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Hello everyone, I am Leonie Kidd. Below is today's Morning Squawk.
The mitigatory rebound of Wall Street's AI concept stocks encountered resistance in Asia and Europe, and the prospects for the "new clouds" on the horizon also darkened as a result. This has made the market focus more on financial reports today, with Netflix and SpaceX becoming the highlights of the day.
What's happening: Tech stocks are fluctuating up and down.
After the rebound on Monday AI, U.S. stock index futures are giving back some of their overnight gains. Asian markets weakened significantly, indicating that investors' nervousness regarding tech stocks remains.
The weakening closing price of CoreWeave and the high yield on Oracle's bonds have exposed ongoing credit concerns in the trading of AI.
International selling pressure
South Korea's Kospi index led the decline in Asian markets, closing near the technical bear market range. Meanwhile, in Europe, tech stocks dragged down major stock indices during morning trading.
Question IPO
The South Korean AI data center company Elice was listed on the country's secondary market in the form of a small IPO, but its stock price plummeted significantly on the first trading day, with a decline of over 30%.
- Why it's important: Other data center companies have already canceled the IPO plans, including Firmus supported by NVIDIA, AirTrunk supported by Blackstone, as well as SB Energy under SoftBank.
- Analysis: Gartner, the chief analyst, is also the author of the report that triggered last week's market sell-off. He insists on his view, stating: "In the AI competition, everyone is fighting for the position of the last survivor. In the AI competition that Gartner is tracking, almost every market could ultimately shrink down to a duopoly."
Stocks with significant fluctuations: "New clouds" on the horizon
The stock price of 'New Cloud' company fell during pre-market trading. CoreWeave is still at the center of the storm; despite Goldman Sachs raising its rating and stating that the stock is 'near the top in terms of quality within this ecosystem,' its mitigating rebound is fading. HSBC holds a different view, stating later on Monday that due to rising borrowing costs and a slowdown in revenue growth from the AI model, the stock could fall another 36%.
- 39 years have passed since "Black Monday," but Jim Cramer indicates that from this AI sell-off, the market can still learn important lessons from that event. He also said that investors should pay attention to hedge funds' liquidations and their role in the recent decline.
$111 per gallon gasoline price
International oil prices, based on Brent crude, rose to their highest level since May earlier on Tuesday due to intensified attacks by Iran and its proxies in the Middle East. The mutual strikes between Ukraine and Russia on energy infrastructure have also exacerbated the situation. Ukrainian President Volodymyr Zelensky is scheduled to meet with U.S. special envoys Steve Witkoff and Jared Kushner in Norway today, following another call from U.S. President Donald Trump for the country to change its leadership.
Financial Report Reminder: Streaming Media and Space
Today, two important benchmark companies in the technology sector will release their financial reports after market closes, namely Netflix and SpaceX.
Swim against the current
According to LSEG data, Netflix expects its profits to grow by 40% in the third quarter. However, after significant changes in the executive team and a large-scale layoff, Netflix investors will be paying attention to the prospects of user engagement.
- Netflix The stock price has declined after each of the past five quarterly financial report releases.
Unparalleled performance
Elon Musk promised to give each American child one share of SpaceX stock next year, setting the tone for today's financial report. This is only the second time the company has released financial reports as a publicly traded entity. Although the stock price is higher than the IPO issue price of $135, it is still below the high point after listing.
- CNBC indicates that you can follow their SpaceX financial report live blog, which will go live at 9 a.m. Eastern Time.
In progress: NVIDIA's European ambitions
NVIDIA is investing in Europe, pledging to invest nearly $10 billion in companies, universities, and research institutions in the region.
Jensen Huang announced a new collaboration with Germany. After announcing the strategic partnership with the German government in Berlin, he also raised a toast to celebrate with the German Chancellor Friedrich Merz.
- Why it's important: Jensen Huang's trip to Europe has led to investments in several startups, including Genesis AI, Agile Robots, and Reflex Aerospace, with Mistral AI still being a key partner.
- Analysis: NVIDIA hopes to accelerate the adoption of AI in regions outside of the United States, but Europe is known for its strict regulations, which may limit the development of the entire region.
Finally
What makes Europe so angry?
Rising living costs and the strain on public services have prompted hundreds of thousands of protesters to take to the streets in several European countries, with demands ranging from high housing costs to poor conditions in schools and universities.
The largest demonstration in France occurred over the weekend, with over 500,000 people participating in the march. While most protested peacefully, some engaged in looting and vandalism of shops, setting fire to town halls, and attacking police.
Protests also took place on Saturday and Sunday in Italy, Spain, Portugal, and Albania.
– CNBC’s Caleigh Keating, Kai N token issuance, Lora Kolodny, Liz Napolitano, Sawdah Bhaimiya, and Jenny Lee have also contributed to this article.
Edited by John Melloy for this issue.
