to fall by as much as 30%.

Who would bet against Musk? He took a niche vehicle manufacturer that has flirted with bankruptcy and challenged Detroit, and now plans to reinvent the EV maker into a leader in AI and robotics.

Still, Wall Street has a new favorite in Nvidia. It passed the $3 trillion mark and surpassed Apple to become the second most valuable U.S. company. Before Thursday's record high, UBS noted that Nvidia's year-to-date gain is responsible for a significant chunk of the S&P 500's 2024 rally.

"NVDA accounts for 30% of the market's return YTD," wrote strategist Jonathan Golub in a Wednesday note to clients. "S&P 500 returns drop from 11.3% to 7.8% ex-NVDA. Many stocks have moved in step with the AI theme."

While some caution a bit of profit-taking, the company's 10-for-1 stock split should encourage side-lined retail investors to take a slice of the AI frenzy. Bank of America still sees an upside to the stock.

— CNBC's Brian Evans, Alex Harring, Darla Mercado, Kif Leswing, Rohan Goswami, Leslie Josephs and Yun Li contributed to this report.

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June 5, 2024
Oil alliance OPEC+ could extend production cuts this weekend as focus shifts away from Middle East tensions, sources say

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The OPEC logo on the building of the Organization of the Petroleum Exporting Countries.

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The oil-producing Organization of the Petroleum Exporting Countries and its allies could extend existing output cuts this week, delegates and analysts told CNBC, even as focus shifts from Middle East tensions to summer demand.

The group, collectively known as OPEC+, was set to convene in person in Vienna on June 1, but last week moved the encounter virtually to June 2.

OPEC+ producers are currently implementing a combined 5.86 million barrels per day of supply cuts. Just 2 million barrels per day of these cuts represent unanimous commitments under OPEC group policy, and expire at the end of this year.

The remainder are reduced voluntarily by a subset of the alliance. A cut of 1.66 million per barrel is in place until the end of 2024, and 2.2 million barrels per day of supplies have been trimmed until the end of the second quarter. Market participants are watching whether this latter cut will be extended for another quarter, amid projected demand hikes.

“Come June, China would be largely out of refinery maintenance, U.S. consumption is improving as summer moves closer, so June should already see negative crude balances. And then August is the peak month for tightness,” Viktor Katona, lead crude analyst at Kpler, told CNBC.

The OPEC+ coalition is also eyeing individual members’ quota compliance, asking overproducers to implement additional cuts. Iraq and Kazakhstan have detailed compensation plans.

Extension

Three OPEC+ delegates, who spoke anonymously because of the sensitivity of talks, told CNBC the 2.2 million-barrels-per-day supply reductions will likely be prolonged, with a fourth saying this is the scenario anticipated by the market. One delegate acknowledged the probable market tightness in the second half of the year, but noted that demand concerns persisted until only recently.

OPEC’s latest Monthly Oil Market Report of May projects a 2.25 million barrel-per-day increase in demand this year, while Paris-based International Energy Agency’s Oil Market Report of the same month points to just a 1.06 million-barrel-per-day demand hike.

“I think that the clever thing for OPEC+ would be to gradually unwind the voluntary cuts to limit the upside price pressure, to prevent refilling inflation,” Jorge Leon, senior vice president of Rystad Energy’s Oil Market Research, told CNBC. “However, I think that the market right now has priced in a full extension of the voluntary cuts. So I think that is what, probably, they will do.”

He added, “If they decide to fully extend the voluntary cuts, and there is perfect compliance, and they do the full compensation, and then, if, I think prices could reach closer to $100 per barrel this summer.”

Energy security concerns fueled global inflation in the wake of Russia’s invasion of Ukraine and were further stoked after the conflict in Gaza threatened a broader spillover in the oil-rich Middle East, while frequent maritime attacks by Yemen’s Houthi militants disrupted trade transit in the Red Sea.

A high-inflation environment and tight monetary policy in turn reined in oil demand, but central banks have signaled readiness to lower interest rates in the second half of the year.

Tamas Varga, analyst at PVM Oil Associates, told CNBC that the OPEC+ supply restrictions will likely remain in place for the third quarter, adding, “I also believe that the producer group will emphasize that anyone who did not comply with the quota will have to make amends. And I believe that OPEC+ will only ease the supply constraints when they see obvious signs of global oil inventories depleting.”

