Ringside · Pre-Bell · August 20
- Alibaba's cloud unit grew 45%, its spending 75%, and its profit missed by RMB 2.20
- Seoul's Kospi jumped 6.18% to 6,871 on buyback plans from SK hynix and Samsung
- Walmart reports before the bell, call at 8:00 Eastern, consensus 74 cents on $186.8 billion
Indexes
Two sessions ago Korea was the worst market in the world. It is now the best, and the reason has less to do with memory pricing than with what the memory makers decided to do with their cash. The Kospi closed at 6,871, up 6.18% from Wednesday's 6,471.17, per Trading Economics, with SK hynix adding 12.80% on a 40 trillion won buyback-and-cancellation program and Samsung Electronics 9.49% on a reported shareholder-return plan above 100 trillion won. Tokyo joined on a smaller scale. American futures declined to follow in either direction, sitting a fraction below Wednesday's settlements while four index members reporting this morning hold the session's real information.
| Futures | Level | % Chg | Note |
|---|---|---|---|
| ES (S&P 500) | 7,726.50 | -0.16% | |
| NQ (Nasdaq 100) | 29,532.00 | -0.27% | Chips still heavy |
| YM (Dow) | 53,458 | -0.18% | |
| RTY (Russell 2000) | 3,035.90 | -0.33% |
Quotes taken at 6:48 a.m. Eastern against Wednesday's settlements. Europe stayed out of it, with the FTSE 100, the DAX, the CAC 40 and the Stoxx 50 all inside half a percent of Wednesday's closes through the London morning, which earns them this sentence and no table rows.
| Asia | Close | % Chg | Note |
|---|---|---|---|
| Kospi | 6,871 | +6.18% | Recovers Tuesday's rout |
| Nikkei 225 | 66,216.79 | +1.20% | |
| Hang Seng | 25,698.49 | +0.80% |
In the News
Rates, FX, Commodities
Wednesday's buyback announcement from the Treasury did its work at the far end of the curve and left the front alone, and the early European session has not disturbed that arrangement.
| Treasury | Yield | Note |
|---|---|---|
| 2-Year | 4.19% | Unmoved since August began |
| 5-Year | 4.35% | |
| 10-Year | 4.65% | Half of August's climb retraced |
| 30-Year | 5.19% | Off Tuesday's 2007 high |
Levels are Wednesday's closes; Trading Economics quoted the ten-year at 4.648% through the London morning. One housekeeping note on crude: screen quotes for West Texas Intermediate diverged by several dollars this morning depending on which contract a given feed displayed, so the figures below come from the Trading Economics benchmark series this letter has used all week.
| Commodity / FX | Level | % Chg | Note |
|---|---|---|---|
| Gold (spot) | $4,492.75 | -0.55% | Holds Wednesday's 3.66% jump |
| Silver | $67.04 | +0.17% | |
| WTI crude | $84.53 | +0.16% | Up more than 3% this week |
| Brent crude | $91.87 | +0.27% | |
| Natural gas | $2.79 | -0.80% | |
| Dollar Index | 98.72 | Weakest since May 14 | |
| EUR/USD | 1.1678 | +0.01% | |
| USD/JPY | 158.48 | +0.20% |
Technicals
Wednesday's close at 7,707.98 puts the S&P 500 1.19% clear of its 20-day at 7,617.34 and 2.43% clear of the 50-day at 7,525.33. The August 13 peak of 7,798.99 is 1.18% overhead and remains the only level that matters on the upside. The Nasdaq 100 at 29,426.02 is the weaker chart, a quarter of a percent over its 50-day of 29,353.35 and 4.0% under its own high. Small caps finished 1.17% below the record set this month, the Russell 2000 at 3,032.94 against a 52-week high of 3,068.42. The rates picture is a curve story: two-year paper has been anchored all month while the ten-year has given back half of August's rise, so a retest of 4.75% would need the long end to do the work a second time.
Breakouts
Marvell Technology (MRVL) rose 9.85% to $237.27 on the Alphabet arrangement, closing 1.2% above its 50-day average of $234.48 after four weeks underneath it. That reclaim is the first constructive development on the chart since June, and the 20-day at $206.19 now sits well below as the level a failure would have to reach. Newmont (NEM) added 7.85% to $125.08, which is 18.3% above its 20-day of $105.76 and 24.9% above the 50-day, with the 52-week high of $131.95 another 5.5% away. The VanEck Gold Miners ETF closed at $97.33, extending August's advance to 31.3% and running 22.6% clear of its own 50-day, a distance that usually resolves through time instead of through more price.
