MORNING BID AMERICAS-Wavering waiver?
By Mike Dolan
Oct 19 (Reuters) - After a withering shakeout in AI-linked tech stocks last week, earnings reports from Meta and others due in the next few days will provide another opportunity to test the waters.
The severity of the selloff was exemplified by the SOX chip index's more than 10% weekly loss, as well as the 25% drop in data center builder CoreWeave, which sat at the epicenter of investors' concerns.
Among a range of AI anxieties, markets are starting to fret about the rising cost of capital for the big borrowers in the space, just at a time when the pace of revenue growth may be slowing and doubts are rising about the cost of computing that AI developers can eventually charge customers.
Meta - along with Tesla, Texas Instruments and others - will report third-quarter earnings this week, and close tabs will be kept on the scale of its investment spending growth ahead.
A big takeaway from last week's market action was how the Treasury bond market reacted to the stock market tumble, with yields retreating sharply on the prospect of any damage to the overwhelming AI theme, even after unexpectedly hot US inflation readings for September.
That retreat continued first thing Monday as crude oil prices backed off five-month highs seen late last week. Brent crude hit $110 per barrel on Friday for the first time since May on concerns about worsening developments in the Iran and Ukraine-Russia wars.
Although the weekend did see more ships hit in the Gulf, as well as a Ukrainian attack on another major Russian oil installation in St Petersburg, the focus now shifts to US sanctions waivers on Russian crude in an attempt to get energy prices down before the midterms.
Russia may not have much to export given developments in the war, and there were weekend doubts from US Secretary of State Marco Rubio, who said President Trump would use up to 60 days to assess the impact of waiving sanctions. Brent fell back 2% first thing Monday nonetheless.
Elsewhere, China reported that third-quarter GDP growth picked up to 4.5%, with softer retail sales growth beating forecasts for September too. The yuan hit another four-year high.
Indonesia's stock market, the worst-performing of the year, plunged again today after Friday's announcement by index compiler MSCI that it may remove the country from its emerging market investment indexes due to governance and transparency concerns.
Indonesia's stock benchmark is down more than 40% for the year so far.
CHART OF THE DAY
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Rocket or damp squib? Elon Musk's SpaceX will report on Tuesday, with consensus estimates homing in on $12.7 billion revenue and earnings of 14 cents per share.
The row over Starlink's interrupted services to Ukraine, speculation about a possible merging of SpaceX with Musk's Tesla - which also reports this week - and market jitters about AI financing over the past week all form the backdrop.
At $146, the SpaceX share price is now about 8% above its IPO price in June, with Wall Street's median 12-month price target at $221.
TODAY'S EVENTS TO WATCH
US October NAHB Housing Index (10 a.m. EDT)
Canada September CPI (8:30 a.m. EDT)
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