Kpler’s Katona aligned with the views, but noted that heavyweights Saudi Arabia, Russia and the United Arab Emirates, who participate in the voluntary reductions, could seek to scrap the latter curbs toward the end of the year.

“Further down the line into 2025, unwinding cuts might be challenging for prices as incremental production from Guyana, Brazil, Canada will saturate the markets,” he said, flagging new Floating Production Storage and Offloading facilities due to come online. “This year there’s no new FPSO in Guyana, whilst next year it starts up a new one in [third-quarter] 2025. Brazil, likewise, has one FPSO starting up this year whilst next year it will be a bonanza of new capacity.”

Rising competing supplies have reduced the market prominence of OPEC+, one OPEC+ delegate acknowledged, while analysts signaled that the group’s ongoing output cuts allows unfettered producers to capture their market share.

Priced in

Oil prices have largely languished range-bound in the first half of the year, under ongoing threat of spikes from developments in the Middle East. Regional escalations could top prices with a risk premium of up to $10 per barrel, Rystad’s Jorge Leon noted – while OPEC+ delegates told CNBC that the situation in the Gaza Strip is still adding a little pressure, but that the market has already absorbed the majority of its effect.

Katona likewise noted that the Gaza crisis “will seemingly persist for longer than everyone expected but it doesn’t really have an imprint on OPEC+ coherence and policy.”

One OPEC+ delegate meanwhile said that the unexpected death of Iranian President Ebrahim Raisi represented a tragic accident that could not be interpreted as a risk to the market, especially given that his successor will likely pursue similar politics.

“I think the geopolitical risk premium has subsided and I think that the tension between Israel and Hamas will only support prices if it will have an obvious impact on oil production or oil flows, which might come in the form of the closure of the Strait of Hormuz, or attacks on oil infrastructure in the region, something which does not look plausible at the moment,” Varga said.

OPEC+ must also balance its relationship with the U.S., which has previously blasted the coalition’s supply cuts amid concerns over gasoline prices. The Biden administration last week said it will release 1 million barrels of gasoline from reserves in a bid to curb prices at the pump. The U.S. undertook similar crude releases from its Strategic Petroleum Reserve Stocks during the Covid-19 pandemic, but one OPEC+ delegate noted such measures are unlikely to have an impact beyond price relief during the summer. The U.S. typically seeks to replenish the emergency stockpile of its state reserves.

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May 30, 2024
CNBC Daily Open: Dow’s worst day in 2024, Nvidia shares pop

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Jensen Huang, co-founder and chief executive officer of Nvidia Corp., during the Nvidia GPU Technology Conference (GTC) in San Jose, California, US, on Tuesday, March 19, 2024.

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This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Dow sinks 600 points
The Dow Jones Industrial Average suffered its worst day of the year, dropping over 600 points on Thursday. Boeing led the decline on the Dow. Despite reaching intraday record highs earlier, both the S&P 500 and the Nasdaq Composite ended the day in negative territory. Nvidia‘s blockbuster earnings and guidance failed to prop up markets, with more than 400 stocks on the S&P 500 trading lower. Treasury yields extended gains as the Fed delays rate cuts, while oil prices bounced back after a three-day decline.

Nvidia pops
Shares of Nvidia soared as much as 11% after the AI chipmaker’s earnings that beat Wall Street’s estimates. It also issued strong guidance as demand for its artificial intelligence accelerators remains robust. Shares passed $1,000 for the first time, reaching an all-time high of $1,063.20 during intraday trading, and are up about 111% this year.

Musk disapproves China EV tariffs
Tesla CEO Elon Musk said he’s not in favor of tariffs on Chinese electric vehicles, which were imposed last week by President Joe Biden. “Neither Tesla nor I asked for these tariffs,” Musk said in response to a question from CNBC’s Karen Tso. “Tesla competes quite well in the market in China with no tariffs and no preferential support. I’m in favor of no tariffs.”

