Overnight, futures contracts for the EuroStoxx 50 and Nasdaq fell 0.2% and 0.5%, respectively, as the wind has been taken out of the global AI rally's sails. Nvidia was down over 8% in post-market trading after disappointing sales forecast figures. Chipmakers Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. are suffering as well. The AI proxies will be the names to watch today. A run of bad earnings in China continued, with Li Auto Inc. shares down 15% after missing estimates. Adding insult to injury, UBS has downgraded its forecast for China's growth this year and next, citing a worse-than-expected property market slump.
Investor focus will shift from tech stocks to the US economy as the day progresses, with US personal consumption and weekly jobless claims data due later today. This may firm up bets on how quickly the Fed will cut rates this year. Currently, 102 bps of cuts are priced into the futures curve, with the next meeting having a cut of 33 bps priced in, reflecting the market's indecision on whether we'll see a 25 or 50 bps rate cut.
In commodities, oil has steadied after a two-day drop, with WTI crude at $74.69 per barrel. Gold is at $2,517.76 per ounce.
Today we have:
- US GDP and initial jobless claims
- Raphael Bostic of the Fed speaking
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