STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking, CFA
Good morning,
Welcome back and hopefully you enjoyed the long holiday weekend. On Thursday major US indices bounced back from the Fed induced selloff in the prior session. The S&P 500 rallied 1.2% leaving the index higher for the week with tech, particularly semiconductors (+~7%) leading to the upside. Breadth was not particularly strong with only 5 of 11 sectors in the S&P 500 ending in the green while energy, financials and healthcare led to the downside. There was a big liquidity event on Thursday as it was triple witch expiration, and the S&P quarterly index rebalance with nearly 3 billion shares trading in the NYSE closing auction.
Iran headlines continued to dominate the press over the weekend. Those headlines initially tilted negatively but ultimately after a meeting in Switzerland the two sides have signaled progress. S&P futures have recouped most of the losses and are trading around unchanged while Dow and R2k futures are modestly higher. Oil prices have pulled back from the weekend highs and are trading slightly lower than they were when markets closed Thursday, ICE Brent is trading ~$78.50.
AI remains the other focal point. There has been some focus on Satya Nadella’s interview (MSFT CEO) who criticized the concentration power within a few frontier models and highlighted the company’s shift to offer low-cost AI models which reportedly could include China’s DeepSeek. Separately this morning the company announced a 20yr power deal with Chevron (+1%) to power its data center in Texas. In an interview, President Trump said he no longer views Anthropic as a national security threat. Ahead of Micron earnings later this week memory stocks are rallying again this morning. Alphabet (-2%) is moving lower after another top AI executive left for OpenAI.
There were a couple of deals announced this morning with ABBV buying APGE for ~$11B in an all-cash deal. CRH is buying infrastructure products/services company ACA for $8.5B.
There is no impactful US economic data today. Fed Waller will be speaking before the open. Treasury yields are up 3-4bps across the curve while the USD is a touch higher.
Markets in Asia were mostly higher overnight. The China Shanghai Composite was up nearly 2% though the Hang Seng fell. The PBOC left 1/5yr LPR rates unchanged as expected. China added 10 companies to its export control list, including rare-earth companies MP/USAR (both trading higher in the pre-market), in response to similar action by the US recently. The Nikkei was up 1.5% with tech and financials leading to the upside. Local yields continue to move higher while the Yen weakens trading ~161.75¥/$ moving away from the closely watched 160 level. South Korea added to recent gains with SK Hynix rallying >5% overtaking Samsung as the largest company. Regulators are weighing stabilization steps to limit potential fallout from volatility created by leveraged ETF’s of the two giant memory companies. European indices have recouped earlier losses now trading modestly higher. France’s CAC 40 is underperforming as luxury stocks are under pressure. UK PM Starmer resigned after last week’s election results local yields are down 3-5bps. The FTSE 100 is up 0.6% with financials and miners leading to the upside.
Oil prices are near session lows down ~2.5%. Natural gas is modestly higher in both the US/Europe. Metals have bounced recouping most of the weekend losses. Ag is mixed. Crypto was moving modestly higher overnight and has accelerated this morning with Bitcoin and Ethereum up ~3% at 65k and 1,765, respectively. Markets have been fixated on STRC moving away from the 100 peg recently. This morning Strategy announced it sold 2.7ml shares last week buying another 520 Bitcoin (~$35ml) but also added $300ml to its balance sheet easing some concern about funding future dividends.
Earnings:
Pre-Market: FRVO
Economic Data:
US:
Welcome back and hopefully you enjoyed the long holiday weekend. On Thursday major US indices bounced back from the Fed induced selloff in the prior session. The S&P 500 rallied 1.2% leaving the index higher for the week with tech, particularly semiconductors (+~7%) leading to the upside. Breadth was not particularly strong with only 5 of 11 sectors in the S&P 500 ending in the green while energy, financials and healthcare led to the downside. There was a big liquidity event on Thursday as it was triple witch expiration, and the S&P quarterly index rebalance with nearly 3 billion shares trading in the NYSE closing auction.
Iran headlines continued to dominate the press over the weekend. Those headlines initially tilted negatively but ultimately after a meeting in Switzerland the two sides have signaled progress. S&P futures have recouped most of the losses and are trading around unchanged while Dow and R2k futures are modestly higher. Oil prices have pulled back from the weekend highs and are trading slightly lower than they were when markets closed Thursday, ICE Brent is trading ~$78.50.
AI remains the other focal point. There has been some focus on Satya Nadella’s interview (MSFT CEO) who criticized the concentration power within a few frontier models and highlighted the company’s shift to offer low-cost AI models which reportedly could include China’s DeepSeek. Separately this morning the company announced a 20yr power deal with Chevron (+1%) to power its data center in Texas. In an interview, President Trump said he no longer views Anthropic as a national security threat. Ahead of Micron earnings later this week memory stocks are rallying again this morning. Alphabet (-2%) is moving lower after another top AI executive left for OpenAI.
There were a couple of deals announced this morning with ABBV buying APGE for ~$11B in an all-cash deal. CRH is buying infrastructure products/services company ACA for $8.5B.
There is no impactful US economic data today. Fed Waller will be speaking before the open. Treasury yields are up 3-4bps across the curve while the USD is a touch higher.
- US 2yr +4bps to 4.22%, 5yr +4bps to 4.28%, 10yr +4bps to 4.50%, 30yr +4bps to 4.94%
- USD index: +$0.05 to $100.67
Markets in Asia were mostly higher overnight. The China Shanghai Composite was up nearly 2% though the Hang Seng fell. The PBOC left 1/5yr LPR rates unchanged as expected. China added 10 companies to its export control list, including rare-earth companies MP/USAR (both trading higher in the pre-market), in response to similar action by the US recently. The Nikkei was up 1.5% with tech and financials leading to the upside. Local yields continue to move higher while the Yen weakens trading ~161.75¥/$ moving away from the closely watched 160 level. South Korea added to recent gains with SK Hynix rallying >5% overtaking Samsung as the largest company. Regulators are weighing stabilization steps to limit potential fallout from volatility created by leveraged ETF’s of the two giant memory companies. European indices have recouped earlier losses now trading modestly higher. France’s CAC 40 is underperforming as luxury stocks are under pressure. UK PM Starmer resigned after last week’s election results local yields are down 3-5bps. The FTSE 100 is up 0.6% with financials and miners leading to the upside.
Oil prices are near session lows down ~2.5%. Natural gas is modestly higher in both the US/Europe. Metals have bounced recouping most of the weekend losses. Ag is mixed. Crypto was moving modestly higher overnight and has accelerated this morning with Bitcoin and Ethereum up ~3% at 65k and 1,765, respectively. Markets have been fixated on STRC moving away from the 100 peg recently. This morning Strategy announced it sold 2.7ml shares last week buying another 520 Bitcoin (~$35ml) but also added $300ml to its balance sheet easing some concern about funding future dividends.
Earnings:
Pre-Market: FRVO
Economic Data:
US:
- 9:00 Fed Waller
- China 1/5yr Loan Prime rates left unchanged at 3%/3.5%
- Canda CPI: 1%/3.2% m.m/y.y vs. 0.8%/3% cons,. prior 0.4%/2.8%
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