Boeing sinks
Shares of Boeing dropped 7.6% after CFO Brian West said the company would continue to burn through cash this year. Delivery of new planes, a major source of revenue, will not improve in the second quarter. Boeing is facing a host of production issues related to safety concerns. The company burned through nearly $4 billion in cash in the first quarter and West believes that figure could be similar or “possibly a little worse” in the second quarter.

Asia-Pacific markets slide
Stocks in the Asia-Pacific region fell on Friday as investors assessed inflation data from Japan. The Nikkei 225 fell 1% as inflation slowed for the second straight month. While the Bank of Japan is under pressure to raise interest rates, inflation is expected to push higher in the coming months. South Korea’s Kospi dropped 1% after a report said Samsung Electronics’ new chip wasn’t ready for Nvidia. Samsung shares fell 2.4%. Hong Kong’s Hang Seng dipped 1.3%, mainland China’s CSI 300 index declined 0.4%, and Australia’s S&P/ASX 200 shed 1.1%.

[PRO] What’s next for Nvidia?
Wall Street analysts are revising their price targets for Nvidia upwards after its blowout earnings and guidance. Some had feared a slowdown in demand as Amazon and Microsoft wait for Nvidia’s more powerful AI chips. Nvidia’s decision to split its stock could provide more upside for investors.

The bottom line

Nvidia's blockbuster earnings and forecast couldn't stop Wall Street from taking a late dive. Nvidia held up well, its stock closing above $1,000, up 9% on the day after reassuring investors its sales of graphics chips that power artificial intelligence weren't a flash in the pan.

What comes next for Nvidia is a 10-for-1 stock split; Post-split shares will start trading on June 10. Stock split will help retail investors, put off by a share price of a thousand-plus dollars, to buy them at around $100. Nvidia shares are up more than 240% in the last 12 months.

CNBC's Ryan Ermey explains more on the psychology of the move and how the mechanism of the stock split works.

So what's freaking markets? According to the Charles Schwab Trader Sentiment Survey, the bullish outlook among traders fell to 46% from 53% in the second quarter.

"Traders began the year feeling pretty confident that the economy was improving and Fed rate cuts would be quick to follow," said James Kostulias, head of Trading Services at Charles Schwab. "But inflation concerns have jumped significantly."

Before the latest minutes from the Federal Reserve meeting, suggesting concern about stubborn inflation, some strategists had estimated the Fed could cut interest rates at least three times this year as prices cooled. Now, traders are lowering their expectations to just one reduction, possibly in September or November.

As the first-quarter earnings season winds down, investors are shifting their attention to geopolitical concerns.

"The Fed has been pretty clear that they're not going to cut rates, so you don't have this, 'Will they or won't they' [scenario] keeping everybody on edge. We are going to start to see a turn to some of this geopolitical stuff, whether it's elections or the two ongoing wars," said Melissa Brown, managing director of applied research at SimCorp.

While events such as the U.S. and UK elections don't necessarily result in economic impacts, they do increase uncertainty, Brown noted.

"People may go from saying 'I'm just going to buy now,' to, 'Look, I'm gonna wait and see the outcome of this before I decide to commit more money to market,'" Brown said.

The Daily Open will be back on Tuesday as U.S. markets will be closed for Memorial Day on Monday.

— CNBC's Hakyung Kim, Samantha Subin, Ryan Ermey, Jeff Cox, Sophie Kinderlin, Spencer Kimball, Ece Yildirim, Sarah Whitton and Ryan Browne contributed to this report.

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May 23, 2024
CNBC Daily Open: Nvidia shares top $1,000 on AI boom

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A sign is posted in front of Nvidia headquarters on May 21, 2024 in Santa Clara, California.

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This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Nvidia to split stock, sales to soar
Shares of Nvidia rose more than 7%, topping $1,000 for the first time, in after-hours trading after its first-quarter earnings and sales beat analysts’ expectations. The chipmaker expects second-quarter sales of $28 billion, compared with estimates of $26.6 billion. The company plans to split its stock 10 for 1.

Wall Street sinks on inflation fears
The Dow Jones Industrial Average plunged more than 200 points, marking its worst day so far this month as minutes of the Federal Reserve’s latest meeting stoked concerns about sticky inflation. The S&P 500 and the Nasdaq Composite also lost ground. Treasury yields inched higher as the prospect of rate cuts was pushed further out. Oil prices fell for the third consecutive day ahead of an OPEC meeting.

