Though the streams are swollen, Keep them doggies rollin’, Rawhide

US stock indexes continue to break new records, led by the demand for anything semiconductor-related, almost to the exclusion of all else. Hardly a day goes by that something chip-related does not have its market worth revalued by a significant amount. Yesterday, it was Marvel’s turn, as Jensen Huang, Nvidia’s CEO, declared that Marvel’s shares could rise fivefold to make it the next trillion-dollar company. You guessed it, Nvidia has a stake in Marvell, which designs chips, as part of a collaboration that allows customers to use components from both companies to develop semi-custom AI infrastructure.

Alphabet’s announcement of an $80 billion rights issue did nothing for its share price; however, it boosted the semiconductor index by another 6% yesterday. Hewlett Packard Enterprise, already up some 180% this year, jumped another 30% yesterday after the AI server specialist posted record financials for its Q2 and issued upbeat guidance for the full year. According to a Bloomberg article, this is the strongest relative period for tech this century so far. At 33%, the latest quarter is the best on record.

To the other subject dominating the news at present, and it would seem it’s back to the drawing board when it comes to a peace settlement between Iran and the US, as the US launched strikes overnight on the Straits of Hormuz. The price of Brent Crude has returned to the mid-$90s per barrel but has so far remained below $100. This was in response, apparently, after Tehran had fired multiple ballistic missiles at Gulf states. Reports that peace talks had failed were hotly denied by Trump and Marco Rubio. Maybe those comments helped keep a lid on the oil price.

Stockpiling helped drive the S&P Global manufacturing index in the US and UK higher; however, in the US, the service sector slipped closer to the 50 mark that defines expansion from contraction as consumers pulled back due to high inflation, resulting in the sharpest drop in service-sector employment since May 2020. We get the UK’s monthly services index later this morning.

Ahead of the ECB meeting next week, further evidence of weakness in the eurozone as the composite index fell to a 29-month low of 47.5 from 48.8 in April, suggesting an accelerating economic contraction. Despite this, economists are becoming more convinced the ECB will hike rates by 25 basis points next week, on the back of yesterday’s euro area inflation print, with prices rising 3.2% year over year. Hardly surprising, but one of the key takeaways from the monthly survey is that input costs surged at the fastest pace in nearly four years. i.e., the last time we had an oil price shock.