A look at the day ahead in European and global markets from Tom
Westbrook
Europe's most valuable company and the top supplier of
chip-making equipment reports on Wednesday with the AI rally
getting some speed wobbles.
ASML is the only maker of EUV lithography systems,
the huge $300 million machines needed to produce the tiny
circuitry on cutting-edge chips.
It is set to report an 8.8% rise in second-quarter net
profit at 2.61 billion euros ($2.99 billion) on a 14% increase
in revenue at 8.8 billion euros, LSEG estimates showed. Analysts
are also looking for an increase to the company's full-year
revenue forecast currently at 36 billion to 40 billion euros.
The market mood is such that only a big beat will do, with
IBM ( IBM ) the latest illustration of how AI is upending
business models in software and computing and how fickle markets
are turning about picking the boom's winners and losers.
IBM SHEDS A QUARTER OF ITS VALUE
"Big Blue" said it had failed to keep pace with the shift in
corporate spending from software to data-centre infrastructure.
A projected revenue rise of just 1% put its adjusted
earnings-per-share forecast at $2.93 compared with market
expectations of $3.02. The result sent IBM's ( IBM ) shares down 25%.
South Korea's volatile KOSPI shot up 8% in Asia,
with a surprise slowdown in U.S. inflation cooling bets on
interest rate hikes and giving investors a reason to be
cheerful.
Brent crude futures kept over $85 a barrel, though
stayed short of fresh peaks as investors wait to see how long
the Strait of Hormuz will again be blocked to oil tankers.
Data showed China's economic growth slowed to 4.3% in the
first half, short of economists' expectations. Still, there was
little reaction, since the theme of export strength and domestic
weakness are well worn and because investors hope the slowdown
will prompt a bit of a fiscal impulse.
The Bank of Canada is widely expected to hold interest rates
steady later on Wednesday.
Key developments that could influence markets on Wednesday:
* Earnings: ASML, BNY, Blackrock, Johnson & Johnson, Morgan
Stanley, United Airlines
* Economics: Eurozone industrial production, U.S. PPI
* Interest rates: Bank of Canada seen holding rates
($1 = 0.8744 euros)