US stock selloff snaps rally

US indices

US indices suddenly dropped in the final hours of the US session on Wednesday. The selloff rippled through Asia-Pacific markets. European indices also opened lower on Thursday.

The UK CPI

Sterling has now settled. Yesterday, it suffered its sharpest drop in two months after the UK consumer price index (CPI) fell below forecasts to an annual 3.9% in October, its lowest in 24 months. Investors are now betting that the Bank of England will start easing earlier than it officially suggests.

Micron Technologies

Elsewhere on the equity market, Micron Technology rose about 5% in extended trading last night, paring earlier losses, after reporting better earnings and sales for its fiscal first quarter, as well as a stronger forecast. The loss was lower than anticipated, at 95 cents per share. This trend has been in place for the past three quarters. From a $1.91 loss in Q2 2023, Micron saw it improve to $1.43 in Q3 and a $1.07 loss three months ago. Revenue came in at $4.73 billion, its largest since Q4 2022.

These results reflect the beginning of a recovery in the memory market, which Micron's CEO confirmed yesterday evening in his conference call. Demand for flash storage and DRAM should keep improving next year; supply will approach normal levels in the first half of 2024; and memory prices will also improve next year and rise further in 2025. Artificial intelligence is also boosting demand for Micron's high-bandwidth memory chips. Micron expects "several hundred million" dollars worth of high-bandwidth memory revenue in fiscal 2024 and continued growth of such revenue in 2025.

Micron Technologies Q2 revenue

Micron expects losses to continue shrinking at a faster pace than analysts thought. On an adjusted basis, the company expects a loss of 28 cents per share, plus or minus 7 cents, for the second quarter, compared with estimates of a loss of 62 cents per share. Q2 revenue is seen at $5.3 billion, plus or minus $200 billion, compared with estimates of $5.03 billion.

Nike

Nike is expected to post a rise in revenue but lower earnings. Earnings are forecast to fall by 1.2% to 84 cents per share. Revenue should reach $13.39 billion, up from $13.30 billion a year ago. As these expectations suggest, the economic environment remains challenging for Nike. In the context of still-high inflation, the group continues to struggle with slowing consumer demand. To counter this situation, Nike had to lower its prices. If discounts help support sales and keep inventories under control, it affects profit margins. Nike earnings will also provide an early picture of this year's holiday season, as this earnings period ended on November 30.