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Apple's Baidu Link, Nissan sales, STOXX 600 growth - what's moving markets

Published 03/25/2024, 05:25 AM
Updated 03/25/2024, 05:35 AM
© Reuters

Investing.com -- Apple has been linked with Baidu over using the Chinese internet giant’s AI models in China, while Nissan (OTC:NSANY) launches a new three-year business plan. Goldman turns more positive on European equities, while Wall Street looks set to start the new week on a negative note.

1. Futures lower, on track for monthly gains

U.S. stock futures slipped lower Monday, starting a holiday-shortened week by handing back some of the previous week’s strong gains ahead of the release of the Federal Reserve’s preferred gauge of underlying inflation.

By 05:25 ET (09:25 GMT), the Dow futures contract was down 45 points, or 0.1%, S&P 500 futures had dipped by 7 points or 0.1%, and Nasdaq 100 futures had fallen by 35 points or 0.2%.

The market is on track for its fifth consecutive month of gains, with the broad-based S&P 500 adding around 2.3% last week, the Dow Jones Industrial Average gaining just under 2% for its best week since December, and the Nasdaq Composite jumped about 2.9% - all recording all-time closing highs.

The Fed’s favorite inflation gauge, the core personal consumption expenditures price index, is due for release when markets are closed for Good Friday.

The index, which excludes food and energy costs, is forecast to rise 0.3% in February after posting its biggest monthly increase in a year the prior month.

It will be studied carefully after the Fed last week stuck with projections for three interest rate cuts this year, despite revising up its forecast for economic growth, adding that it wanted more evidence inflation is slowing before easing.

Additionally, Fed Chair Jerome Powell, Atlanta Fed president Raphael Bostic and Fed governors Lisa Cook and Christopher Waller are among some of the Fed officials due to make appearances during the coming week.

2. Apple in talks with Baidu over AI - reports

Apple (NASDAQ:AAPL) is likely to remain in the spotlight Monday, following reports in the Chinese media that the tech giant is in talks with Baidu (NASDAQ:BIDU) over using the Chinese internet giant’s AI models in its iPhone software in China.

The reports suggested Baidu’s AI model will be used in Apple’s iPhone 16 and IOS 18 in China, a move that could help Apple lessen U.S. regulatory concerns over using proprietary AI technology in China.

The AI integration may also boost its iPhone sales in China, which have fallen for four straight quarters amid increased government scrutiny and tighter competition from rivals such as Samsung (KS:005930) and Huawei.

Apple was sued by the U.S. Department of Justice late last week, with the iPhone maker becoming the latest of the Big Tech companies to be accused of operating monopolies and abusing their power.

Elsewhere, the Financial Times reported on Sunday that China has introduced guidelines to phase out U.S. microprocessors from Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD) from government personal computers and servers.

The procurement guidance also seeks to sideline Microsoft (NASDAQ:MSFT)'s Windows operating system and foreign-made database software in favour of domestic options, the report said.

3. Nissan targets 1 million extra sales over 3 years

Nissan (TYO:7201) launched a new medium-term business plan Monday, targeting an additional 1 million vehicle sales over the next three years, with electrified vehicles, including hybrids, set to make up 60% of global sales by the end of the decade.

The Japanese auto giant said it would launch 30 new models over the next three years, of which 16 would be electrified. Nissan also plans to reduce the cost of the next generation of EVs by 30% to make them comparable to internal combustion engine models by 2030.

This is part of Nissan’s plan for EVs to make up 60% of its global sales by the end of the decade, up from a goal of 55% released in February 2023.

Japan's third-largest automaker by sales said it would target an operating profit margin of over 6% and total shareholder returns of more than 30% by the financial year ending in March 2027.

4. Goldman lifts STOXX 600 year-end target

The STOXX 600 index has had a strong year so far, but Goldman Sachs sees more upside for the pan-European benchmark index this year.

AT 05:25 ET, the STOXX 600 traded 0.1% lower at 509.12, a gain of over 6% year-to-date.

Goldman Sachs raised its 2024 year-end target for the index to 540 from 510, implying just under 6% upside, citing potential improvement in economic growth and monetary policy easing across central banks.

"If economic growth modestly accelerates and central banks embark on a rate-cutting cycle in June, as our economists expect, valuations will rise further," analysts at Goldman Sachs said in a note.

Expectations are growing that the European Central Bank will start its rate-cutting cycle in June, while recent business activity pointed to the potential for a return to growth next month.

"Equities have probably reached the optimism phase, the last one of the equity cycle, in which multiples tend to rise while profit growth slows," the influential investment bank added.

The bank also lifted on Monday its 2024 target for the U.K.'s benchmark FTSE 100 index to 8,200 from 7,900, offering over 3% upside from current levels.

5. Oil rises as Gaza ceasefire chances dim

Oil prices rose Monday as the chances of a Gaza ceasefire dimmed, adding to concerns of tightening global supply conditions. 

By 05:25 ET, the U.S. crude futures traded 0.7% higher at $81.23 a barrel, while the Brent contract climbed 0.7% to $85.45 per barrel.

Both benchmarks fell around 1% last week, with a stronger U.S. dollar, which rose about 1% over the last week, keeping a lid on prices.

The United Nations Security Council will vote, later on Monday, on an alternative resolution for an immediate ceasefire in the Gaza strip for Ramadan, as well as the release of all hostages by Hamas. 

However, this resolution was tabled almost immediately after China and Russia vetoed a U.S.-led resolution, suggesting that U.S. officials may look to retaliate with their veto this time. 

A deescalation in the Israel-Hamas conflict would likely soothe concerns over geopolitical instability in the oil-rich Middle East region.

The prospect of tighter supplies put oil prices at four-month highs earlier in March, on the back of reduced Russian fuel output, following Ukrainian strikes on major refineries, as well as steadily shrinking U.S. inventories.


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