Pre-market trading on Wednesday shows all three major US stock index futures pointing higher. As of writing, Dow Jones futures are up 0.12%, S&P 500 futures are up 0.26%, and Nasdaq futures have gained 0.71%.
In Europe, the German DAX index is trading 0.35% higher, while the UK's FTSE 100 is down 0.04%. France's CAC 40 has slipped 0.22%, and the Euro Stoxx 50 is up 0.13%.
In the commodities market, WTI crude oil is up 0.49% to $83.61 per barrel, while Brent crude has risen 0.29% to $89.17 per barrel.
Critical US CPI Data on the Horizon
The "global anchor for asset pricing" is approaching a pivotal moment. Wall Street strategists are more divided than ever on whether the Federal Reserve will resume rate hikes next month, but there is one point of agreement: Wednesday's US CPI inflation report will be the decisive factor. Swap market pricing currently shows a roughly 50% probability of a 25-basis-point rate hike. Following the unexpectedly weak July jobs report, the market has become evenly split on the likelihood of a September move. The Fed, under Chair Powell, has reduced its forward guidance, forcing markets to rely on hard data for policy direction. The impact of the July CPI is therefore asymmetric—a tame reading would further weaken the case for a hike, while a hotter-than-expected number could quickly re-establish a September hike as the baseline scenario. For the 10-year Treasury yield, the risk-reward is currently skewed towards a scenario where a benign CPI report drives yields sharply lower, supported by constructive macro data and CTA bond market positioning.
Fed Officials Sound Alarm on Inflation Risks
Ahead of the July CPI release, several Fed policymakers have warned about the persistent risk of high inflation. Chicago Fed President Goolsbee stated he is more concerned about inflation being too high than about any weakness in the labor market. Cleveland Fed President Hammack noted that a single 25-basis-point hike might not have a significant impact on the economy, and the Fed may ultimately need "a certain number" of additional rate increases to bring inflation down. However, she emphasized she does not want to prejudge the exact number of hikes needed. Previously, St. Louis Fed President Musalem said that with inflation above the 2% target, policymakers cannot afford to tolerate higher prices while waiting for the potential of strong productivity growth. Fed Governor Cook reiterated her readiness to support further rate hikes if inflation does not continue to slow, warning that the longer inflation stays above the 2% target, the harder it will be to control in the future. Minneapolis Fed President Kashkari suggested the Fed should begin gradually raising rates to combat inflation and avoid the need for more aggressive action later.
Hon Hai's Profit Surges on AI Server Demand
Hon Hai Precision Industry Co., a key assembler of AI servers, reported a larger-than-expected 35% jump in quarterly profit, driven by robust demand from major cloud providers and AI leaders for Nvidia's GPU server clusters. Net profit for the quarter ending June rose to NT$60 billion ($1.9 billion), surpassing the average analyst estimate of NT$58.4 billion. The company had previously reported a 40% increase in quarterly revenue. July revenue surged 54.2% to NT$946.5 billion. Analysts expect Hon Hai's current-quarter revenue to grow 32% year-over-year despite a high base. The company's management forecasted "high double-digit" sequential growth for AI server rack shipments in the third quarter and plans to expand production capacity in the US, including Texas and Wisconsin. Hon Hai explicitly stated that AI computing infrastructure is driving its growth and holds a "strong" outlook for AI servers.
South Korea Tightens Rules on Leveraged ETFs
South Korea is further tightening regulations on leveraged ETFs for individual stocks, requiring new investors to complete simulated trading exercises. The Financial Services Commission (FSC) announced that new investors in single-stock leveraged ETFs must complete at least five days of simulated trading, totaling at least five hours, before they can invest. This rule takes effect on August 19 for both domestic and overseas investors. This is the latest measure to curb retail investor exposure to these high-risk products, following a previous rout that caused significant losses. Earlier, the regulator raised the minimum cash deposit for such trades to 30 million won ($21,000) and extended mandatory online training for new investors to three hours.
