Nasdaq Futures Climb as TSMC Boosts Tech Optimism

June Nasdaq 100 E-Mini futures (NQM26) are trending up +0.32% this morning, setting a new record high as an upbeat forecast from Taiwan Semiconductor Manufacturing Co. boosted sentiment.

The tech rally gained further momentum on Thursday after TSMC, the world’s largest contract chipmaker, delivered a profit beat and raised its full-year revenue growth guidance, underscoring the resilience of AI chip demand. Adding to the positive tone in tech, Elon Musk’s staff is requesting pricing and delivery times for chipmaking equipment for his envisioned Terafab facility. Chip stocks advanced in pre-market trading, with Lam Research (LRCX) and Applied Materials (AMAT) rising over +1%.

Sentiment also remains supported by hopes that a peace agreement between the U.S. and Iran will be reached soon. Bloomberg reported that the U.S. and Iran are considering a two-week extension of their ceasefire, set to expire on Tuesday, to give negotiators additional time to work toward a peace agreement. Still, the price of WTI crude rose over +1% on Thursday as traffic through the Strait of Hormuz remained virtually paralyzed.

Investors are now awaiting a new round of U.S. economic data and corporate earnings reports.

In yesterday’s trading session, Wall Street’s three main equity benchmarks closed mostly higher, with the S&P 500 and Nasdaq 100 notching new record highs. Software stocks popped, with Atlassian (TEAM) surging over +10% to lead gainers in the Nasdaq 100 and Datadog (DDOG) climbing more than +9%. Also, Robinhood Markets (HOOD) jumped over +10% and was the top percentage gainer on the S&P 500 after the SEC approved sweeping changes to a restriction on day-trading activity by small investors. In addition, Tesla (TSLA) climbed more than +7% after CEO Elon Musk said the company had completed the final phase of designing its AI5 chip. On the bearish side, chip and AI-infrastructure stocks retreated, with Sandisk (SNDK) sliding over -5% and KLA Corp. (KLAC) falling more than -2%.

“It’s difficult for investors to avoid the fear of missing out. It reinforces the whole buy-the-dip mentality that has worked so well the last few years,” said Matt Maley, chief market strategist at Miller Tabak + Co.

Economic data released on Wednesday were positive for equities. The U.S. April Empire State manufacturing index rose to a 5-month high of 11.0, stronger than expectations of 0.3. Also, the U.S. import price index rose +0.8% m/m in March, weaker than expectations of +2.3% m/m.

Cleveland Fed President Beth Hammack said on Wednesday that interest rates are well-positioned and she favors keeping them unchanged, though she also sees the possibility that they may need to be adjusted in either direction. “My baseline is that we’re going to remain on hold for a good while, but I do think that there’s a two-sided risk to rates,” Hammack said. “I think there’s a risk that we might need to be more accommodative, or more restrictive, depending on how the data comes out.”

Meanwhile, the Fed said on Wednesday in its Beige Book survey of regional business contacts that the Middle East conflict has created challenges for U.S. companies that extend well beyond coping with higher energy costs. “The conflict in the Middle East was cited as a major source of uncertainty that complicated decision-making around hiring, pricing, and capital investment, with many firms adopting a wait-and-see posture,” according to the Beige Book. Despite elevated uncertainty, economic activity continued to expand at a slight-to-modest pace across most U.S. regions. The report noted that overall price growth remained moderate, but energy and fuel costs surged across all 12 Fed districts. The report also said that the U.S. labor market remained stable across most districts.

U.S. rate futures have priced in a 99.5% chance of no rate change and a 0.5% chance of a 25 basis point rate hike at the April FOMC meeting.

First-quarter corporate earnings season is in full swing, and investors await new reports from prominent companies today, including Netflix (NFLX), PepsiCo (PEP), Abbott Laboratories (ABT), The Charles Schwab Corporation (SCHW), and Prologis (PLD). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +12% increase in quarterly earnings for Q1 compared to the previous year, marking the sixth consecutive quarter of double-digit growth.

On the economic data front, investors will focus on U.S. Initial Jobless Claims data, set to be released in a couple of hours. Economists expect this figure to be 213K, compared to last week’s number of 219K.

The U.S. Philadelphia Fed Manufacturing Index will also be closely watched today. Economists anticipate that the Philly Fed manufacturing index will stand at 10.3 in April, compared to last month’s value of 18.1.

U.S. Industrial Production and Manufacturing Production data will be released today as well. Economists project Industrial Production to rise +0.1% m/m and Manufacturing Production to rise +0.1% m/m in March, compared to the February figures of +0.2% m/m and +0.2% m/m, respectively.

In addition, market participants will be anticipating speeches from Fed Governor Stephen Miran and New York Fed President John Williams.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.28%, down -0.23%.

The Euro Stoxx 50 Index is up +0.29% this morning amid cautious optimism about a possible resolution to the Middle East conflict. Technology, retail, and mining stocks climbed on Thursday. Final data from Eurostat released on Thursday showed that Eurozone inflation accelerated slightly more than initially estimated in March, as the energy shock from the Middle East conflict was more pronounced than expected. Separately, data showed that the U.K. economy expanded for the second consecutive month in February, before the spike in energy prices driven by the Middle East conflict that is likely to weigh on activity in the months ahead. Meanwhile, Eurozone government bond yields fell on Thursday after European Central Bank officials indicated they are in no hurry to raise interest rates. ECB Governing Council member Madis Muller said the central bank may not have sufficient data this month to decide whether interest rates need to be raised to curb an inflation surge, and that the June meeting will provide a more comprehensive set of information. Also, ECB policymaker Alexander Demarco said the Eurozone economy may be edging toward the central bank’s adverse scenario, but officials must stay patient and avoid rushing any interest rate changes to rein in inflation. The ECB will release the accounts of its March policy meeting later today. Investors will be looking to see whether the report reveals any tilt toward rate hikes. In corporate news, Barry Callebaut (BARN.Z.IX) tumbled over -16% after the Swiss chocolate maker cut its full-year operating profit guidance.

