JASPER’S MARKET SQUAWK 17-11-2022

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JASPER'S MARKET SQUAWK 17-11-2022

Micron warning pushes Nasdaq 1.5% down

Markets fell yesterday largely due to disappointing earning reports and Micron's warning despite retail sales beating estimates. Micron, AMD and Nvidia stocks were all impacted, as the firm said the outlook for 2023 weakened a little later after reporting strong earnings last quarter.

Key factors for today:

• Chip manufacturer sends tech stocks plunging on stellar warning


• Bloomberg report suggests a less hawkish ECB in the next meeting


• Oil back down despite inventory draw as risk sentiment wanes


• UK CPI is not too pleasing ahead of Autumn Budget


• US Retail Sales offered some respite but remained overshadowed

Micron sends market down on gloomy chip outlook

Micron warned that market conditions had deteriorated even more, leading to semiconductor stocks down and pulling the Nasdaq 1.5% lower after receiving rejection at the 12k handle. The firm announced it was reducing its forecast for chip supply due to "market conditions". All key US indices slid, but the S&P 500 and DJIA were not much impacted, printing a 'dogi' indecision bar. The stock itself ended up closing 6.7% lower.

ECB might hike less than expected

A Bloomberg article suggested that the ECB was leaning towards hiking by 50bps at the December meeting instead of 75bps. The ECB had previously warned in its Financial Stability Review report about risks to the housing sector. House prices are up 9.3% in the EA in Q2 when compared to Q1. Bunds moved higher after the report, with the EUR/USD closing near $1.04 in what seemed to be an 'inside bar' formation.

WTI 1.40% lower despite EIA record

After it was confirmed that the incident of a rocket landing in Poland would have minimal geopolitical implications, crude prices fell to ~$85/bbl, along with some unravelling of safe haven plays. Gold, for example, softened 0.53% and formed a 'doji' inside bar, already impacting prices to the downside in the early morning. The weakening of oil incurred partially due to the Druzbha pipeline resumption despite EIA reporting a large inventory draw not seen since 2004.

UK CPI remains hot ahead of Autumn budget

Annual inflation in the UK hit 11.1% compared to the 10.7% expected, it keeps speculation about what would be in Chancellor Hunt’s Autumn Budget to be released today alive. Hunt was in Parliament and said his job is to help the BOE reach its inflation target. Meanwhile, the pound didn't perform much differently than its peer EUR/USD, with an inside 'doji' bar at play.

US retail sales better than expected

Treasury yields slipped, weakening the dollar after US retail sales figures beat estimates of 0.4% with a print of 1.3%. The positive figures support trends in recent corporate reports from major retailers such as Walmart and Lowes, but had no positive impact on the markets yesterday.

Movers and shakers

• Target plunged 13% as it missed bottom-line expectations after Q3 softening sales and profitability spilt into Q4; announced $2-3B cost-cutting measure


• Micron slid 6.7% lower after announcing it would cut wafer starts by 20%. The firm said market conditions had deteriorated even more and saw the outlook for next year weaker


• AMD’s stock dropped 4.8% after Micron’s warning


• Nvidia stock prices have fallen 4.5% in anticipation of the chip maker's fiscal earnings report


• Cisco rose 3% on marginal earnings beat but raised guidance, noting that the supply situation had eased


• Lows rose 3% after beating the top and bottom lines and raising outlook, attracting more investor interest than its main rival


• TJX spiked 5% higher after beating bottom-line earnings, raising the outlook and promoting a new CFO

On the docket

• EA core inflation is expected to spike to plunge at 5% YoY


• UK's Autumn Budget Statement to be finally announced


• Philly Fed Manufacturing Index and Jobless Claims in focus


• Fed's Bowman and Jefferson speech

The post JASPER’S MARKET SQUAWK 17-11-2022 appeared first on Key To Markets Blog.

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