Strong US economic data spurs stocks and Japan tech rallies

TL;DR: Markets rallied yesterday on strong economic data from the US which eased recession fears. Shares in Asia are mostly in the green this morning, with strong gains amongst Japan tech while European futures are slightly higher. US futures have dipped, implying potential profit-taking at the open.

📰 What’s moving markets?

• US new home sales came in stronger than expected yesterday at 763k (expected: 675k) and US consumer confidence increased to 109.7 (last: 102.5). The S&P 500 rallied 1.2% and the Nasdaq 100 1.8% on the news.

• Nvidia and AMD dropped 3% and 2.3% respectively as the US government considers new restrictions on the export of artificial intelligence chips to China.

• Asian shares are mostly in the green today, led by Nikkei 225 up 1.9% due to electronic companies such as Tokyo Electron and Advantest which may be set to benefit from US AI restrictions.

• Unity jumped 15% yesterday after announcing plans to introduce an “AI Marketplace” which allows game-makers to purchase AI software to expedite the production of their video games.

• The UK fintech Wise rallied 16% yesterday after reporting a threefold increase in pre-tax profit to £147m (largely due to rising base rates). Wise reported revenue of £846.1m in the year to March 31, 2023.

📊 Chart of the day

Tech fundamentals outshine non-tech fundamentals, with tech constituents of the S&P 500 expected to have higher revenue growth than their non-tech counterparts over the next few quarters.

Question for the readers - is anyone underweight tech right now? I would love to hear why. If you’re a big tech bull also let me know. (Just hit reply to this email).

Revenue growth consensus estimates for Tech (blue) vs non-Tech (grey) (S&P 500)

📅 Coming up this week

Monday 26th June

-

Tuesday 27th June

• Japan BoJ Core CPI (YoY) expected: 3.4%, last; 3.0%, actual: 3.1%

• Canada Core CPI (YoY) expected: 3.9%, last: 4.1%, actual: 3.7%

• US Housing Price Index (YoY) expected: 3.1%, last: 3.6%, actual: 3.1%

• Australia Headline CPI (YoY) expected: 6.1%, last: 6.8%, actual: 5.6%

Wednesday 28th June

-

Thursday 29th June

• Euro Zone Consumer Confidence expected: -16.1, last: -17.4

• Germany Headline CPI (YoY) expected: 6.3%, last: 6.1%

• US GDP (QoQ) expected: 1.4%, last: 1.3%

• Japan Unemployment Rate expected: 2.6%, last: 2.6%

Friday 30th June

• UK GDP (QoQ) expected: 0.1%, last: 0.1%

• Euro Zone Core CPI (YoY) expected: 5.5%, last: 5.3%

• Euro Zone Headline CPI (YoY) expected 5.7%, last 6.1%

• Canada GDP (MoM) expected: 0.2%, last: 0.0%

📈 The markets at a glance