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Morning Briefing: August 24th, 2023

Equity Futures Overview

Equity futures present a mixed bag this morning. NVIDIA (NVDA) is the talk of the town, with a significant pre-open gain following its impressive earnings results and forward guidance. This positive momentum has given a boost to the Nasdaq 100 and S&P 500 futures. Other chipmakers and mega-cap stocks are also seeing a surge ahead of the market opening, bolstering the broader market. However, it’s not all sunshine and rainbows. Boeing (BA) has taken a hit due to emerging concerns about a new 737 Max issue. This, in collaboration with Spirit AeroSystems (SPR), has put a damper on the Dow futures.

Treasury Yields on the Rise

There’s movement in the treasury yields. The 2-yr note yield has seen an increase of five basis points, now standing at 4.98%. Meanwhile, the 10-yr note yield has nudged up by one basis point to 4.21%.

Central Bank Updates

In the realm of central banks, there have been some expected moves and surprising shifts. Both the Bank of Korea and Bank Indonesia have maintained their repurchase rates at 3.5% and 5.75% respectively. However, Turkey’s central bank has taken a bold step, hiking its key lending rate from 17.5% to a whopping 25%.

Economic Calendar Highlights

For those keeping an eye on the economic calendar, here’s what’s on the docket for today:

  • 8:30 ET: Keep an eye out for the Weekly Initial Claims, Continuing Claims, July Durable Orders, and Durable Orders ex-transportation.
  • 10:30 ET: The Weekly natural gas inventories report is due.

Corporate News Flash

  • NVIDIA (NVDA): The tech giant has outdone itself, beating expectations on revenue and earnings. The company has also given a nod to an additional $25 billion for share repurchases. Interestingly, NVIDIA has stated that export restrictions on Data Center GPUs to China won’t immediately impact financial results.
  • Boeing (BA) and Spirit AeroSystems (SPR): The duo is under scrutiny due to a potential new issue with the 737 Max, as reported by Air Current.
  • Tech Roundup: Autodesk (ADSK), Splunk (SPLK), and Snowflake (SNOW) have all surpassed expectations, with positive earnings and revenue reports. On the flip side, Petco Health and Wellness (WOOF) and NetApp (NTAP) have presented mixed results, while Dollar Tree (DLTR) and Guess? (GES) have shown some interesting shifts in their financials.

Tech Stocks and AI Hype

The tech sector, especially Nasdaq futures, is buzzing with excitement. NVIDIA’s optimistic outlook has reignited the artificial intelligence hype, propelling tech stocks to new heights. The company’s consistent sales forecasts, beating analysts’ predictions, have set the stage for a potential tech rally. Stuart Cole, a chief macro economist at Equiti Capital in London, commented on NVIDIA’s performance, emphasizing the robust demand for AI technology.

Global Market Insights

While the tech sector is thriving, global investors still have some concerns. China’s trust industry, worth $2.9 trillion, is showing signs of strain, potentially impacting the economy. Additionally, there are apprehensions about the health of local government financing vehicles. On a brighter note, the Turkish lira has rallied after the country’s central bank took aggressive measures to curb inflation.

Commodities Corner

In the commodities sector, European natural gas prices have seen a decline. This drop is attributed to the potential resolution of a labor dispute at Australia’s largest liquefied natural gas export plant, alleviating concerns about possible strikes in the key exporting nation.

Closing Thoughts

As we move forward, the focus will shift to the gathering of top central bankers at Jackson Hole, with a keen eye on Federal Reserve Chair Jerome Powell’s speech scheduled for Friday. While the equity market has seen broad gains this week, the future trajectory remains uncertain. The tech sector, especially AI-related stocks, seems to be the current safe haven in the equity world. However, as always, the market’s dynamics are subject to change, and investors should remain vigilant.




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