Pre-market market movements
1. Before the U.S. stock market on May 1 (Wednesday), the futures of the three major U.S. stock indexes fell together. As of press time, Dow futures fell 0.22%, S&P 500 futures fell 0.42%, and Nasdaq futures fell 0.64%.
2. As of press time, the UK's FTSE 100 index edged up 0.01%. The stock markets of many European countries are closed on May Day.
3. As of press time, WTI crude oil fell 1.77% to $80.48 per barrel. Brent crude fell 1.56% to $84.98 a barrel.
Market news
Tonight, global investors focused on the Federal Reserve. At 2:00 a.m. Beijing time on Thursday, May 2, the Federal Reserve will announce its interest rate decision. Fed Chair Jerome Powell will hold a monetary policy press conference half an hour after the interest rate decision. The Fed is widely expected to maintain its current restrictive policy stance until it is more confident in controlling inflation, and the FOMC meeting will continue to keep interest rates at their highest levels in more than two decades, i.e., keeping the federal funds target range at 5.25-5.50%. Fed officials, including Jerome Powell, have said in recent weeks that they are willing to keep interest rates high for longer if economic data continues to be strong, a stance Powell is expected to reiterate after this week's FOMC meeting. Bank of America economist Michael Gapen said ahead of the Fed's interest rate decision that the unexpectedly stubborn U.S. inflation left the Fed not confident enough to consider cutting interest rates, causing interest rates to remain high for longer, and the bank now expects the Fed to cut rates only once in December this year. Citibank expects pricing implied by the options market's "at-the-money arbitrage" trading strategy to show that the S&P 500 is expected to see a 0.95% amplitude on the day, which would be the biggest volatility on the Fed's decision-making day since May 2023.
"Fed Mouthpiece": The Fed's "no rate cut" camp may be more emboldened. Nick Timiraos, who has the title of "Fed mouthpiece", recently posted that the disappointing inflation data for three consecutive months has shattered the prospects of the Fed laying the foundation for a summer interest rate cut. The question now is whether stronger-than-expected wage growth in the last quarter will prompt a broader rethinking within the Fed on how to manage the "last mile" of lowering inflation. Fed Chair Jerome Powell has downplayed concerns about rising inflation over the past six months, but the U.S. Labor Department's wage growth report on Tuesday may make the Fed's wait-and-see posture less comfortable. Within the central bank, some officials see no need to cut interest rates this year because of the strength of the economy, and they fear that inflation will stay well above 2.5%. The latest data supports them and increases the likelihood that officials are waiting to see more evidence of an economic slowdown. New data released Tuesday from the U.S. Bureau of Labor Statistics showed that wage costs rose 1.2 percent in the first quarter, up from a 1 percent increase in the previous quarter and above economists' expectations of 0.9 percent.
Negatively impacted by the outlook for the Federal Reserve's interest rates, cryptocurrencies fell to two-month lows. On May 1, the price of bitcoin fell below $57,000, its lowest level since the end of February, and Ethereum followed suit, updating its lowest level since mid-February. Tonight will be the night of the Fed's decision, and the market does not expect the Fed to make any adjustments to interest rates, but the widespread view among investors that the Fed may not cut rates at all this year is gaining traction, which is taking a hit to rate-sensitive assets such as cryptocurrencies, emerging market stocks, bonds, and even commodities.
CEO of BlackRock, the world's largest asset manager: The power shortage caused by AI data centers is a "huge investment opportunity". This week, Larry Fink, chairman and CEO of BlackRock, the world's largest asset manager, spoke at the World Economic Forum about AI investment opportunities. Fink said the surge in power demand from AI data centers is a "huge investment opportunity". He argues that intermittent energy sources such as wind and solar cannot be used to power data companies, and dispatchable power resources are needed.
The U.S. Senate passed a ban on Russian uranium imports, waiting for Biden to sign it into law. The U.S. Senate voted on Tuesday evening local time to pass a bill banning the import of enriched uranium from Russia and submitted the bill to the White House. The White House has said it supports a ban on imports of enriched uranium from Russia. The Prohibiting Russian Uranium Imports Act, which would ban U.S. imports of Russian enriched uranium for 90 days after enactment, was unanimously passed, but allow for a temporary waiver until January 2028. The bill needs to be signed by U.S. President Joe Biden before it becomes law. The White House had called for a "long-term ban" on Russian imports to support the U.S. uranium industry.
