Futures lower, huge week of earnings, Nvidia down, Boeing up, Lightspeed downgrade
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Synonym for massive: Futures are slightly lower ahead of a massive week for earnings, politics, and top tier economic data. This week 40% of the S&P 500 reports results, including four of the Magnificent 7 – Microsoft & Meta on Wednesday and Apple & Amazon on Thursday. This morning large cap tech is lagging as Huawei is reportedly developing its own AI chip to rival Nvidia’s. Despite the plunge in tech stocks since China’s DeepSeek splashed on to the scene in January, it may surprise you to learn that tech stocks are actually up slightly since Liberation Day. Nevertheless, as US President Donald Trump arrives at his first 100-day mark (on April 30th) he currently holds the record for the worst run during a president’s first 100-days since Gerald Ford in 1974. In addition to earnings, we will get a huge economic data dump including the first pass of Q1 GDP, the Fed’s preferred inflation gauge for March, a read of the manufacturing sector in April, and jobs data on Friday for April. North of 49th parallel, Canadians are heading to the polls today.
Nail biter: Technically polls still have Liberals on track for a win, but the polls have tightened up recently. While this election matters to all Canadians, for investors it is hard to think of a sector with more immediate impact than energy. Conventional wisdom would suggest Liberals = bad for energy while Conservatives = good for energy. However, TD is out with a report this morning noting that both Liberals and Conservatives have been talking about making Canada an energy super power. “The Liberal energy policy has shifted sharply over the last two months and now aligns rather closely with the Conservative’s,” wrote TD’s Menno Hulshof. Both parties are on level footing with respect to the carbon tax since Prime Minister Mark Carney scrapped it shortly after coming into office. Both parties have also talked about the need for more pipelines. One key differentiator remains, according to TD, and that is an oil & gas emissions cap. The formal implementation of a cap by the Liberals could be a mid-term headwind for Canadian energy equities, says TD. However, they say there is scope to still grow production. Still, Canada would be the only country with the cap and this could weigh on investor sentiment and fund flows.
Stiff competition: Shares of Nvidia are slightly lower in the pre-market on reports that China’s Huawei is testing high-end chips in a bid to replace Nvidia’s chips. The Wall Street Journal is reporting that Huawei has reached out to some Chinese tech companies to test the technical feasibility of their chips. Clearly sanctions against Huawei have done little to stall its progress. And with Nvidia now effectively shut out of the Chinese market, it gives scope for domestic players to scoop share.
Take flight: Shares of Boeing are higher in the pre-market as it looks like the path has been cleared for it to takeover Spirit AeroSystems. Airbus has agreed to acquire some assets, which allows Boeing to to re-acquire the struggling aerospace supplier it sold back in 2005. Recall, this was all set in motion in January of last year when a fuselage built by Spirit lost a panel mid-flight. An upgrade by Bernstein is supporting the stock as well. The analyst says the company is making the progress needed for the growth trajectory. Price target is $218/share which implies 23% upside from here.
Slowspeed: Shares of Lightspeed are getting clipped after Scotia downgraded the stock this morning. “We’re most cautious on stocks exposed to consumer trends,” wrote Kevin Krishnaratne of Scotia, “We’re downgrading Lightspeed to (hold) from (buy).” Krishnaratne is expecting lower transaction volumes on weaker small & medium-sized business trends. In addition, he is reducing estimates on Shopify due to concerns about its dropshipping business (where a company doesn’t hold inventory, instead they are third-party supplier). Scotia estimates this is about 10% of their gross merchandise volume and that Chinese goods represent about 30% of that. So tariffs on Chinese goods could put this part of the business at risk.
