ASML Earnings Preview and IBM Shares Decline Shape Global Market Sentiment
Key Market Developments and Earnings Insights
A look at the day ahead in European and global markets from Tom Westbrook
ASML Earnings in Focus
Europe's most valuable company and the top supplier of chip-making equipment reports on Wednesday with the AI rally getting some speed wobbles.
ASML’s Unique Position in Chip Manufacturing
ASML is the only maker of EUV lithography systems, the huge $300 million machines needed to produce the tiny circuitry on cutting-edge chips.
Expected Financial Performance
It is set to report an 8.8% rise in second-quarter net profit at 2.61 billion euros ($2.99 billion) on a 14% increase in revenue at 8.8 billion euros, LSEG estimates showed. Analysts are also looking for an increase to the company's full-year revenue forecast currently at 36 billion to 40 billion euros.
AI and Market Sentiment
The market mood is such that only a big beat will do, with IBM the latest illustration of how AI is upending business models in software and computing and how fickle markets are turning about picking the boom's winners and losers.
IBM Shares Plunge After Earnings Miss
IBM SHEDS A QUARTER OF ITS VALUE
"Big Blue" said it had failed to keep pace with the shift in corporate spending from software to data-centre infrastructure.
Revenue and Earnings Forecast
A projected revenue rise of just 1% put its adjusted earnings-per-share forecast at $2.93 compared with market expectations of $3.02. The result sent IBM's shares down 25%.
Global Market Movements
Asian Markets React to U.S. Inflation Data
South Korea's volatile KOSPI shot up 8% in Asia, with a surprise slowdown in U.S. inflation cooling bets on interest rate hikes and giving investors a reason to be cheerful.
Oil Prices and Geopolitical Tensions
Brent crude futures kept over $85 a barrel, though stayed short of fresh peaks as investors wait to see how long the Strait of Hormuz will again be blocked to oil tankers.
China’s Economic Growth Slows
Data showed China's economic growth slowed to 4.3% in the first half, short of economists' expectations. Still, there was little reaction, since the theme of export strength and domestic weakness are well worn and because investors hope the slowdown will prompt a bit of a fiscal impulse.
Bank of Canada Rate Decision
The Bank of Canada is widely expected to hold interest rates steady later on Wednesday.
Key Events to Watch
Key developments that could influence markets on Wednesday:
Corporate Earnings
• Earnings: ASML, BNY, Blackrock, Johnson & Johnson, Morgan Stanley, United Airlines
Economic Data Releases
• Economics: Eurozone industrial production, U.S. PPI
Interest Rate Decisions
• Interest rates: Bank of Canada seen holding rates
($1 = 0.8744 euros)
(By Tom Westbrook; Editing by Christopher Cushing)
