Chip stocks weigh on Wall Street while China’s CXMT soars in debut
Oil tumbles as US and Iran get back around the negotiating table.
Stocks on Wall Street were mixed as Nvidia and other chip companies weighed on the tech-heavy Nasdaq as the fear of circular deals was revived by the chipmaker providing a backstop for a major OpenAI data centre project, while software firms Salesforce and Microsoft were among those helping buoy the blue chip Dow Jones Industrial Average.
Meanwhile, Chinese memory chip maker CXMT soared in its debut to become the most valuable listed company in Mainland China, and Dutch manufacturer ASML declined amid reports that a state-backed Chinese company had started producing chipmaking machines that posed a threat to the European firm’s dominance.
Oil prices tumbled as the pause in hostilities gave way to renewed negotiations between the US and Iran to de-escalate the conflict in the Middle East, with President Donald Trump saying there was a good chance of a deal.
And the subdued tone is set to flow through to the antipodes, with Australian futures pointing to a soft start for the ASX, while local data includes employment figures from Statistics New Zealand and Ryman Healthcare holds its annual meeting in Auckland today.
Circling back
The Nasdaq Composite was down 0.4% in late trading with Nvidia falling 4.5% as a Wall Street Journal report that the chipmaker was in talks to provide a US$250 billion guarantee to help finance an OpenAI data centre in Ohio revived concerns about the symbiotic relationships developing in the artificial intelligence sector.
Meanwhile, the growing threat of Chinese rivals remained top of mind as CXMT surged 465% in its debut on the Shanghai Stock Exchange’s tech-focused STAR Market, valuing the firm at about 3.28 trillion yuan, making it the most valuable listed company on the mainland.
And Dutch chipmaking equipment manufacturer ASML dipped after The Information reported that a state-backed Chinese company had begun mass production of lithography machines that have been dominated by the European firm.
“Reports that Nvidia could provide a roughly US$250 billion backstop for an OpenAI-related data-centre project have raised fresh questions about circular financing within the AI ecosystem and how much future demand is being supported by suppliers financing their own customers,” Moomoo market strategy consultant Greg Boland said in a note. “The concern comes at an important time, with Microsoft and Meta reporting Wednesday followed by Apple and Amazon Thursday, putting AI spending, orders and returns on that investment firmly in focus.”
Still, the Dow was up 0.4% with software firms Salesforce and Microsoft among the blue-chip index’s leaders, along with manufacturer Sherwin-Williams, and the S&P 500 was marginally higher in late trading.
Out of orbit
Local favourite Rocket Lab climbed 3% to US$65.81 after the space company won a US$266 million contract from the US Space Force Systems Command’s rocket systems launch programme to deliver 12 suborbital launches, and potentially a further six. SpaceX fell 3.2% to US$111.44.
Across the Atlantic, stock markets were stronger with the UK’s FTSE 100 up 0.4%, Germany’s DAX climbing 1% and France’s CAC 40 advancing 0.4%.
Luxury heavyweight LVMH met expectations for the second quarter as sales rose 3% with strong demand in the US, while fast-fashion giant Shein posted a loss on slowing sales as the China-founded company prepares for a listing in Hong Kong.
Brent crude oil futures tumbled 8.9% to US$88.20 a barrel as the US and Iran return to the negotiating table after a pause in the Middle East conflict. Separately, Iranian and Omani officials were reportedly attempting to negotiate a deal to restart shipping through the Strait of Hormuz.
Across the Tasman, Australian prime minister Anthony Albanese is expected to announce a plan for a new oil refinery in Western Australia after this year’s energy shock raised fears about maintaining fuel supply.
Australian futures were pointing to a 0.4% decline for the resources-heavy S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar fell to 57.75 US cents at 7am in Auckland from 57.97 cents. The New Zealand dollar declined to 82.63 Australian cents from 82.86 cents.
Stats NZ will release its monthly filled jobs report, which is expected to show a modest gain in employment, and the June quarter household living-costs price index.
Reporting by Paul McBeth. Image from L N on Unsplash.