U.K. GDP, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.

U.K. February GDP rose +0.5% m/m and +1.0% y/y, stronger than expectations of +0.1% m/m and +0.6% y/y.

Eurozone’s March CPI rose +1.3% m/m and +2.6% y/y, stronger than expectations of +1.2% m/m and +2.5% y/y.

Eurozone’s March Core CPI rose +0.8% m/m and +2.3% y/y, in line with expectations.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.70%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.38%. 

China’s Shanghai Composite Index closed higher today after Beijing reported accelerating economic growth at the start of the year. Sentiment was also bolstered by optimism over a possible extension of the ceasefire in the Iran war. Technology and mining stocks led the gains on Thursday. Data from the National Bureau of Statistics released on Thursday showed that China’s economy grew at a quicker pace in the first quarter, indicating limited spillover effects so far from the war in Iran but offering little evidence of a rebound in weak consumer spending. Strong manufacturing and exports played a key role in driving China’s economic growth. At the same time, consumer spending remains tepid, with retail sales growth, a key measure of household demand, missing expectations in March. Also, China’s property market continues to weigh on consumer and business sentiment. Official data showed widespread declines in property investment, prices, and sales. Goldman Sachs economist Lisheng Wang said the latest Chinese economic data show the economy remains “bifurcated,” highlighting strong manufacturing and exports but weak housing and consumer spending. In corporate news, CATL climbed over +5% after the battery giant reported strong Q1 profit growth.

The Chinese GDP has been reported at +1.3% q/q and +5.0% y/y in the first quarter, compared to expectations of +1.3% q/q and +4.8% y/y.

The Chinese March Industrial Production rose +5.7% y/y, stronger than expectations of +5.4% y/y.

The Chinese March Retail Sales rose +1.7% y/y, weaker than expectations of +2.4% y/y.

The Chinese Fixed Asset Investment rose +1.7% y/y in the January-March period, weaker than expectations of +1.9% y/y.

The Chinese March Unemployment Rate was 5.4%, weaker than expectations of 5.2%.

Japan’s Nikkei 225 Stock Index closed sharply higher today, hitting a new record high as investors remained optimistic that the U.S. and Iran will soon strike a peace deal. The U.S. and Iran are reportedly weighing a two-week extension of the ceasefire to provide additional time for negotiations on a deal. Technology stocks led the gains on Thursday, tracking an overnight rally in their U.S. peers that pushed the S&P 500 and Nasdaq 100 to records. Mining and industrial stocks also climbed. Tsuyoshi Shimizu, chief market analyst at Asset Management One, said, “The Nikkei’s move to fresh highs likely reflects that Japanese equities are shifting toward a ‘new normal’.” The benchmark index is now just 0.8% shy of the 60,000 milestone watched by investors. Meanwhile, the yen strengthened against the dollar on Thursday after Japan’s top currency official, Atsushi Mimura, said that Japan and the U.S. had agreed to cooperate on foreign exchange. In other news, foreign investors bought a net 3.94 trillion yen ($24.87 billion) worth of Japanese stocks in the week through April 11th, marking their largest weekly purchase on record, as expectations that the Middle East conflict could be resolved through negotiations boosted demand for risk assets, according to Ministry of Finance data. In corporate news, Daikin Industries surged over +9% after Elliott Investment Management disclosed that it had built a stake in the air-conditioner maker. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +4.08% to 28.58.

Pre-Market U.S. Stock Movers

Chip stocks advanced in pre-market trading amid a fresh burst of AI optimism, with Lam Research (LRCX) and Applied Materials (AMAT) rising over +1%.

Okta (OKTA) climbed about +4% in pre-market trading after Raymond James upgraded the stock to Outperform from Market Perform with an $85 price target.

J.B. Hunt Transport Services (JBHT) gained more than +1% in pre-market trading after the logistics company reported better-than-expected Q1 results.

GitLab (GTLB) fell over -2% in pre-market trading after UBS downgraded the stock to Neutral from Buy.

PayPal Holdings (PYPL) dropped more than -1% in pre-market trading after Mizuho downgraded the stock to Neutral from Outperform.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - April 16th

Netflix (NFLX), PepsiCo (PEP), Abbott Laboratories (ABT), The Charles Schwab Corporation (SCHW), Prologis (PLD), The Bank of New York Mellon Corporation (BK), U.S. Bancorp (USB), Marsh & McLennan Companies (MRSH), The Travelers Companies (TRV), Citizens Financial Group (CFG), KeyCorp (KEY), Alcoa (AA), F.N.B. (FNB), First Financial Bankshares (FFIN), Independent Bank (INDB), Cohen & Steers (CNS), Simmons First National (SFNC), ManpowerGroup (MAN), Westamerica Bancorporation (WABC), Insteel Industries (IIIN), Hooker Furnishings (HOFT), Lakeland Industries (LAKE).