By Mike Dolan
July 27 (Reuters) –
What matters in U.S. and global markets today
By Mike Dolan, Editor-at-Large, Finance and Markets
A pause in the Iran conflict and a sizeable retreat in crude oil prices away from $100 per barrel offer some relief at the start of what’s set to be another turbulent week for markets.
The calendar is certainly packed, with the Federal Reserve meeting on Wednesday, a third of the S&P 500 set to report earnings – including Apple, Amazon, Microsoft, Meta and Qualcomm – and second-quarter U.S. GDP estimates also due.
I’ll get into that and more below.
But first, listen to the latest episode of the Morning Bid daily podcast, where we break down the week to come and oil’s latest retreat.
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CHINA CHIP CHAMP
There’s still at least a one-in-four chance of a Fed rate hike on Wednesday priced into futures, despite the latest retreat in oil prices. The Bank of Japan and Bank of England are also set to meet this week, with the former eyeing fresh yen weakness and the latter meeting just as a new UK prime minister takes office.
But oil prices set the tone first thing this week. Brent crude began falling from the triple-digit level on Friday, and the U.S. then said it was pausing strikes on Iran after 13 straight days of attacks. Iran indicated it would reciprocate and we now have to wait to see if some mediation resumes.
There were some reports of the U.S. side running low on munitions, but many in the market will now assume that $100 oil is a pinch point that focuses minds – at least in Washington.
Brent fell further to around $89/bbl early on Monday. Shares in Asia firmed and Wall Street futures were up sharply before the bell.
In earnings, the hyperscalers will be forensically examined again after Alphabet’s second-quarter cash burn saw its stock fall last week despite a big earnings beat.
Elsewhere in the AI world, the Wall Street Journal reported that Nvidia was in talks to provide a roughly $250 billion backstop for OpenAI as part of a data center project. That speaks to both the intensifying cross-financing in the sector and OpenAI’s efforts to build out its own infrastructure.
On the other side of the world, Chinese chipmaker CXMT had a blowout IPO on Monday that saw its stock soar nearly 500% in its Shanghai debut.
Chart of the day
New chip on the block? This year’s global frenzy over chipmaker stocks added another name on Monday as China’s CXMT soared almost 500% on its market debut in Shanghai. This makes it China’s most valuable stock, overtaking the Industrial and Commercial Bank of China.
Asia’s biggest IPO of the year raised about $8.6 billion, giving it a valuation of more than half a trillion dollars. Only 6.73% of CXMT’s enlarged share capital was freely tradable at listing, as most shares are locked up. The small initial float likely magnified the price swings and attracted strong turnover.
But given U.S. restrictions on Chinese chips, CXMT is likely to be a pivotal part of China’s development of its own tech and AI ecosystem, making it a strategic firm globally.
Today’s events to watch
• U.S. June durable goods (8:30 a.m. EDT)
• U.S. 2-year and 5-year note auctions
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(By Mike Dolan)
