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Chip Stocks Lead Futures Higher; Apple Gets Price Target Hike

Stock futures trended higher Thursday, as Asia’s markets rallied following Wednesday’s news of revived U.S.-China trade talks.




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Chip stocks and China-based names led the early action, with Qualcomm (QCOM), Intel (INTC) and ASML Holdings (ASML) staking out early gains. Apple (AAPL) jumped after its new iPhone release spurred an analyst price target increase. Chip stock Impinj (PI) blasted to the top of the market on its second-quarter report. Kroger (KR) and Pivotal Software (PVTL) fell hard following their quarterly results.

Dow futures rose 0.4% above fair value. S&P 500 futures advanced 0.3%. Nasdaq 100 futures gained 0.5%. Intel and Apple led the Dow, Davita Healthcare (DVA) and Qualcomm topped the S&P 500 and ASML Holding ran ahead of the Nasdaq 100 in premarket action.

The market is so far tracking toward a positive week. The Dow rose 0.3% through Wednesday, the S&P 500 is up 0.6% and the Nasdaq Composite has a 0.7% gain. September remains a mixed month, with the Dow up a meager 0.1%, while the S&P has declined 0.4% and the Nasdaq is nursing a 1.9% loss. Both the Nasdaq and S&P 500 are tracking toward their first monthly declines since March.

Chip Stocks Qualcomm, ASML Jump; Apple Price Target Increased

Chip stocks rose largely on reaction to the trade situation, with Qualcomm up 3% and Netherlands-based ASML Holding surging 3.6%. Advanced Micro Devices (AMD) popped 2%.

Qualcomm also announced a $16 billion accelerated share-buyback initiative. The accelerated buyback agreement, entered into with Bank of America, Citibank and Morgan Stanley, was part of a $30 billion initiative announced in July. On Monday, Qualcomm shares moved to their highest level since October 2016.

Chip stock Impinj soared 37% on second-quarter results that included an all-clear after an internal audit found no adjustments to prior financial filings were necessary. The Seattle-based chipmaker has posted three straight quarters of revenue declines, four quarterly losses.

Apple advanced 1.1%, as Needham lifted the stock’s target price to 260, from 220, citing a change in the company’s pricing/release strategy following Wednesday’s new iPhone introductions. The IBD Swing Trader stock is in a buy zone through $226.30.

Grocery chain Kroger dived 8.5% after reporting above-forecast second-quarter earnings, but revenue growth that stopped short of some estimates. Kroger shares had climbed just beyond buy range above a 30.10 buy point in a flat base.

Pivotal Software crumbled 26% lower, despite better-than-expected revenue growth and a narrower loss than projected in its second quarter. However, Pivotal added just 15 subscription customers vs. 20 in the first quarter. Subscription revenue rose 51% vs. a year earlier, but decelerating from the first quarter’s 69% pace.

Among China-based stocks, Tencent Holdings (TCEHY) surged 5.6%, while Alibaba Group Holdings (BABA) and Baidu (BIDU) gained more than 2% apiece.  Electric auto maker NioNIO, which raised $1 billion in its Wednesday IPO, gained 2.1% in Thursday’s premarket trade.

China Surges On Trade Talks: Europe Mixed As Turkey Hikes Rates

Global markets were in focus Thursday, as markets across Asia rebounded with gusto. That followed the announcement of a new round of U.S.-China trade talks late Wednesday. Scheduled for later this month, the negotiations will attempt to avoid another escalation in a widening trade war.

The U.S. and China currently have tariffs stacked against imports to each country valued at $50 billion per year. The Trump Administration has threatened tariffs on another $200 billion in Chinese exports if China does not meet demands to restructure its trade practices with the U.S. The new round of talks will be led by Treasury Secretary Steven Mnuchin.

In China, Hong Kong’s Hang Seng Index vaulted 2.5% higher, snapping a six-day decline. The Shanghai Composite jumped 1.2%. Both indexes remains in bear market territory. In Japan, Tokyo’s Nikkei 225 leapt 1%.

Central Bank Actions In Europe

Europe’s markets were tuned to central bank actions in England, Europe and in Turkey. The central bank of Turkey hiked its benchmark interest rate a full 24% — its first significant move to deal with the country’s run-away inflation rates. The move followed a ban issued by Turkish President Recep Tayyip Erdogan, preventing domestic sales and rental transactions in foreign currencies. Both moves intend to prop up the collapsing lira.

The Bank of England held rates steady at 0.75%. But it warned that uncertainties regarding the country’s Brexit strategy had increase since its last meeting. The European Central Bank also left rates unchanged. It also underscored its plans to wind down its bond-buying stimulus efforts before the end of the year.

Further, the ECB slashed its economic growth projections. At the press conference following the decision, ECB President Mario Draghi said that “uncertainties relating to rising protectionism, vulnerabilities in emerging markets, and financial market volatility have gained more prominence.”

European markets were mixed following the announcements. Frankfurt’s DAX showed a 0.6% gain and the CAC-40 was up 0.5% in afternoon trade. London’s FTSE 100 narrowed its early loss to 0.1%.

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