What moved
- US (Tuesday's close): The S&P 500 finished flat, down 0.02% at 7,805.45 and within 0.5% of its 52-week high. The Nasdaq Composite lost 0.15% to 27,204.38 and the Dow fell 0.35% to 51,670.10. S&P 500 futures are 0.11% higher at 7,864.25, and that is the only live read on the American day.
- Europe (Tuesday's close): The FTSE 100 ended 0.06% lower at 10,650.33, the DAX lost 0.07% and the CAC 40 lost 0.07%. The Euro Stoxx 50 lagged, falling 0.55% to 6,167.01, because its heavy chip weighting dragged on the index.
- Asia (this morning): The Nikkei is up 0.19% at 67,906.46 and the Hang Seng is up 0.22%. Shanghai is 0.69% lower. The Kospi is down 0.53% at 6,003.33, giving up an early rebound, and sits 36% below its 52-week high. Taiwan closed 0.59% higher.
Why
Tuesday's main story was chips. Memory names sold off on concern that China's ChangXin Memory Technologies is closing the technology gap with Korean producers. SK Hynix lost 10.09% in Seoul and the Philadelphia Semiconductor Index fell 2.7%. The selling spread to chip-equipment makers: ASML ended 4.2% lower in Amsterdam and Applied Materials fell 6.69%. Seoul bounced at first this morning but has since slipped back. That suggests investors are not yet treating Tuesday as a one-off.
ASML's results this morning address part of that worry. Third-quarter sales came in at €11.7bn and the gross margin rose to 57.5% from 54.0%. The company guided to fourth-quarter sales of €14.2–15.2bn. Its chief executive said planned supply for 2027 and 2028 will not fully meet demand driven by AI investment. Whether that steadies the sector should become clear when Amsterdam opens.
Oil is the other driver. Brent is at $106.12 because Houthi attacks on Saudi Arabia and threats against tankers keep supply risk in the price. Higher energy costs feed inflation, which matters more now that the Fed raised rates last month. US banks reported mixed results: Goldman Sachs earned $17.01 a share, while JPMorgan missed forecasts with $5.57. JPMorgan chief executive Jamie Dimon warned of 'sticky inflation' and rising rates. Healthcare was the weakest US sector after Johnson & Johnson fell 5.73% on disappointing sales at its medical-devices business.
Sentiment & risk appetite
The flat S&P 500 hides a weak market underneath. Across our US universe, PrimerIQ's breadth count shows 3,071 decliners against 2,288 advancers, and the Asian count was worse at 6,996 to 4,845. The gap between sectors is wide: US energy rose 1.8% while healthcare fell 1.35%. Stock volatility is calm, with the VIX at 15.27. Bond volatility is less calm: the MOVE index rose 2.66% to 101.09 ahead of the CPI data. Treasuries firmed, with the 10-year yield down 2.3bp to 5.217% and the 30-year down 3.5bp. Gold is little changed at $4,180.60 and 25% below its 52-week high, so investors are not rushing into safe havens.
Economic calendar
No major UK data was released at 07:00 today. UK August GDP is due at 07:00 BST tomorrow, with a 0.1% monthly fall expected after a 0.4% rise previously. China's September trade figures came in well ahead of forecasts: exports rose 36.3% year on year against an expected 25.5%, and imports rose 31% against an expected 24.5%.
The day's main event is US September CPI at 13:30 BST. Headline inflation is forecast at 3.6% year on year, up from 3.4%, with a 0.6% monthly rise. Core inflation is expected to slow to 0.2% on the month. A reading above forecast would put upward pressure on yields, which are already above 5%. ECB President Christine Lagarde speaks at 09:30 BST.
Earnings
ASML released its results this morning, before its shares have traded. Sales of €11.7bn, a 57.5% gross margin and fourth-quarter guidance of €14.2–15.2bn give the chip sector its first fundamental test after Tuesday's sell-off. A second group of large US financial companies reports before the Wall Street open, after Tuesday's mixed first round.