Stock Market Update

Equity futures point to a lower opening as semiconductor stocks move sharply lower in the premarket.

The group faced choppy action yesterday following Micron's (MU 1,150.23, -63.33, -5.2%) blowout earnings release, but ended the session with solid gains. That strength was not evident at the index level, as heightened demand for memory caused several "magnificent seven" companies to raise prices, setting up another day of weakness across mega-cap tech.

This morning, chipmakers are giving back their gains after reports that OpenAI may delay its IPO to 2027 due to recent volatility across SpaceX (SPCX 150.93, -2.07, -1.4%) and other AI-related names. Additionally, Axios reports that the Trump administration has asked OpenAI to delay the release of its latest model due to security concerns.

Outside of the tech space, oil prices continue to retreat, and futures linked to the DJIA hold the narrowest losses, suggesting another day of rotation into the broader market could be in store.

In corporate news:

• ON Semiconductor (ON 101.76, -16.98, -14.3%) agreed to acquire Synaptics (SYNA 130.00, +4.38, +3.5%) in an all-stock deal worth $7 billion.
• Samsung (SSNLF) and SK Hynix (SKHY) are planning to announce hundreds of billions of dollars worth of new investments next week, according to Bloomberg.
• SpaceX (SPCX 150.93, -2.07, -1.4%) is aiming to introduce a new Starlink mobile service for U.S. consumers, according to Financial Times.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a mostly lower finish to the week with Hong Kong's Hang Seng hitting a fresh 13-month low while markets in India were closed for a holiday. Japan's Nikkei: -4.2%, Hong Kong's Hang Seng: -1.8%, China's Shanghai Composite: -2.3%, India's Sensex: CLOSED, South Korea's Kospi: -5.8%, Australia's ASX All Ordinaries: +0.1%.

In news:

• Japan's Tokyo CPI accelerated in June but remained below the Bank of Japan's 2.0% target for the fifth consecutive month.
• Japan's Prime Minister Takaichi indicated that her government plans to shift away from annual extra budgets in favor of annual bond issuance.
• Meanwhile, Finance Minister Katayama proposed a framework that would link spending to most predictable revenue streams like taxes, bond issuance, and spending cuts. The plan would include a 14-year, $2.3 trln, investment plan for AI and energy.

In economic data:

• Japan's June Tokyo CPI 1.7% yr/yr (prior 1.4%) and Tokyo Core CPI 1.6% yr/yr (expected 1.6%; prior 1.3%)
• Singapore's May Industrial Production -0.7% m/m (expected 2.0%; last 6.2%); 13.0% yr/yr (expected 17.0%; last 16.5%)

Major European indices trade in the red. STOXX Europe 600: -0.9%, Germany's DAX: -1.2%, U.K.'s FTSE 100: -1.3%, France's CAC 40: -0.8%, Italy's FTSE MIB: -1.2%, Spain's IBEX 35: -0.4%.

In news:

• Manager Magazin reported that Volkswagen could cut up to 100,000 jobs as part of aggressive restructuring that would also include a spin-off of the passenger vehicle brand.
• Near-term consumer inflation expectations decelerated slightly to 3.5% from 3.9%, according to a survey from the European Central Bank.

In economic data:

• France's May jobseekers 3.116 mln (prior 3.100 mln)
• Italy's June Business Confidence 88.4, as expected (prior 87.9) and Consumer Confidence 92.4 (expected 94.5; prior 93.4). May non-EU trade surplus EUR3.84 bln (prior surplus of EUR3.85 bln)