Fed inflation worries
Minutes of the Federal Reserve’s latest rate-setting meeting showed the central bank was concerned about the “lack of progress” in bringing inflation closer to its 2% target, sending the Dow down 200 points. The minutes also revealed that “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” The Fed policymakers maintained the benchmark borrowing rate within the 5.25%-5.5% range.

Alexa’s AI makeover
Amazon plans to upgrade its Alexa voice assistant with generative artificial intelligence and charge a monthly subscription for the service, according to people familiar with the plans. The move comes after Google and OpenAI launched similar products. Subscription for the new AI-powered Alexa will not be included in the $139 per year Prime offering.

Vivek takes Buzzfeed stake
Buzzfeed shares shot up 20% after the former GOP presidential candidate Vivek Ramaswamy bought an 8% stake in the online media company. In a filing with the Securities and Exchange Commission, Ramaswamy said he would talk with Buzzfeed’s management about every aspect of the company’s operations, including an acquisition by a third party. The media outlet went public in 2021 and has seen its shares fall 94% since then.

[PRO] Under-the-radar AI plays
Hedge funds are loading up on these lesser-known beneficiaries from the artificial intelligence boom while cutting back on their exposure to mega caps, according to Goldman Sachs. The Wall Street investment bank analyzed the holdings of 707 hedge funds with $2.7 trillion of gross equity positions at the start of the second quarter.

The bottom line

There were two major announcements after the markets closed on Wednesday.

First from Prime Minister Rishi Sunak of the United Kingdom, the world's sixth-largest economy with a GDP of about $3 trillion, calling a general election, which barely had any market impact. The pound was largely unchanged.

The second was from a 31-year-old graphics chip company valued at $2.3 trillion, Nvidia, which delivered its much-anticipated earnings — and saw its shares soar to record highs.

There were expectations of a $200 billion swing one way or the other in the company's stock, depending on the outcome of its earnings. In after-hours trading, the stock rose more than 7%. Nvidia's shares are up 92% this year and 200% over the last 12 months. Nvidia is the bedrock of the artificial intelligence revolution, with Google, Amazon, Meta, and Microsoft estimated to be spending $200 billion buying up its AI chips.

"The next industrial revolution has begun," Chief Executive Officer Jensen Huang said in a statement. "We are poised for our next wave of growth."

Dan Niles, founder of Niles Investment Management, has likened Nvidia to Cisco in the 1990s. Cisco was the go-to company for internet gear. From 1994 to its peak in 2000, Cisco's shares rose 4000%. Niles believes Nvidia will go through a similar cycle.

"We're still really early in the AI build," Niles told CNBC's "Money Matters" on Monday. "I think the revenue will go up three to four times from current levels over the next three to four years, and I think the stock goes with it."

"If you look at today for the AI build-out, who's really driving that?" Niles said. "It's the most profitable companies on the planet — it's Microsoft, it's Google, it's Meta, and they're driving this."

Crucially, Nvidia said it expects second-quarter sales to soar to $28 billion, up from the $26.6 billion analysts were expecting. Even with the prospects of increased competition from Advanced Micro Devices and Google building its own custom chip, Piper Sandler analysts expect Nvidia to keep at least 75% of the AI accelerator market.

Nvidia's done everything that's been asked of it, now it's over to Wall Street to decide if it's time to crack through more milestones or consolidate.

— CNBC's Kif Leswing, Jeff Cox, Kate Rooney, Hakyung Kim, Lisa Kailia Han, Yun Li and Rohan Goswami contributed to this report.

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May 22, 2024
CNBC Daily Open: S&P 500 and Nasdaq hit new heights ahead of Nvidia’s earnings

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Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City.

Angela Weiss | AFP | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Wall Street reaches new highs
The S&P 500 and the Nasdaq Composite rose to fresh record highs as investors await earnings from AI chipmaker Nvidia after the close on Wednesday. The Dow Jones Industrial Average closed 0.17% higher at 39,872.99. Nvidia’s shares rose 0.6% with option traders pricing in swings of as much as 9% up or down in reaction to its earnings. Treasury yields fell and oil prices drifted lower.

