Pre-market market trends
1. Before the US stock market on October 5 (Monday), futures for the three major US stock indexes had mixed ups and downs. As of press release, Dow futures were up 0.06%, S&P 500 futures were up 0.01%, and NASDAQ futures were down 0.21%.
2. As of press release, the German DAX index rose 0.14%, the UK FTSE 100 index rose 0.51%, the French CAC40 index fell 0.76%, and the European Stoxx 50 index rose 0.01%.
3. As of press release, WTI crude oil fell 0.83% to $90.35 per barrel. Brent crude rose 0.36% to $102.62 per barrel.
Market news
The US ISM Service Industry Index for September is about to be released: prices and employment segments are worth paying attention to. The American Institute for Supply Management (ISM) will announce the ISM service sector PMI for September on Monday. According to the data, the ISM service sector PMI for August was 55.4, up from 54.1 in July, and has been in the expansion range of more than 50 for the 26th consecutive month. Among them, the business activity index rose to 61.7, and the new orders index rose to 60.9, indicating that demand in the service sector is still strong. However, the two sub-indicators in the report deserve special attention. The service sector employment index in August was only 47.8, in a contraction range for the second month in a row; at the same time, the payment price index rose to 72.6, the highest level since August 2022. This shows that the US service sector is currently showing a combination of “strong demand, weak employment, and high price pressure.” Therefore, if the September data continues to show that the price index is above 70 and the employment segment improves again, it may reinforce the view that the economy is still resilient and inflationary pressure continues, thereby supporting the market's expectations for further interest rate hikes by the Federal Reserve.
The US dollar index is approaching a recent high, and the risk of overbuying is heating up. Financial pressure and political uncertainty have reignited in Europe, boosting safe-haven purchases in the US dollar. Affected by the weakening of the euro, the Bloomberg Dollar Spot Index once rose 0.4%, continuing the index's three-week rise and reaching its highest level in recent years. However, some indicators show that the US dollar has been overbought, and the rally is at risk of a reversal. The market focuses on this week's US ISM service sector PMI, employment data, and the Michigan Consumer Confidence Index on Friday. At the same time, it also focuses on the minutes of the Federal Reserve meeting (the Federal Reserve raised interest rates for the first time in three years last month) and official speeches to determine the interest rate path. Marinov, head of foreign exchange research at Fanong Credit G10, warned that the overbought and overvalued dollar is vulnerable to negative data. If investors reevaluate the FOMC hawkish consensus, the dollar may be under pressure; the bank's model suggests going long against the British pound and Swedish krona against the US dollar.
Raw sugar futures hit a new high in nearly two years, and concerns about tightening global supply are heating up. Raw sugar futures continued to rise, weather and production concerns in the world's major sugar producers intensified, and market concerns about the tightening of global supply continued to heat up. New York's most active raw sugar futures once rose 2% to the highest level since December 17, 2024, continuing a rise of nearly 8% last week. Sugar futures also rose at the same time. The El Niño weather pattern is heating up supply concerns across the agricultural market, and sugar crops are expected to be among the earliest affected varieties. At the beginning of the year, the market generally anticipated an oversupply in the global sugar market, but weather risks are changing this expectation. Chris Beauchamp, chief market analyst at investment and trading platform IG, said, “Weather concerns are driving the recent rise in sugar prices, and sugar prices may further test the August high.” Too much rainfall in Brazil, the world's largest sugar producer, has led to a slowdown in sugar cane harvesting and pressing. India, the world's second-largest sugar producer, was affected by the weakest monsoon since 2015, and sugar production is expected to decline. On the European side, the European Union's agricultural resources monitoring department predicts that sweet menu production will be lower than the five-year average. Normally, a drop in production in one region can be compensated by an increase in production in other regions, but if several major sugar producers experience unfavorable weather at the same time, this supply buffer space may be weakened.
Saudi Aramco's CEO warns that the global oil supply buffer is “frighteningly small.” Saudi Aramco CEO Amin Nasser said in London on Monday that oil stocks to cushion global supply shocks are “terribly low” and that unless the Strait of Hormuz is reopened, market risks may increase further. A few days before Nasser made these remarks, the Group of Seven (G7) and its partners decided to release up to 100 million barrels of emergency oil and diesel reserves to mitigate rising fuel costs. “Until the Strait of Hormuz is fully reopened and market confidence is restored, the harsh reality is that price pressure on both crude oil and refined oil products will increase,” Nasser said at the London Energy Intelligence Forum. “Crude oil supply is already tight, but the price of refined oil products has increased even more.” Nasser said that releasing inventory will buy some time for various economies, but it will not solve the imbalance between supply and demand. He said that even if Hormuz, a key shipping port, reopens, it may take up to two years for energy consumers to replenish stocks.
