Exciting news has emerged from the European Union (EU) as member states granted final approval to the EU's Chips Act, an ambitious master plan to expand semiconductor production within the bloc. The plan aims to reduce reliance on Asia for crucial computer chips used in various industries, from household appliances to automobiles.
The Chips Act, which will see a staggering €43 billion ($47 billion) in public and private funds, will support state aid for the semiconductor industry in Europe. The EU has set its sights on doubling its share of global semiconductor production from the current 10% to an impressive 20% by 2030.
Asia has been the dominant player in semiconductor production, a fact that was exacerbated during the COVID-19 pandemic when supply chain disruptions led to severe shortages in essential products such as cars, smartphones, and medical devices. In response, Western governments, including the US and the UK, have been making efforts to reduce dependence on Asia and boost their own chip-making capabilities. Companies like Intel have also announced substantial investment plans in Europe, signaling a promising future for the region's semiconductor industry.
In the stock market, pre-market trading showed signs of growth, particularly in tech-heavy Nasdaq 100 futures, which rose by approximately 0.3%. The market is eagerly anticipating earnings reports from tech giants Microsoft and Alphabet (Google) later in the day, as these reports are expected to set the tone for other significant technology companies reporting their earnings in the coming weeks.
Investors are also closely watching the Federal Reserve's two-day meeting, starting today, to glean any hints about the central bank's plans regarding interest rate adjustments after the July decision. Additionally, there is keen interest in China's economic outlook, with hopes for increased economic support leading to a rally in Chinese equities.
In other corporate news, Biogen Inc. announced plans to cut around 11% of its workforce (approximately 1,000 jobs) as part of a cost-cutting program. The company is focusing on the launch of its new Alzheimer's disease drug, Leqembi, to drive growth amid competition from cheaper versions and rival drugs.
Lastly, Verizon Communications surprised the market with a rise in wireless subscriber additions, thanks to users upgrading their mobile phones to access the company's super-fast 5G network. Verizon's push to expand its 5G network comes as it competes with other telecom players such as T-Mobile.
The stock market is expected to see some exciting movements today, with the semiconductor industry's expansion and tech companies' earnings reports taking center stage. Investors are optimistic about the potential growth in these sectors, and the market is gearing up for an eventful and potentially rewarding trading day.
As always, keep a close eye on the market trends and company developments to make informed decisions. Happy trading!
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