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What’s happening: Shares of Micron Technology fell on Monday, following a move by China’s authorities.
What happened: The Cyberspace Administration of China cited serious cybersecurity issues with some of Micron’s products and urged domestic companies to not use them.
The news exerted pressure on the company’s stock since mainland China and Hong Kong account for a large share of Micron’s sales.
Why it matters: In late March, Micron reported weaker-than-expected quarterly results, with a 53% year-over-year decline in revenues to $3.69 billion. The figure was below market expectations of $3.72 billion. The company reported a loss of $1.91 per share, significantly higher than the Wall Street estimates of a loss of 81 cents per share.
In China, Micron has offices in Shanghai and Shenzhen, and a chip packaging facility in Xian city. Mainland China and Hong Kong together contributed around 25% of the company’s revenues in 2022.
The US has already blacklisted several Chinese tech firms and announced expansive chip export controls. Washington has also prohibited Nvidia to export H100 to China.
In retaliation, the Cyberspace Administration of China imposed trade restrictions on Micron Technology on selling its products in key domestic industries, citing national security concerns. The country’s cybersecurity regulator said the chipmaker had failed to pass a cybersecurity review, which was initiated seven weeks ago and urged domestic companies providing critical infrastructure to stop purchasing products from Micron.
Micron said in a statement that it was looking forward to discussing the issues with the Chinese authorities.
How shares responded: Micron’s shares fell 2.9% to close at $66.23 on Monday, paring some losses after tanking almost 6% in premarket trading. The stock has gained more than 31% year to date.
What to watch: Investors will watch developments with the Chinese regulators regarding the alleged risks posed by Micron’s products.
Context: The EUR/USD forex pair edged higher on Monday, after stabilising on Friday following a three-session downturn.
Details: The EUR/USD forex pair had declined to as low as 1.0760 last week, its weakest level since March 28.
However, the euro stabilised on Friday and began the new week trading slightly above the 1.08 mark. The overall trader sentiment remained cautious on Monday, amid the ongoing debt ceiling talks in the US.
The euro was supported by some economic data. Eurozone’s consumer confidence indicator rose by 0.1 points to a reading of -17.4 in May, surging to a fresh high since February 2022.
The European Central Bank is scheduled to meet on June 15 and there is significant uncertainty around the central bank’s next move. With inflation accelerating to 7.0% in April, from 6.9% a month ago, the ECB could raise rates further.
The US dollar also remained stable, limiting the overall gains for the euro on Monday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, traded almost flat at 103.20 on Monday.
The EUR/USD forex pair rose by less than 0.1% to 1.0813 on Monday.
What are expectations: Traders await the release of economic data on current account, manufacturing PMI and services PMI from the Eurozone today. The current account surplus is expected to contract from €21.3 billion in February to €15.1 billion surplus in March.
Analysts expect the HCOB Eurozone manufacturing PMI to rise to 47 in May, versus a reading of 45.8 in April, while the services PMI is projected to improve to 56.7 in May, from 56.2 in April.
Other Markets: US trading indices closed mostly higher on Monday, with the S&P 500 and Nasdaq 100 up by 0.02% and 0.34%, respectively, and the Dow Jones index down by 0.42%.
External power supply has been cut off from the Russian occupied Zaporizhzhia nuclear power plant. The news sent the safe-haven US dollar index slightly higher this morning.
Japan’s manufacturing PMI rose to an eight-month high of 50.8 in May, versus a reading of 49.5 in the prior month. Despite this, the JPY/USD forex pair remained under pressure.
Australia’s services PMI fell to 51.8 in May, from 53.7 in the prior month. However, the latest reading signalled the second straight month of expansion in the country’s service activity and sent the AUD/USD pair higher in forex trading this morning.
South Korea’s Composite Consumer Sentiment Index rose to 98 points in May, from 95.1 points a month ago, lending support to the KRW/USD forex pair.
Israel’s central bank raised its key interest rate by 25bps to 4.75% at its latest meeting. However, the ILS/USD pair declined in forex trading this morning.
UK’s public sector net borrowing, manufacturing PMI, services PMI and composite PMI, South Africa’s leading business cycle indicator, France’s manufacturing PMI, services PMI and composite PMI, Germany’s manufacturing PMI, services PMI and composite PMI, Italy’s current account, Canada’s producer price inflation, US Redbook index, new home sales, Richmond Fed manufacturing index, building permits, manufacturing PMI, services PMI, composite PMI, and API crude oil stock change, as well as Argentina’s economic activity estimator.
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