Breakdowns
Advanced Micro Devices (AMD) lost 3.71% to $466.42 and is now beneath both its 20-day of $487.06 and its 50-day of $509.94, with nothing structural until the 200-day far below at $327.73. The VanEck Semiconductor ETF at $560.92 is under its 20-day of $563.85 for a second session and 4.9% under the 50-day.
Top Movers
American premarket quotes were still catching up to the 7:00 a.m. Eastern releases at the time of writing, so what follows is the reported arithmetic and the overnight prices instead of a guess at the opening reaction.
Gainers
Deere (DE) reported third-quarter earnings of $5.10 a share against $4.75 a year ago on revenue of $12.61 billion, ahead of the $4.67 to $4.72 range analysts had modelled. Construction and forestry carried the quarter, with net sales up 18% to $3.62 billion, while production and precision agriculture fell 6% to $4.00 billion. The company lifted the floor of its full-year net income forecast to $4.75 billion from $4.5 billion, left the ceiling at $5.0 billion, and still expects large agricultural equipment sales in the United States and Canada down 15% to 20% this year. Deere closed Wednesday at $580.63.
SK hynix gained 12.80% in Seoul on a 40 trillion won share buyback and cancellation, the largest it has undertaken. The company was the single biggest casualty of Tuesday's regional selloff, which makes the timing look less like routine capital allocation and more like an answer to it.
Losers
Alibaba (BABA) beat on revenue and missed badly on profit. Quarterly revenue of RMB 268.95 billion topped the RMB 268.34 billion consensus and grew 9% from a year ago, helped by an extended "618" shopping festival, per Reuters. Earnings of RMB 8.52 a share came in well under the RMB 10.72 analysts expected, because capital expenditure rose 75% to RMB 67.68 billion. Cloud revenue grew 45% with that segment's operating margin at 12%, and AI product revenue has now delivered triple-digit growth for twelve straight quarters. The Wall Street Journal framed the quarter as weaker earnings amid heavy artificial-intelligence investment, which is the trade the company is openly making. The shares closed Wednesday at $128.90, 6.7% under their 200-day average of $138.21.
NetEase (NTES) grew net revenues 7.9% to RMB 30.1 billion, with games up 9.7%.
Key Macro Data Today
A second-tier data session with three releases, none of which normally moves a curve on its own. Weekly claims carry the most weight, being the fastest labor-market signal available between payroll reports, and the labor market is the half of the mandate the July minutes treated as settled.
| Time (ET) | Release | Note |
|---|---|---|
| 8:30 a.m. | Initial jobless claims | Weekly, most timely labor read |
| 8:30 a.m. | Philadelphia Fed manufacturing index | August survey |
| 10:00 a.m. | Conference Board leading indicators | July, released after the open |
Earnings Today
Before the open: Walmart (WMT), Alibaba (BABA), Deere (DE), NetEase (NTES), Atour Lifestyle (ATAT) and Advance Auto Parts (AAP). After the close the slate thins to Ross Stores (ROST), whose options market was pricing an 8.5% move into the report.
Walmart sets the tone. It releases at 7:00 a.m. Eastern with the call an hour later, and consensus is 74 cents of adjusted earnings on $186.8 billion of revenue, against 68 cents in the year-ago quarter. Its own guidance for the quarter was 72 to 74 cents. The shares closed Wednesday at $114.30, down 0.78%, some 15% below the 52-week high of $134.20 and under the 200-day average, which is an odd place for a company that has beaten or matched estimates in sixteen of the last eighteen quarters. Guggenheim trimmed its target to $135 from $137 on Tuesday while keeping a buy rating.
Drivers
- Claims and the Philadelphia Fed survey arrive together at 8:30 a.m. Eastern into a curve that has already priced the Treasury's intervention. A soft claims number would land awkwardly: it argues for the cuts the front end has refused to price, yet it comes a week after minutes showing three regional presidents wanted a hike. The Philadelphia survey matters less for its headline than for its prices-paid component, the earliest tariff pass-through indicator available all year.
- Retail is three reports deep into the quarter and the readings disagree with each other. Target rose 4.28% on Wednesday to a one-year high, TJX lost all three of its moving averages in a single session, and Home Depot beat on Tuesday and added 2.02%. The name reporting this morning is the largest of them, and its grocery business makes it a proxy for the household as a whole. The split between comparable sales and advertising revenue is the number to find first: a quarter carried by the ad line is a different quarter than one carried by traffic.
- Whether the overnight enthusiasm in Asian memory names reaches American semiconductors will be visible in the first hour. Buyback commitments are capital-allocation decisions and say nothing about chip pricing. The VanEck Semiconductor ETF closed Wednesday at $560.92, and its 20-day average sits $2.93 higher at $563.85.