Pre-market market trends

1. Before the market opened on September 5th (Thursday), the futures of the three major U.S. stock indices were mixed. As of the time of writing, Dow Jones futures rose by 0.08%, S&P 500 futures rose by 0.01%, and Nasdaq futures fell by 0.10%.

2. As of the time of writing, the Germany DAX index rose by 0.22%, the UK FTSE 100 index fell by 0.13%, the France CAC 40 index fell by 0.44%, and the Europe Stoxx 50 index fell by 0.30%.

3. As of the time of writing, WTI crude oil rose by 0.35% to $69.44 per barrel. Brent crude oil rose by 0.48% to $73.05 per barrel.

Market News

Aggressive rate cut bets swept the financial markets! More and more traders are betting on a 50 basis point rate cut by the Federal Reserve. Options trading tied to the overnight secured financing rate (SOFR) shows that the number of open positions or positions held by traders in many call contracts that expire on September 13th, the five days before the Fed's policy meeting announcement, has surged. This reflects the increasing number of traders using real money to bet on the Fed's 50 basis point rate cut to boost the weak labor market and economic growth in the United States. If Friday's non-farm payroll report and next week's Consumer Price Index (CPI) data show that the U.S. labor market and inflation rate have cooled enough to justify a faster looser policy, then these traders' dovish bet positions will pay off. Currently, swaps contracts indicate that there is about a one-third chance of a 50 basis point rate cut by the Fed this month.

Morgan Stanley: Fed rate cuts may not drive a new round of stock market gains. JPMorgan said that the Federal Reserve is about to start cutting interest rates, but it would be a big mistake for investors to think that this will bring a new round of stock market gains. Mislav Matejka, strategist at JPMorgan, said in a research report that the Fed's interest rate cut is partly to counter the economic slowdown, which may offset the positive impact of rate cuts on the stock market. The strategist said, "The Fed will begin easing monetary policy, but it is more of a passive response to slower economic growth, which may not be enough to drive the next round of stock market gains." The strategist also added, "We have not yet overcome the challenges, and September is a month with seasonal challenges for the stock market."

Goldman Sachs expert Rubner warns that weak employment data may trigger a market pullback, and the 'curse' of September trading looms. Scott Rubner, the Managing Director and Tactical Specialist of Goldman Sachs Global Markets, warned that if the employment data to be released on Friday does not perform well, the stock market may enter a pullback phase. Rubner pointed out that Goldman Sachs clients have already prepared for a possible stock price decline in the second half of September, and hedging operations are expected to start from September 16. Rubner specifically mentioned that the end of September is usually one of the worst two-week trading periods for the S&P 500 index in history. He further analyzed that, as trend-following systematic funds have almost no room to increase stock holdings, coupled with the upcoming profit buy-back lock-up period for companies, this will reduce demand in the stock market. Goldman Sachs' buyback team forecasts that the passive demand of these funds will be approximately $6.6 billion before the lock-up period begins on September 13.

How much will the rate cut by the Federal Reserve be in September? Key voters: It all depends on the next two weeks! Mary Daly, President of the Federal Reserve Bank of San Francisco and a member of the FOMC, said that the Federal Reserve needs to cut interest rates to maintain a healthy labor market, again reinforcing the market's view that a rate cut in September is a foregone conclusion. Daly said, "The health of the labor market must be 'maintained and protected,' and 'we must be very careful as further tightening of policy could further slow the labor market, which in my opinion, is unwelcome.' Daly also revealed that she believes the size of the Fed's rate cut will depend on the upcoming economic data, including this Friday's non-farm employment report and next Wednesday's CPI data.

The 'Seven Sisters' of tech stocks are no longer shining, with small-cap stocks likely to 'lead the way' in the second half of the year. As of now, a key indicator measuring the performance of U.S. small-cap companies shows that they have outperformed the Wall Street benchmark S&P 500 index in the second half of 2024, indicating that market breadth has shifted from large-cap stocks to other areas. Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, said: "Although the upward trend of the U.S. stock market remains strong in the second half of 2024, leadership has shifted from behemoths to minnows."

Another suspense in OPEC+ production cuts, Citigroup warns of downside risk to oil prices if cuts are not sufficient. Citibank's latest forecast indicates that if OPEC+ does not increase the intensity of production cuts, oil prices could fall to $60 per barrel next year. The bank warned that if capital flows lead to further price declines to $50, the market may experience a rebound. However, the long-term impact of geopolitical tensions on oil prices is considered minimal, with each subsequent rebound becoming weaker, and market participants view these tensions as selling opportunities during temporary price increases. Citigroup also warned that if the production cut agreement is not extended, OPEC may lose confidence in defending a $70 per barrel oil price. Although Citibank has issued similar negative forecasts in the past, and sometimes even made mistakes, its analysis still attracts market attention.

