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Micron Warning, Eurozone Inflation, Celsius Still Frozen - What's Moving Markets

Economy Jul 01, 2022 19:12
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By Geoffrey Smith -- Micron's quarterly guidance signaled an end to the boom times for chipmakers. The ISM's manufacturing survey for June is due. Inflation in the Eurozone surged past expectations to a new record high, putting fresh pressure on the European Central Bank to do more - and more quickly - to bring it down. Stocks are set to open slightly lower after the worst first half in 52 years. FTX is set to buy troubled crypto lender BlockFi (but not Celsius, which may be past rescue), and oil prices rebound from Thursday's losses as fundamentals stay tight. Here's what you need to know in financial markets on Friday, 1st July.

1. Micron outlook spooks chipmakers

It’s been a great couple of years for chipmakers, but the boom may be coming to an end. Micron Technology (NASDAQ:MU) stock fell over 5% in premarket trading, after forecasting a marked drop in sales in the current quarter and saying that it would “moderate” its output growth accordingly.

“The industry demand environment has weakened,” CEO Sanjay Mehrotra said. Recent research has suggested that PC shipments will fall nearly 10% this year, while smartphone shipments are expected to fall nearly 6%. Thursday’s U.S. data on personal spending showed declines on all categories of durable goods, from autos to electronics.

The news dragged down other semiconductors names overnight, with Samsung (KS:005930) falling 1.4% in Seoul, and Infineon (ETR:IFXGn) falling 2.2% in Europe, while lithographer ASML (AS:ASML) fell 2.7%.

2. Eurozone CPI surges to new record high but PMIs surprise to the upside

Inflation in the Eurozone surged to a new high of 8.6%, ahead of expectations and piling further pressure on the European Central Bank to quicken the pace of monetary policy tightening.

That was despite tax cuts that led to lower prices for fuel in Germany and some other Eurozone members last month. The Bank has already all but committed to a 25 basis point increase in interest rates this month, despite a vocal minority of policymakers calling for more drastic action.

On a brighter, note, the region’s manufacturing sector continued to expand in June, activity slowing by less than feared. Tougher times remain ahead, however, with the risk of a complete stop to Russian gas exports threatening to force countries to impose rationing. Gazprom's (MCX:GAZP) stock fell over 30% in Moscow on Thursday after the company said it wouldn’t pay a dividend, in what appeared a preparation for a sudden stop in payments from customers.

3. U.S. stocks set to open lower after worst 1H in over 50 years; ISM survey eyed

U.S. stock markets completed their worst 1st half in 52 years on Thursday and are set to extend their losses at the open.

By 6:30 AM ET (1030 GMT), Dow Jones futures were down 50 points, or 0.2%, while S&P 500 futures were down 0.3%, and Nasdaq 100 futures were down 0.5%.

The data calendar later is headed by the Institute for Supply Management’s monthly manufacturing survey, which is expected to show a moderate slowdown in growth from May.

Micron’s results look likely to put semiconductor stocks under pressure, although premarket moves have been modest so far. Utilities will also remain in the spotlight as the market digests the importance of the Supreme Court’s clipping of the Environmental Protection Agency’s wings on Thursday. In semi-related news, German engineering giant Siemens (ETR:SIEGn) announced a $3 billion write-down of its stake in its Siemens Energy unit due to spiraling losses at the turbine maker.

4. Celsius Network seeks debt restructuring as FTX reportedly passes on bailout opportunity

Celsius Networks, the crypto investment platform that suspended client withdrawals 19 days ago due to ‘extreme market conditions’, said it’s working on a debt restructuring and considering “strategic transactions” as it tries to protect its assets.

It didn’t comment on a report by The Block on Thursday that FTX had chosen not to buy it after discovering a $2 billion hole in its balance sheet.

FTX is, however, on the verge of buying BlockFi, another troubled platform, for as little as $25 million, according to CNBC, two weeks after agreeing a $250 million credit facility with it. BlockFi CEO Zac Prince denied the price tag but said more news would be forthcoming soon.

5. Oil rebounds as India impose export duties; rig count, CFTC data eyed

Crude oil prices rose after reports citing U.S. officials cast doubt on a speedy return of Iranian crude to the market. Talks in Doha aimed at reviving the 2015 UN deal on non-proliferation appear to have gone badly. In addition, Libya’s biggest export terminals remain under force majeure restrictions, firmly capping output from North Africa.

Overnight, India imposed new export duties on gasoline and diesel in an effort to keep more fuel within the country and put a lid on domestic prices. Such measures typically lead to higher prices in the rest of the region. The country also introduced a windfall tax on oil producers.

By 6:30 AM ET, U.S. crude futures were up 2.0% at $107.86 a barrel, while Brent futures were up 2.1% at $111.27 a barrel. Baker Hughes’ rig count and the CFTC’s net positioning data are due later.

Micron Warning, Eurozone Inflation, Celsius Still Frozen - What's Moving Markets

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