Japan may introduce tax incentives to curb the depreciation of the yen. According to the Sankei Shimbun, Japan may introduce measures to provide tax breaks for companies that convert overseas profits into yen, which will apply to "foreign direct investment gains" worth about 20 trillion yen (about $126.74 billion) of companies' overseas subsidiaries. Japan intends to incorporate the plan into the government's annual mid-year policy blueprint prepared this summer. According to reports, this tax incentive may be used as a policy tool to curb the sharp decline of the yen and encourage companies to repatriate overseas assets to Japan. Japan's finance ministry has not yet commented, but some government officials are skeptical, arguing that preferential tax treatment is already in place and that additional measures could have an impact.
Stock news
Pfizer (PFE. US) Q1 revenue and earnings per share both beat expectations. The U.S. pharmaceutical giant Pfizer achieved total revenue of about $14.879 billion in Q1, exceeding market expectations of $14 billion; Pfizer's Q1 net profit was about $3.115 billion, beating the consensus of $1.689 billion, and Q1 earnings per share were $0.55, beating the market estimate of $0.3. In terms of outlook, Pfizer expects full-year adjusted earnings per share of $2.15 to $2.35, compared to $2.05 to $2.25 previously, and Pfizer still expects fiscal year revenue of $58.5 billion to $61.5 billion.
GlaxoSmithKline (GSK. US) Q1 results beat expectations, raising full-year profit guidance. GlaxoSmithKline (GSK. US) reported first-quarter results on Wednesday. According to the data, the company's Q1 revenue was 7.36 billion pounds ($9.18 billion), a year-on-year increase of 10% at constant exchange rates (CER), higher than the market expectation of 7.07 billion pounds; EPS came in at 43.1p, also above the consensus of 37.3p. GlaxoSmithKline raised its full-year profit guidance and said sales in the first half of the year would be higher than in the second half due to strong demand for its respiratory virus and shingles vaccines. The drugmaker now expects adjusted earnings per share to grow by 8% to 10% in 2024, up from its previous forecast of 6% to 9%. The company also expects revenue growth in 2024 to reach the upper end of the forecast range of 5% to 7%.
Gen Z's favorite social platform, Pinterest (PINS. US) exceeded expectations across the board, soaring 15% pre-market. Pinterest, a U.S.-based social media platform focused on image sharing and lifestyle discovery, recently reported first-quarter sales and platform user growth that exceeded Wall Street expectations, with total sales up 23% year-over-year to $740 million in the three months ended March 31, 2024, beating the average Wall Street analysts' estimate of $700.3 million. The company reported non-GAAP adjusted earnings per share of 20 cents, beating its average estimate of 14 cents across the board and 8 cents a year earlier. In terms of earnings expectations, Pinterest management expects total sales in the range of $835 million to $850 million for the quarter, or 18-20% year-over-year, above the average Wall Street analysts' expectations of $828 million.
AMD(AMD. US) CEO Lisa Su: MI300 demand is strong but supply is limited. During the Q1 AMD2024 earnings call, CEO Lisa Su revealed some important information. She said AMD will share more details on the new generation of Instinct AI chips in the coming months, which will be available as early as later this year. Later this year, AMD will also introduce a new generation of mobile processors, codenamed "Strix". Lisa Su emphasized that AMD's Instinct MI300 AI chip is in very high demand, becoming the fastest-growing product in the company's history, achieving sales of more than $1 billion in less than two quarters. In addition, AMD's priorities this year will include expanding AI chip production capacity, and the PC and data center businesses are expected to return to growth, which will drive strong growth in AMD's revenue and gross margin this year.
Delisted from the NASDAQ, Faraday Future (FFIE. US) response: will appeal. Faraday Future announced that it has received a letter from the Nasdaq exchange that the company will be delisted from Nasdaq because it does not comply with the Nasdaq listing rules. Faraday Future said it plans to request a hearing to appeal the delisting decision by May 1, 2024, during which time the company's securities will remain listed on the Nasdaq Capital Market. In a letter dated April 24, the Nasdaq exchange said Faraday Future did not comply with Rule 5810 of the Nasdaq Listing Rules because the company's securities closed at $0.10 or less for ten consecutive trading days. As a result, Nasdaq staff decided to delist the company's securities from the Nasdaq Capital Market.
Preview of important economic data and events
Beijing time 20:15: ADP employment in the United States in April (10,000 people)
22:00 Beijing time: U.S. ISM manufacturing PMI for April; US JOLTs Job Vacancies (10,000 people) in March
22:30 Beijing time: EIA crude oil inventories in the United States for the week to April 26 (10,000 barrels)
02:00 a.m. Beijing time on May 2: Federal Reserve interest rate decision
02:30 a.m. Beijing time on May 2: Federal Reserve Chairman Jerome Powell held a monetary policy press conference.
Earnings forecast
Thursday morning: Qualcomm (QCOM. US)、eBay(EBAY. US)
Thursday evening: Novo Nordisk (NVO. US), Shell (SHEL. US)