IEA Warns of Widening Global Oil Supply Deficit
The International Energy Agency (IEA) stated that despite falling demand, the global oil supply deficit is set to widen. In its monthly report, the IEA said the global oil market will face a supply deficit of 1.8 million barrels per day in the current quarter, more than double previous estimates, as renewed hostilities and shipping disruptions hamper production. The IEA revised its forecast for global oil demand growth downward by nearly 50% to 1.6 million bpd, while noting that inventories are tightening again. The IEA expects the lost inventory to be replenished next year as the market moves back into surplus. It also noted that major consuming countries like the US, Japan, and Germany will need to refill their emergency oil reserves after a record release in March.
No Talks on Extending Iran Ceasefire, Source Says
A senior Iranian source stated that there are currently no discussions between Iran and the US regarding an extension of the ceasefire. The source claimed that the US violated a temporary agreement within 48 hours of its conclusion and then withdrew from it days later. The current issue under discussion, the source said, is the US's return to the memorandum of understanding and establishing a timeline for fulfilling its commitments, but no progress has been made.
Nebius Surges on Strong AI Cloud Revenue
Nebius Group (NBIS.US) reported second-quarter revenue that exceeded expectations, driven by strong demand for its AI infrastructure and cloud services, leading to larger contracts and higher pricing. Total revenue for the quarter was $582.3 million, above the consensus estimate of $572.75 million. Revenue from its core AI cloud business surged over 500% year-over-year, accounting for about 98% of total group revenue. The company reaffirmed its full-year guidance for fiscal 2026 and noted that demand for AI computing power is accelerating, helping it secure larger, higher-margin contracts. Nebius signed four landmark AI cloud service agreements during the quarter, each with a total contract value exceeding $1 billion, and the total contract value nearly quadrupled sequentially. The company said its pricing power improved this quarter, boosted by strong demand for new-generation AI chips and higher rental rates for previous-generation GPUs. About 70% of the contracts signed included customer prepayments, covering 50% to 60% of related capital expenditures. The stock surged about 15% in pre-market trading.
CoreWeave's Backlog Tops $104 Billion, Lifts Guidance
CoreWeave (CRWV.US) reported second-quarter revenue of $2.58 billion, beating the consensus estimate of $2.56 billion and representing 112% year-over-year growth. The company posted a net loss of $626 million, or $1.14 per share, primarily due to high interest expenses of $640 million for infrastructure expansion, though the loss was narrower than the expected $1.41 per share loss. The most striking figure was its revenue backlog, which reached approximately $104 billion, up 246% year-over-year and increasing from $99.4 billion at the end of the previous quarter. The company raised its full-year 2026 revenue guidance to a range of $12.4 billion to $13.2 billion, up from the previous $12.0 billion to $13.0 billion range, compared to the analyst consensus of $12.63 billion.
Lumentum Beats Estimates on Strong AI Optical Demand
Lumentum (LITE.US) reported fourth-quarter fiscal 2026 revenue of $1.006 billion, beating the consensus estimate of $990 million and representing 109.3% year-over-year growth. Adjusted net income was $326 million, up 415% year-over-year, with adjusted earnings per share of $3.23, surpassing the expected $2.97. Adjusted gross margin was 50.4%, up 1,260 basis points year-over-year and above the consensus of 48.8%. The company's guidance for the first quarter of fiscal 2027 also exceeded expectations. Lumentum forecasts first-quarter revenue between $1.225 billion and $1.275 billion, with the midpoint of $1.25 billion above the consensus of $1.15 billion. It expects adjusted earnings per share of $4.05 to $4.35, with the midpoint of $4.20 above the consensus of $3.58.
Super Micro Computer's Outlook Smashes Estimates
Super Micro Computer (SMCI.US) provided a first-quarter revenue forecast that far exceeded the most optimistic Wall Street estimates. The company expects revenue of $14.5 billion to $15.5 billion for the quarter ending September, with adjusted earnings per share of $1.01 to $1.10. Analysts had expected revenue of about $12 billion and earnings of $0.74 per share. The forecast even surpassed the highest analyst estimate of $13.3 billion in revenue. Super Micro also projected full-year revenue for the new fiscal year starting July to be between $65 billion and $72 billion, far exceeding the consensus estimate of $54.4 billion.
