Summary: Apple’s stock dropped 2.9% for the second day in a row due to China's iPhone restrictions. Qualcomm tumbled 7.2%. In contrast, Intel continued its nine-day winning streak, rising 3.2% following positive AI-related comments from its CFO. The Hang Seng Index and the CSI300 declined, driven by weaknesses in semiconductor and Internet stocks, amid concerns about escalating US-China tech tensions. The USD's strength pushed the Chinese yuan to 16-year lows, with USDCNY rising to 7.3297 and USDCNH approaching August highs near 7.35.
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US Equities: Apple’s stock (AAPL:xnas) declined for the second day due to China’s iPhone restrictions, shedding 2.9% and exerting downward pressure on the Nasdaq 100, which dropped by 0.7%. Qualcomm (QCOM:xnas) tumbled 7.2% as the chipmaker could be hit by both a potential loss of iPhone sales in China and any tightening of US curb on chip export to China. In contrast, Intel advanced for the ninth day in a row, adding 3.2% on Thursday after its CFO told investors that Intel is feeling an AI “tailwind”.
Fixed income: Treasuries rallied, seeing the 2-year yield plunge 7bps to 4.95% and the 10-year yield drop by 4bps to 4.24%. The market sold off briefly after initial claims fell to a level last seen in February but quickly found its footing.
China/HK Equities: The Hang Seng Index and the CSI300 saw declines of 1.3% and 1.4% respectively, driven by a reversal in the recent gains of semiconductor stocks, coupled with weakness in Internet-related stocks. Sentiment took a further hit due to concerns about a potential escalation in the tech war between the US and China, arising from a call from the chair of the House of Representatives' committee on China to end all technology exports to Huawei and SMIC (Reuters). SMIC (00981:xhk) tumbled 7.6%. Adding to the negative sentiment is Bloomberg’s story saying China is to expand a ban on iPhones beyond sensitive departments to government-backed agencies and SOEs.
FX: USD strength continued, bringing the Chinese yuan to 16-year lows. USDCNY rose to 7.3297, the highest since 2007, despite better-than-expected trade data while USDCNH was just shy of August highs near 7.35. USDCAD rose back towards 1.37 as oil prices took a breather and BOC Governor Macklem hinted that the tightening cycle might be over. Lower Treasury yields brought USDJPY below 147.30 but EURUSD reached 1.07 handle on weakness in German industrial output although a clear break is not yet seen.
Commodities: Oil prices eased after but remain on track for weekly gains after production cut announcements from Saudi Arabia and Russia artificially tightening the market. Brent crude was back below $90 as EIA data also showed crude inventory drawdown of 6.3 million barrels last week to hit their lowest level since December while gasoline and distillate inventories also declined. Gas markets remain on edge with Chevron Australia LNG workers likely to go on strike today. Gold was supported by a drop in Treasury yields.
Macro:
In the news:
Macro events:
Earnings events: Kroger (before market; Adj. EPS est. USD0.904)
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