DBS CIO: Nvidia (NVDA.US) expects a price-earnings ratio of only 17 times, and AI technology stocks are far from reaching the bubble zone. DBS Group Chief Investment Officer Hou Wey Fook said that Nvidia's price-earnings ratio and projected profit growth rate of 70% next year show that artificial intelligence (AI) -driven technology stocks are far from entering the bubble zone. According to the data, Nvidia's current stock price is about 17 times its expected profit for the next 12 months. Hou compared this valuation to the 100 times that of Cisco (CSCO.US) before the Internet bubble burst. “If the benchmark company for AI trading is valued at only ten times, how can it be called a bubble?” In an interview, he said and added that the semiconductor and AI markets are still “smooth sailing.” However, Hou still advocates adopting a “barbell” strategy to “control the overall volatility of the portfolio”: combining growth technology stocks with investment-grade fixed income products to achieve stable returns, while using hedge funds and gold as intermediate risk diversification tools.
Individual stock news
Schneider Electric plans to acquire US engineering software developer PTC (PTC.US) for US$22.6 billion. France's Schneider Electric reached an all-cash transaction to acquire PTC, an American industrial software company. PTC's overall valuation is US$22.6 billion. The move is intended to improve the business portfolio for laying out industrial artificial intelligence. Schneider Electric announced Monday that it is offering PTC a cash purchase offer of $205 per share, a 42% premium over the stock's closing price on the previous trading day. The PTC Board of Directors has decided to recommend that shareholders approve this transaction. PTC surged 36% in the premarket.
Qualcomm (QCOM.US) and Huawei have reached a multi-year patent license agreement. Huawei and Qualcomm announced on Monday that they have reached an extensive patent licensing agreement over a period of many years, including cross-licensing of their patent portfolios in various fields such as 5G, computing, artificial intelligence, and networks, as well as Qualcomm's acquisition of some of Huawei's US patents. The deal will be completed after obtaining the necessary regulatory approvals. According to reports, this is the first patent license agreement between Huawei and Qualcomm covering 5G technology. Qualcomm rose more than 4% before the market.
British Petroleum (BP.US) plans to improve the efficiency of capital use, and the CEO has been in office for half a year to accelerate restructuring. BP CEO Meg said there is a need to improve the efficient use of shareholders' capital. After being in charge of the company for six months, she is reinventing the oil giant. “Decisions are important,” Meg said at the Energy Intelligence Forum in London on Monday. In the past, we didn't manage shareholders' capital carefully.” As the first CEO of BP to be hired from outside the company, Meg quickly promoted the restructuring of the company after taking office. Prior to this, BP had poor performance for many years. Related measures include selling low-return assets, streamlining the company structure, and appointing a new chairman. She said in August that BP had not reached its full potential and “lost too much value.” The war in Iran boosted oil and gas prices, providing some help for Meg to push for a restructuring of the company. However, she declined to say when BP will resume share buybacks on Monday, only stating that the company will continue to repay its debts and will not increase expenses. “BP has been the most leveraged company in our industry for over a decade,” Meg said.
From Micron (MU.US) to Hon Hai: AI industry chain performance has continuously exceeded expectations, and global infrastructure spending has continued to rise. Nvidia (NVDA.US) partner Hon Hai Precision reported better-than-expected quarterly revenue, indicating that global AI infrastructure spending remains high. In the three months ending September, Hon Hai's total revenue was NT$3.03 trillion (approximately US$95.4 billion), an increase of 47% over the previous year. Analysts expected an average of NT$2.83 trillion. Prior to Hon Hai's strong revenue growth, Micron Technology released optimistic performance guidelines last week, which further proves that AI spending continues to rise. Despite calls from executives such as Sam Altman of OpenAI and Dario Amodei of Anthropic to slow down the development of AI and ensure that it remains under human control, this spending momentum has not abated.
Daima has listed Nvidia (NVDA.US) as the preferred semiconductor stock, and industry bottlenecks have turned to data center infrastructure SpaceX and Amazon cooperation to open up room for growth. Morgan Stanley recently released a research report, re-listing chip giant Nvidia (NVDA.US) as its preferred stock in the semiconductor sector, maintaining an “gain” rating, and the target price reached 300 US dollars. The agency believes that industry bottlenecks are rapidly shifting from semiconductor production capacity constraints to construction speed and financing models for new data centers, while Nvidia fully grasps industry dividends based on product architecture, global customer ecology, and financing support capabilities. At the same time, they are optimistic about the increase brought about by Muse smart agents and new customer cooperation, and the company's valuation has room for improvement. Damo stressed that the current price-earnings ratio corresponding to Nvidia's profit forecast for the 2028 fiscal year is only 15 times, and the valuation is very attractive. Even if the price-earnings ratio does not expand, relying on performance growth can still bring a solid return on investment.
Key economic data and event forecasts
Beijing time 22:00 US ISM non-manufacturing PMI for September