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Good evening,
Leading US stock indices reached fresh records today, reversing Tuesday's declines. After the recent rotation out of the technology sector, major tech names like Nvidia, Apple, and Tesla rebounded today, fueling gains in the Nasdaq and lifting broader sentiment. Wednesday was a light day for data with ADP employment as the highlight. The report set the tone for the session and was a key driver of market direction.
On trade updates, Trump said that he had struck a trade deal with Vietnam that will allow American goods to enter the country duty-free while the US will charge 20% tariffs on Vietnamese goods, well below the 46% announced on Liberation Day. He also said he won’t extend next week's deadline (July 9th) to resume higher tariffs with other trade partners.
Crude oil jumped 3% today as Iran suspended its cooperation with the UN nuclear watchdog and the market was also boosted by the US-Vietnam trade deal.
In single stocks, Tesla reported around 384k car deliveries in Q2, a 14% drop YoY and the second straight quarterly decline, meeting analysts’ estimates and shares rose 5%. Q2 vehicle production was 410k (unch YoY).
Beyond the large cap space, healthcare insurer Centene Corp (CNC, mcap $17bn) plunged 40% today after it withdrew this year’s earnings guidance and warned of a much weaker financial outlook due to slower enrollments and surging medical costs in its Affordable Care Act and Medicaid divisions. The surprise announcement led to a few analyst downgrades and price target cuts, amplifying the selloff. CNC is down 44% this year.
Economics: private-sector employment (ADP) dropped sharply in June, with 33k jobs cut, far below estimates of +95k and the worst reading in 5-yrs. The update raised fears of a softening labor market and led traders to boost their bets on a Fed rate cut in late July, with odds rising from ~20% to 27%.
In the UK, the government was forced to water down its planned welfare reforms after a major party rebellion, wiping out expected budget savings and triggering a sharp selloff in UK bonds and the £ (-0.8% vs $) as investors grew more concerned about Britain's fiscal outlook. The 10-year Gilt yield closed 16bp higher today at 4.62%, reversing the recent rates rally.
Corporate deals: Intralot SA (mcap €660mn), the Greek gaming and lottery tech company, will acquire Bally’s Corp (mcap $555mn) International Interactive in a cash-and-stock deal valuing the business at €2.7bn. Bally’s will become Intralot’s controlling shareholder, and the combined co will be a leading digital gaming operator. The transaction involves a capital raising exercise by Intralot and significant debt financing. (BBG)
KKR has agreed to buy UK-listed Spectris Plc (mcap £3.8bn) for about £4.7bn ($6.5bn), including debt, after outbidding rival Advent International, and marks the largest UK public takeover announced YTD. (FT)
IPOs: Figma, the design-software maker that was the target of a $20bn takeover by Adobe in 2023, filed to go public in the NYSE (under symbol FIG). Neither the expected amount nor price guidance has been released yet. (WSJ)
In the crypto space, Bitcoin gained over 3% but Ethereum’s (ETH) 7% rally was driven by a combination of institutional accumulation, a key technical support at $2,400, and renewed bullish sentiment in the crypto market. Today’s partial recovery cuts this year’s ETH loss to 22%.
Day ahead: US non-farm payrolls for June will be released tomorrow due to Friday’s holiday. Analysts forecast the creation of 110k new jobs, slightly fewer than the 139k reported in May. The unemployment rate is expected to tick up to 4.3%. Also, US trade (imports/exports), and the final PMI readings for most countries.
See you tomorrow.
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