Rate cuts several months away
Federal Reserve Governor Christopher Waller said he does not think further rate increases are necessary, but he will need convincing before backing any rate cuts. “I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said. According to the CME Group’s FedWatch Tool, the first rate cut could come as early as September.

Gasoline reserve release
The Biden administration will release 1 million barrels of gasoline from reserves to reduce prices at the pump ahead of the Fourth of July holiday. OPEC production cuts and fears the Israel-Hamas war could engulf the wider Middle East sent U.S. gasoline futures soaring 19%. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state [region] and northeast at a time hardworking Americans need it the most,” Energy Secretary Jennifer Granholm said.

Pixar job cuts
Pixar Animation Studios will lay off about 175 employees, or around 14% of its workforce, a spokesperson for parent company Walt Disney told CNBC. CEO Bob Iger wants Pixar to focus on box office releases and not on short series for Disney+. Pixar and Walt Disney Animation have struggled to generate more than $480 million at the global box office since 2019. Before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2″ tallied $1.24 billion, and “Toy Story 4” snared $1.07 billion worldwide.

Asia-Pacific stocks eke out gains
Hong Kong’s Hang Seng rose 0.18% and mainland China’s CSI 300 index gained 0.7% on Wednesday. Chinese electric car company Xpeng reported an improvement in profit margin and an upbeat outlook for second-quarter deliveries — its Hong Kong-listed shares soared 13%. Japan’s Nikkei 225 was down 0.5% as investors digested a slew of economic data. South Korea’s Kospi and Australia’s S&P/ASX 200 both inched higher. As did New Zealand’s S&P/NZ50, up 0.1%, after the Reserve Bank of New Zealand held rates unchanged at 5.5% for the seventh consecutive time.

[PRO] When Nvidia rises
CNBC’s Ganesh Rao takes a look at six artificial intelligence-related stocks that have historically reacted positively to Nvidia’s quarterly earnings. Five listed in the United States and one in Japan have risen between 6% and 33% in the past after Nvidia revealed bumper earnings.

The bottom line

Few CEOs are strong-willed and have the vision or audacity to redefine their industries. Steve Jobs revolutionized mobile phones with the iPhone, Elon Musk challenged gas-guzzling Detroit's dominance with electric vehicles, and Jamie Dimon, CEO of JPMorgan Chase, has done the same for the often-criticized grey banking industry.

Dimon might seem like an unusual addition to this list of innovators. Yet, he took a bank ranked eighth on Wall Street in 2006 and propelled it to the top spot within five years, surpassing giants like Goldman Sachs, Deutsche Bank, and Citi.

However, Dimon's inclusion here isn't solely due to his bank's impressive growth. Like his peers, he isn't afraid to stand up to his big institutional investors. This was evident at a recent investor day, where the headline revolved around his potential retirement in the next five years.

When pressed on when the bank would repurchase its own shares, Dimon's response was unequivocal: "I want to make it really clear, OK? We're not going to buy back a lot of stock at these prices."

He went on to say, "Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren't going to do it."CNBC's Hugh Son covered this exchange in detail, providing further insight into the share buyback debate.

Unlike CEOs of companies like Apple, Alphabet, and Meta, who have succumbed to pressure and used their vast cash reserves for share buybacks, Dimon resists this trend. Share buybacks primarily benefit large investors by inflating the value of their holdings.

Dimon could have easily agreed, considering his estimated $2.2 billion net worth, largely tied to his bank holdings. Critics might argue it's easy for him to forego additional wealth, given his substantial $36 million compensation package in 2023.

However, it's undeniable that Dimon has successfully navigated nearly two decades of banking crises, recessions, and a volatile political climate. He has built JPMorgan Chase into the largest bank in the United States by assets, with a market capitalization approaching $600 billion, and at 68 he's still going strong.

— CNBC's Jeff Cox, Hakyung Kim, Alex Harring, Sophie Kinderlin, Leslie Josephs, Hugh Son, Spencer Kimball and Sarah Whitton contributed to this report.

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May 21, 2024
CNBC Daily Open: New highs on Wall Street, Fed’s Waller says rate cuts months away

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Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City.

