ZOOMING IN ON AI, RATES AND CHIPS WARS (0657 GMT) ChatGPT vs Bard. Earnings from U.S. tech giants Microsoft Corp , which backs ChatGPT, and Google parent Alphabet Inc , top the watchlist on Tuesday. Profits at these two, Facebook-owner Meta and Amazon Inc are due this week, and estimates show their cloud businesses could be a drag. Yet, as was the case in the last quarter, their efforts around artificial intelligence will predominate earnings calls. Fed vs ECB. The Fed is in a blackout period ahead of its meeting next week, while the European Central Bank is out and about hinting a half point rate hike is possible next week. The euro is up and has also hit an eight-year high versus the yen as the Bank of Japan's new governor, Kazuo Ueda, has been signalling he is not in a hurry to shift policy.
This week's BOJ meeting, which concludes on Friday, is Ueda's first in charge. U.S. debt ceiling debates and news of plunging deposits at First Republic Bank also serve as a reminder that financial and fiscal stability risks could spur the Fed to shift quickly from hiking to cutting. Chip wars. South Korea reported barely averting a recession in the first quarter and sagging exports, much of which is chip shipments to China and hence a recurrent issue in Sino-U.S. tensions.
South Korean President Yoon Suk Yeol is in the U.S., and America wants South Korea to urge its chipmakers not to boost sales to China if Beijing bans memory chipmaker Micron Technology from selling chips, the Financial Times reported on Sunday.
Key developments that could influence markets on Tuesday:
U.S. April consumer confidence, March new home sales Earnings: Microsoft Corp, Alphabet Inc, Visa Inc, General Motors Co, Texas Instruments Inc, PepsiCo Inc.
(Vidya Ranganathan)
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FUTURES FLASHING RED AS MARKET AWAITS KEY EARNINGS (0647 GMT) Futures are flashing red this morning, with key earnings starting to trickle in ahead of a busy week for corporate reporting as investors mull the interest rate paths of major central banks.
Futures on the STOXX 50 are 0.3% lower, while FTSE futures are down 0.4% and DAX futures are 0.1% lower. Nestle reported slightly better-than-expected first-quarter sales on Tuesday, as the world's biggest packaged food company increased prices to offset tepid sales volume. Switzerland's biggest bank UBS Group reported a 52% slide in quarterly profit, and set aside more money to draw a line under its involvement in toxic mortgages as it prepares to integrate fallen rival Credit Suisse Bank of Japan (BOJ) Governor Kazuo Ueda on Tuesday stressed the need to keep monetary policy ultra-loose for now, but signalled the chance of raising interest rates if inflation and wage growth overshot expectations. Meanwhile, economists polled by Reuters think the European Central Bank will almost certainly add 25 basis points to its deposit rate on May 4 and then take it to 3.50% or higher in June as core inflation remains persistently high.
(Lucy Raitano)
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