Microsoft Reportedly Raises Windows 11 License Fees
Microsoft (MSFT.US) has reportedly increased the licensing fee for Windows 11 by 7% to 10%, a larger increase than in previous years, with higher fees for higher-end CPUs. This is adding to the cost pressures already facing the consumer electronics industry due to semiconductor shortages. Asus and Acer are reportedly planning to raise prices by about 5% later this year, with Asus's average product price already up 30% from Q4 2025.
Musk: AI Will Dominate SpaceX's Valuation
Elon Musk has stated that SpaceX's (SPCX.US) AI business will rapidly surpass its traditional space-related operations to become the core driver of revenue and valuation. During a company-wide meeting, Musk said, "Our AI business revenue will definitely exceed all other SpaceX business revenue by September." He added, "I would say that in five years, AI will absolutely account for 99% of the company's valuation, and the total value of SpaceX will be astronomical." Musk revealed that SpaceX has built the "world's most powerful AI training cluster" and plans to expand its computing power by about tenfold to 10 gigawatts by the end of next year. He estimated that achieving 10 gigawatts of AI computing power could generate $300 billion to $500 billion in annual revenue.
Samsung and SK Hynix Eye Record Shareholder Returns
Samsung Electronics (SSNLF.US) and SK Hynix (SKHY.US) are reportedly planning to announce new shareholder return programs by the end of August, with combined returns potentially exceeding 200 trillion won ($141.2 billion), a record high. The specific timing and size have not been finalized. Market expectations for large-scale shareholder returns are rising. Meanwhile, Singapore's sovereign wealth fund Temasek is reportedly planning to make its first direct investment in the South Korean stock market with its own capital, targeting positions in Samsung Electronics and SK Hynix. Shares of both companies rose about 6% on the news.
Oracle Initiates New Round of Layoffs
Oracle (ORCL.US) is reportedly planning a new round of layoffs to cut employee costs, with some teams potentially facing a double-digit percentage reduction in headcount. Management has been asked to submit lists of affected employees, with the goal of completing the cost-cutting by the start of the second fiscal quarter on September 1. This is another large-scale round of layoffs in fiscal 2026. According to company filings, Oracle's total workforce has been reduced by about 21,000 employees, or 13%, to approximately 141,000 as of May 31, 2026. In its annual report, Oracle formally acknowledged that the adoption of AI is a factor in the job cuts, stating, "The adoption and deployment of AI technology in our operations has and may continue to result in a reduction in the number of our employees." The restructuring has been costly, with Oracle paying $1.84 billion in severance and other separation costs in fiscal 2026, up from $374 million the previous year.
Google Expands in Latin America with New Subsea Cables
Alphabet (GOOGL.US) announced plans to deploy three new submarine cable systems in the Americas: Alisios, Canoa, and OlaLuz. Alisios will connect the Dominican Republic, Panama, and Chile. Canoa will connect the Dominican Republic and Bermuda. OlaLuz will connect the Dominican Republic to Florida in the US. Chile is positioning itself as a digital hub in the region, attracting tech companies with its economic and political stability, extensive fiber network, submarine cables, and abundant renewable energy. In addition to the new Alisios cable, the Humboldt submarine cable, supported by Google, is also under development, which will cross the Pacific Ocean to connect Chile and Australia.
General Motors Secures $4.5 Billion Parts Supply Deal
General Motors (GM.US) has entered into a unique parts procurement arrangement worth up to $4.5 billion to preserve cash and mitigate the risk of supply chain disruptions. The deal involves a specialist company, Procura Auto Parts, which will secure funding through a syndicate led by JPMorgan Chase and Santander Bank and make advance payments to specific suppliers on GM's behalf. In return, GM has issued an "Irrevocable Payment Undertaking" (IPU) to repay Procura by July 31, 2029, after the parts are used in production. This arrangement allows GM to move inventory costs off its balance sheet while securing future supply. GM declined to name the specific components involved, but the automotive industry has faced shortages of items including semiconductor chips, rare earth materials, and wiring harnesses.
Key Economic Events and Data
20:30 Beijing Time: US July CPI. 22:30 Beijing Time: US EIA Crude Oil Inventory Change for the week ending August 7. 01:00 Beijing Time (August 13): US 10-Year Note Auction.
Upcoming Earnings
Thursday (Pre-market): Cisco (CSCO.US), Coherent (COHR.US). Thursday (Pre-market): JD.com (JD.US).
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