Angela Weiss | AFP | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

Wall Street reaches new highs
The S&P 500 and the Nasdaq Composite rose to fresh record highs as investors await earnings from AI chipmaker Nvidia after the close on Wednesday. The Dow Jones Industrial Average closed 0.17% higher at 39,872.99. Nvidia’s shares rose 0.6% with option traders pricing in swings of as much as 9% up or down in reaction to its earnings. Treasury yields fell and oil prices drifted lower.

Rate cuts several months away
Federal Reserve Governor Christopher Waller said he does not think further rate increases are necessary, but he will need convincing before backing any rate cuts. “I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said. According to the CME Group’s FedWatch Tool, the first rate cut could come as early as September.

Gasoline reserve release
The Biden administration will release 1 million barrels of gasoline from reserves to reduce prices at the pump ahead of the Fourth of July holiday. OPEC production cuts and fears the Israel-Hamas war could engulf the wider Middle East sent U.S. gasoline futures soaring 19%. “By strategically releasing this reserve in between Memorial Day and July 4th, we are ensuring sufficient supply flows to the tri-state [region] and northeast at a time hardworking Americans need it the most,” Energy Secretary Jennifer Granholm said.

Pixar job cuts
Pixar Animation Studios will lay off about 175 employees, or around 14% of its workforce, a spokesperson for parent company Walt Disney told CNBC. CEO Bob Iger wants Pixar to focus on box office releases and not on short series for Disney+. Pixar and Walt Disney Animation have struggled to generate more than $480 million at the global box office since 2019. Before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2″ tallied $1.24 billion, and “Toy Story 4” snared $1.07 billion worldwide.

Singapore Airlines: one dead, 30 injured
One person died and 30 people were injured aboard a Singapore Airlines flight that was hit by severe turbulence and forced to land in Thailand. Singapore Airlines Flight 321 encountered “sudden, severe turbulence” about 10 hours into a flight from London to Singapore, the airline said. The Boeing 777-300ER plane was carrying 211 passengers and 18 crew members.

[PRO] Stubborn bear
With the S&P 500 index up more than 11% so far this year, Wall Street strategists have been revising their previously pessimistic outlooks for the benchmark. Against this backdrop, CNBC’s Jesse Pound explores why JPMorgan’s Marko Kolanovic is maintaining his negative outlook for stocks.

The bottom line

Few CEOs are strong-willed and have the vision or audacity to redefine their industries. Steve Jobs revolutionized mobile phones with the iPhone, Elon Musk challenged gas-guzzling Detroit's dominance with electric vehicles, and Jamie Dimon, CEO of JPMorgan Chase, has done the same for the often-criticized grey banking industry.

Dimon might seem like an unusual addition to this list of innovators. Yet, he took a bank ranked eighth on Wall Street in 2006 and propelled it to the top spot within five years, surpassing giants like Goldman Sachs, Deutsche Bank, and Citi.

However, Dimon's inclusion here isn't solely due to his bank's impressive growth. Like his peers, he isn't afraid to stand up to his big institutional investors. This was evident at a recent investor day, where the headline revolved around his potential retirement in the next five years.

When pressed on when the bank would repurchase its own shares, Dimon's response was unequivocal: "I want to make it really clear, OK? We're not going to buy back a lot of stock at these prices."

He went on to say, "Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren't going to do it."CNBC's Hugh Son covered this exchange in detail, providing further insight into the share buyback debate.

Unlike CEOs of companies like Apple, Alphabet, and Meta, who have succumbed to pressure and used their vast cash reserves for share buybacks, Dimon resists this trend. Share buybacks primarily benefit large investors by inflating the value of their holdings.

Dimon could have easily agreed, considering his estimated $2.2 billion net worth, largely tied to his bank holdings. Critics might argue it's easy for him to forego additional wealth, given his substantial $36 million compensation package in 2023.

However, it's undeniable that Dimon has successfully navigated nearly two decades of banking crises, recessions, and a volatile political climate. He has built JPMorgan Chase into the largest bank in the United States by assets, with a market capitalization approaching $600 billion, and at 68 he's still going strong.

— CNBC's Jeff Cox, Hakyung Kim, Alex Harring, Sophie Kinderlin, Leslie Josephs, Hugh Son, Spencer Kimball and Sarah Whitton contributed to this report.

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May 21, 2024