US stock futures traded on either side of the flat line on Wednesday after European chipmaker ASML’s ( AS:ASML ) disappointing earnings report dragged down other semiconductor stocks in the previous session. ASML cut its forecast for fiscal 2025, exacerbating concerns about the outlook for a chip industry that has been boosted in recent months by growing excitement around artificial intelligence. Elsewhere, tech mogul Elon Musk gave about $75 million in three months to boost Donald Trump’s bid to win a second four-year term as US president, new federal disclosures showed.
- Forward contracts mixed
U.S. stock futures were mixed on Wednesday after shares on Wall Street fell in the previous session, partly due to weakness in chipmaker names.
By 03:32 ET (07:32 GMT), Dow futures were down 56 points, or 0.1%, S&P 500 futures were down 4 points, or 0.1%, and Nasdaq 100 futures were rose by 13 points or 0.1%.
All three major indexes fell on Tuesday, weighed down by a plunge in semiconductor stocks after Dutch conglomerate ASML’s disappointing earnings report and financial outlook (see below). Energy companies also fell, reflecting a drop in oil prices that came as fears of supply disruptions from the Middle East receded.
The benchmark S&P 500 and the 30-share Dow Jones industrial average both fell 0.8 percent, retreating from record highs hit earlier in the week. The tech-heavy Nasdaq Composite, meanwhile, lost 1.0%.
- ASML’s early earnings hurt global chipmakers
ASML ( NASDAQ:ASML ) cut its guidance for next year and reported third-quarter orders that were nearly half of what analysts had forecast, sending its U.S.-listed shares down more than 16% on Tuesday .
Europe’s most valuable technology company said it now expects total net sales to be between €30bn and €35bn in 2025, with gross margins between 51% and 53%. Its previous estimates called for revenue of up to €40bn and gross margins of 54% to 56%.
Net bookings, which help measure orders, came in at 2.6 billion euros in the third quarter, well below analysts’ forecasts of more than 5 billion euros.
The disappointing results, which were published a day earlier than expected due to a “technical error”, were seen as a “big red flag for technology more broadly”, according to analysts at Vital Knowledge.
Tech stocks fell after ASML’s announcement, including shares of chipmakers such as Nvidia (NASDAQ:NVDA), which is the daughter of artificial intelligence, and Britain’s Arm (NASDAQ:ARM), which designs chips. Semiconductor companies in Asia and Europe also fell.
- Musk gave $75 million to support Trump’s election campaign
Elon Musk has given about $75 million over three months to help Donald Trump win the upcoming US presidential election, underscoring the importance of the world’s richest man to the Republican candidate’s campaign.
Musk, the tech mogul behind electric vehicle giant Tesla ( NASDAQ:TSLA ) and social networking platform X, made several multimillion-dollar donations to his pro-Trump spending group America PAC between July and September, according to with the disclosures filed with the Federal Election Commission.
America PAC has hired people to encourage voter turnout in Pennsylvania and Michigan — key swing states that could sway the outcome of the Nov. 5 vote. Because Trump’s campaign relies mostly on outside groups to find voters, Musk’s spending may give him a more important role in deciding the election, Reuters reported.
National polls have shown Trump’s Democratic rival, Kamala Harris, with a slight lead over the former president, though the two are nearly tied in several battleground states.
- Plunge in LVMH sales
Shares of luxury goods giant LVMH (EPA:LVMH) fell on Wednesday after the owner of Louis Vuitton reported a surprise drop in third-quarter sales and pointed to an “uncertain” business environment.
The Paris-based group, which is often seen as a benchmark for the rest of the premium goods industry, reported a 3 percent drop in revenue to 19.1 billion euros in the quarter ended Sept. 30 compared with the same period last year.
Analysts had expected organic growth of 2%, according to Barclays.
In particular, sales in Asia outside Japan fell 16 percent, fueling fears of weak consumer spending in the crucial Chinese luxury market. In a call with analysts, chief financial officer Jean-Jacques Guiony said the company still believes in the future of its Chinese business, but added that consumer confidence in the country has slipped to historic lows in the COVID-19 era.
LVMH’s peers, including Kering (EPA:PRTP ), Hermes (EPA:HRMS ) and Burberry (LON:BRBY ), fell in early European trade after the report.
- Oil stabilizes
Oil prices steadied on Wednesday after recent sharp losses, as traders weighed signs of a possible de-escalation of tensions in the Middle East and worries about slowing demand growth from top exporter China.
By 03:31 Greek time, Brent was up 0.7% at $74.78 a barrel, while U.S. crude futures (WTI) were trading 0.8% higher at $71.16 a barrel. barrel.
Both benchmarks fell more than 4 percent in the previous session to near two-week lows after a media report said Israel would not attack Iran’s oil and nuclear facilities, dampening fears of a major escalation in the Middle East.
Weak economic data from China also weighed, with both the Organization of the Petroleum Exporting Countries and the International Energy Agency cutting their 2024 demand growth forecasts this week.
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Reference;
Kanowsky, S. (2024) ASML’s dour outlook; Musk gives $75 mn to boost Trump run – what’s moving markets By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/economy/asmls-dour-outlook-musk-gives-75-mn-to-boost-trump-run–whats-moving-markets-3665149 (Accessed: 16 October 2024).