Individual stock news

New source of income! Tesla (TSLA.US) plans to launch FSD in China and Europe in the first quarter of 2025. The official Tesla AI account posted on social media that Tesla plans to launch Full Self-Driving (FSD) in China and Europe in the first quarter of 2025, pending regulatory approval. It is worth mentioning that this timetable is slightly delayed compared to Tesla's previous expectation of launching by the end of 2024. Tesla CEO Elon Musk said during the July earnings conference call that the company expects FSD to be approved in Europe, China, and other countries by the end of 2024. In addition to the current one-time purchase option, Tesla also plans to offer a monthly subscription service for FSD, which may bring new sources of income to the company amid increasing competition in the electric vehicle market.

Nio (NIO.US) sets a new high for car deliveries in the second quarter, with a 98.9% year-on-year increase in revenue. The car delivery volume for the second quarter reached 57,373 units, including 32,562 high-end intelligent electric SUVs and 24,811 high-end intelligent electric sedans, representing a 143.9% increase from the second quarter of 2023 and a 90.9% increase from the first quarter of 2024. Car sales revenue amounted to RMB 15.6796 billion (USD 2.1576 billion), representing a 118.2% increase from the second quarter of 2023 and an 87.1% increase from the first quarter of 2024. The car gross margin was 12.2%, compared to 6.2% in the second quarter of 2023 and 9.2% in the first quarter of 2024. Total revenue amounted to RMB 17.446 billion (USD 2.4006 billion), representing a 98.9% increase from the second quarter of 2023 and a 76.1% increase from the first quarter of 2024.

Facing a potential antitrust investigation, Nvidia (NVDA.US) denies receiving a subpoena from the U.S. Department of Justice. Nvidia has denied reports that it received a subpoena from the U.S. Department of Justice regarding antitrust issues. A representative of Nvidia said: 'We have inquired with the U.S. Department of Justice and have not received a subpoena.' 'However, we are happy to answer any questions that regulatory agencies may have about our business.' It is estimated that Nvidia holds a market share of over 80% in the datacenter artificial intelligence chip market. Nvidia stated in an interview: 'The results of our benchmark tests and the value we provide to our customers reflect Nvidia's advantage, and customers can choose the solution that best suits them.'

Market expectations for Broadcom (AVGO.US) the third quarter revenue soared, with AI business and cooperation with OpenAI becoming bright spots. Semiconductor giant Broadcom will announce its financial performance for the third quarter of its 2024 fiscal year post-market on Thursday. The market widely expects Broadcom's third-quarter revenue to reach $13.04 billion, a significant increase from last year's $8.88 billion. However, net income is expected to decrease from $3.3 billion in the same period last year to $2.94 billion, leading to a reduced diluted earnings per share (EPS). It is worth noting that Broadcom conducted a 10-for-1 stock split this summer. The performance of artificial intelligence (AI) related business will undoubtedly become the focus of market attention. Investors will closely observe Broadcom's sales in the AI field, future prospects, and whether there are new AI chip customers joining, especially the market rumored ChatGPT manufacturer, OpenAI.

Plunging more than 19% pre-market! Affected by the tightening of business spending, C3.ai (AI.US) Q1 subscription revenue and full-year guidance fall short of expectations. The financial report shows that C3.ai's total revenue for the first quarter reached $87.2 million, a year-on-year increase of 20.5%, exceeding the analysts' expected $86.94 million; the adjusted loss per share is $0.05, while the market's expectation was a loss of $0.13 per share. However, faced with high interest rates and unstable business, the cautious approach to new software investments has affected the demand for C3.ai's products. The company's first-quarter subscription revenue is $73.5 million, significantly lower than the analysts' average expectation of $79.1 million. Although the company's total revenue slightly exceeds expectations, the sharp decline in subscription revenue reflects widespread concerns about corporate spending during times of economic uncertainty. Looking ahead, the company maintains its revenue expectation for the 2025 fiscal year between $370 million and $395 million, with the midpoint of the range lower than analysts' expected $383.9 million.

Q2 revenue missed expectations, coupled with a 15% staff cut, electric vehicle charging network operator ChargePoint (CHPT.US) plunged more than 7% pre-market. Data shows that in the second quarter ending on July 31, ChargePoint's revenue decreased by 27.6% to $0.109 billion, nearly $5 million less than expected; the loss per share is $0.16, narrower than the loss of $0.35 per share in the same period last year, in line with expectations. For the third quarter, ChargePoint expects revenue to be $85 million to $95 million, lower than the market's general expectation of $135.9 million. It is worth mentioning that the company plans to restructure its business and reduce the global workforce by 15%, a move expected to cost $10 million in severance and related expenses. ChargePoint expects that this layoff will save the company approximately $41 million in operating expenses by improving operating efficiency.

Important economic data and events notice

8:15 pm (Beijing time), U.S. August ADP employment figures change

8:30 pm (Beijing time), U.S. initial jobless claims for the week ending August 31st

10:00 pm (Beijing time), U.S. August ISM non-manufacturing PMI

11:00 pm (Beijing time), U.S. EIA crude oil inventory change for the week ending August 30th

Performance forecast.

Friday morning: Broadcom (AVGO.US)