Daily Markets: August CPI tomorrow, Apple today

Market Recap Today Equity markets across the Asia-Pacific region concluded the day with a mix of outcomes. China’s Shanghai Composite recorded a slight 0.18% decline, while Hong Kong’s Hang Seng slipped 0.39%, and South Korea’s KOSPI closed 0.79% lower, primarily driven by declines in Commercial and Industrial Services sectors. On the positive side, India’s SENSEX gained 0.14%, Australia’s ASX All Ordinaries advanced 0.20%, Taiwan’s TAIEX rose 0.85%, and Japan’s Nikkei closed 0.95% higher, primarily due to gains in Banking & Insurance and Power sectors. European markets are experiencing a mixed midday trading session, and U.S. equity futures suggest a lower market opening later this morning. Tech stocks are facing downward pressure following disappointing guidance from Oracle. Investors are gearing up for the release of August’s CPI report tomorrow and the European Central Bank’s interest rate decision on Thursday. Today, Apple (AAPL) is hosting its annual event to unveil new products, including the latest iPhone models, while Arm Holdings (ARM) is getting closer to its hotly anticipated IPO. Notable pre-market movers include Oracle, down approximately 9.50%, and WestRock (WRK), surging by about 7.50% following acquisition news.

International Economic Highlights

• In Germany, wholesale prices have declined for the fifth consecutive month, falling by 2.7% YoY in August. Downward pressure came from various sectors, including petroleum products (-15.8%), scrap & residual materials (-30%), cereals, raw tobacco, seeds & animal feeds (-21.4%), chemical products (-18.2%), and metals & metal ores (-16.1%).
• The ZEW Indicator of Economic Sentiment for the Euro Area decreased to -8.9 in September from -5.5 in the previous month, falling below market expectations of -6.2.
• In the United Kingdom, the unemployment rate rose to 4.3% in July, the highest level since the third quarter of 2021. The number of unemployed individuals increased by 159,000 to 1.46 million, primarily driven by those unemployed for up to 12 months. Wages, excluding bonuses, experienced a YoY growth of 7.8% during the three months to July, marking the largest increase since records began in 2001.
• The International Energy Agency predicts that demand for coal, natural gas, and oil is likely to peak before 2030, with a decline in fossil fuel consumption expected to begin this decade due to the ongoing shift towards renewable energy and increased electric vehicle adoption.

Domestic Economic Update

In the U.S., the NFIB Business Optimism Index decreased to 91.30 points in August from 91.90 points in July, slightly below the consensus expectation of 91.7.

Market Performance

  Meta Platforms (META) recorded a gain of 3.25%, contributing to a 1.51% increase in the Communication Services sector. Tesla (TSLA) surged by 10.09%, driven by a positive research report from Morgan Stanley (MS), leading the Consumer Discretionary sector to a 2.69% rise. The Energy sector was the only one not participating, falling by 1.31% after several days of gains. Broad market indices closed higher, with the Russell 2000 up 0.19%, the Dow gaining 0.25%, the S&P 500 adding 0.67%, and the Nasdaq Composite rising 1.14%. JM Smucker’s (SJM) shares initially surged on news of its acquisition of Hostess Brands (TWNK) but later turned negative when Standard and Poor’s Global Ratings issued a negative outlook on the debt-heavy deal, resulting in a 7.01% drop in SJM shares.  

Year-to-Date Performance

• Dow Jones Industrial Average: +4.57%
• S&P 500: +16.88%
• Nasdaq Composite: +32.98%
• Russell 2000: +5.33%
• Bitcoin (BTC-USD): +51.33%
• Ether (ETH-USD): +29.26%

Stocks to Watch

• Before the U.S. equity markets open today, Cognyte Software (CGNT) is set to report its quarterly results.
• At 1 PM ET, Apple is hosting its Wanderlust event, during which it is expected to unveil its latest iPhone and Apple Watch models, as well as updated AirPods products.
• Oracle (ORCL) reported better-than-expected EPS for the August quarter, with quarterly revenue of $12.45 billion, an 8.8% YoY increase but slightly below the $12.48 billion consensus. Oracle’s cloud revenue for the quarter reached $4.6 billion, a 29% YoY growth in constant currency but significantly lower than the 55% YoY growth in the prior quarter. Oracle’s co-founder and chief technology officer, Larry Ellison, mentioned that AI development companies have signed contracts to purchase over $4 billion of capacity in Oracle’s Gen2 Cloud. For the current quarter, Oracle provided EPS guidance of $1.30-$1.34, slightly below the $1.34 consensus, with revenue growth projected at +5%-7%, or $12.89-$13.13 billion, compared to the $13.28 billion consensus.
• Mission Produce (AVO) reported mixed results for the July quarter, with EPS falling short of the consensus forecast, while revenue, which declined 16.5% YoY to $261.4 million, exceeded the $241.97 million consensus. The company anticipates that avocado industry volumes in the current quarter will remain flat to slightly lower compared to the previous year due to reduced supply from Peru, which will impact Mission’s production volumes. Pricing is expected to remain flat to slightly higher sequentially and higher YoY by approximately 10%.
• Sight Sciences (SGHT) lowered its revenue outlook, citing uncertainty over the future of Medicare coverage for its products as a factor affecting demand.
• WestRock (WRK) has agreed to merge with Smurfit Kappa (SMFTF) to create one of the world’s leading paper and packaging companies, valued at nearly $20 billion. Under the merger terms, WestRock shareholders will receive one new Smurfit WestRock share and $5.00 in cash, with a total value of $43.51 per share, and Smurfit Kappa shareholders will hold 50.4% of the combined company.
• Acelyrin (SLRN) shares faced pressure after the company’s lead product candidate failed to meet the primary endpoint in a clinical trial for patients with the severe skin condition Hidradenitis Suppurativa.

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