JPM International Market Intelligence | Morning Briefing

20 SECONDS: The Broadening Comeback? Tech Weakness & Increasing Competition. Q3 Earnings. EU’s Political Shift to the Right & FR Budget.

• Relatively quiet overnight session with US holiday, but broadening tape with tech weakness.

• Tech selloff extending today with key technicals broken (SOX broke 100dma, KOSPI 200dma)

• EU earnings not off to a great start (LVMH hit on China weakness), but US banks kick off Q3 reporting today – the needed catalyst for broadening to extend?

• On Tech, signs of increasing competition threatening oligopolies are weighing on AI trade. Latest examples incl. MSFT’s Maia chip to become their primary inference system; NVDA in talks to acquire Reflection AI, US developer of open- weight models; and China’s CXMT reported key progress on a new memory product.

• Semis were the most net sold industry by HFs last week in N. Am. (-1.5z), EMEA (-3z) and Japan – but remain a top-2 net exposure industry in every region.

Overall, broader Tech positioning remains less stretched vs this summer, and AI infra need not fall if broadening returns.

• Gokul’s US/UK marketing feedback on Asia Tech flagged mixed sentiment. Key areas of concern: (1) rising share of open-source LLMs challenging ARR for prop models; (2) how the ROIC situation will evolve at model layer; and (3) sustainability of funding for hyperscalers and neoclouds.

• Mislav is out with his Q3 earnings preview. Key takeaway for me is the median Q3 YoY EPS growth is 8% for SPX and 9% for SXXP. EU broadening trade is yet to come back, and positioning vs US is looking stretched.

• Europe’s political shift to the right gaining traction – interesting piece from the FT on the topic.

• France’s budget debate starts today (process outline below). Key thing to watch is if article 49.3 (can ‘replace’ voting in the lower house) is triggered - can lead to a vote of no confidence.

• EGB desk sees OATs 25/30bps cheap vs fundamentals and other countries, but given political backdrop, would not enter longs here.