A look at the day ahead in U.S. and global markets from Mike Dolan
Another impressive earnings beat from Taiwan's chipmaking giant TSMC may help calm this week's tech stock rout, as the earnings season turns toward wobbly megacaps with an update from Netflix on Thursday - just as the European Central Bank meets.
An increasingly volatile week on Wall Street has seen a wild rotation from pricey tech giants to re-invigorated small caps. As Deutsche Bank notes, the out-performance of the Russell 2000 over the Nasdaq in the past five trading days has been the biggest since the former index began in 1979.
But nerves about the chip giants were jangled further by reports of new U.S. curbs on the sector and White House hopeful Donald Trump's doubt about U.S. military defence of Taiwan.
Wall Street's semiconductor index lost more than $500 billion in value on Wednesday in its worst session since 2020 after a report said the United States was mulling tighter restrictions on exports of advanced chip technology to China.
Artificial Intelligence heavyweight Nvidia fell almost 7% during the session.
Although Dutch chipmaking equipment provider ASML, which slumped 13% yesterday, continued to struggle in Europe, TSMC's update may help steady the ship.
U.S. listed shares of TSMC rebounded 3% on Thursday after the firm - a major Apple and Nvidia supplier - beat profit forecasts and said its revenue in the current quarter will increase by as much as 34%.
That, in turn, has seen a rebound in related U.S. stocks, with Nasdaq futures up 0.5% ahead of today's bell and S&500 futures up too. The VIX volatility gauge has ebbed from its highest level since May.
Streaming bellwether Netflix tops another packed earnings diary later.
Stocks around the world were similarly in foment, with tech-heavy Japanese and South Korean benchmarks falling overnight - with the Nikkei the standout loser with a drop of 2.2%, exaggerated by the week's yen surge.
On the back of a weaker dollar more generally, which sent the DXY index to four-month lows before stabilising today, dollar/yen skidded to its lowest in over a month amid jitters around another suspected round of yen-buying Bank of Japan intervention on Wednesday.
BOJ data suggests it may have bought nearly 6 trillion yen ($38.37 billion) last week and traders said this week's moves bore the hallmarks of further intervention - or at least of markets easily spooked by that prospect.
Chinese equities held in positive territory and the yuan froze, however, as details of the ruling Communist party's "Third Plenum" started to emerge in the wake of another big miss in second-quarter Chinese GDP growth earlier this week.
A communique issued on Thursday after the meeting said China will enhance the role of market mechanisms in the economy, create a fairer and more dynamic market environment and optimise the efficiency of resource allocation.
European stocks also got a foothold, with Britain's FTSE100 outstripping the rest, helped by news of slowing UK wage growth in the three months to May and as the pound slipped from 1-year peaks back under $1.30.
European macro markets now await the ECB's rate decision, where the central bank is expected to keep policy unchanged while signalling its next move is set to be a cut. Markets bet the ECB's second rate cut of the year will come in September and the euro retreated slightly from Wednesday's four-month peak.
A September ECB cut would match where futures markets now firmly place the Federal Reserve's first move, with top Fed officials on Wednesday signalling it's "closer" to cutting rates given inflation's improved trajectory and a labor market in better balance.
In an interview with the Wall Street Journal, New York Fed boss John Williams said: "We're actually going to learn a lot between July and September."
The comments came as U.S. retail and industry readouts for June this week came in better than forecast, pushing the Atlanta Fed's closely-watched "GDPNow" estimate up another couple of notches to 2.7%.
But helped by decent demand at Thursday's 20-year Treasury bond auction, 10-year yields fell to four-month lows at 4.14%.
Key developments that should provide more direction to U.S. markets later on Thursday:
* European Central Bank policy decision, press conference from ECB President Christine Lagarde; South Africa Reserve Bank policy decision* Philadelphia Federal Reserve's July manufacturing survey, U.S. weekly jobless claims, May TIC data on Treasury holdings and flows * US corporate earnings: Netflix, Blackstone, M&T Bank, Textron, Snap-On, Cintas, Marsh & McLennan, Abbott Laboratories, KeyCorp, DR Horton, Domino's Pizza, PPG, Intuitive Surgical * Fed Board Governor Michelle Bowman, San Francisco Fed President Mary Daly and Dallas Fed chief Lorie Logan all speak
* Donald Trump speaks to the Republican National Convention
* European Parliament votes on new European Commission President
* European political leaders meet at EPC summit in Oxford
* US Treasury auctions 10-year inflation-protected securities, 4-week bills
(Editing by Christina Fincher)
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