Market Watch: Dow futures contract increased by 70 points, S&P 500 futures rose 12 points, and Nasdaq 100 futures rose 45 points.
Wall Street is expected to start the week positively, but the Fed’s inflation gauge could impact the future. Apple violated EU rules, and Broadcom is collaborating with ByteDance.
Apple trouble
Apple has been accused of violating EU rules by the European Commission, which regulates technology and antitrust. The Commission claims Apple’s App Store rules prevent developers from directing consumers to alternative offers. The EU is also investigating Apple’s new contractual requirements for third-party app developers and app stores. The Digital Markets Act, introduced in March, has led to an investigation into Apple’s anti-steering rules.
Broadcom’s chips
Chinese technology firm ByteDance is partnering with US chipmaker Broadcom to develop an advanced artificial intelligence processor, despite the US restricting export of these chips to its main economic rival. The 5 nanometre chip will be compliant with US export curbs and likely outsourced for manufacturing to TSMC. ByteDance and Broadcom already have partnerships in place, with TikTok owner purchasing several AI-linked chips from the firm.
Chinese-made electric vehicles tariffs
China and the European Union are set to begin talks on tariffs on Chinese-made electric vehicles (EVs) imported into the European market. The European Commission plans to impose up to 38.1% duty on EVs produced in China, due to apply by July 4. China has expressed retaliatory measures and suggested a de-escalation of the trade conflict.
Yen intervention talk
Japan’s yen has weakened to its lowest level against the dollar since April, leading to intervention talk in foreign exchange markets. The USD/JPY pair reached a 34-year low in April, causing authorities to spend around 9.8 trillion yen to support the currency. Japan’s top currency diplomat, Masato Kanda, has said authorities will take appropriate steps if excessive foreign exchange movement occurs. The addition of Japan to the U.S. Treasury’s foreign exchange manipulation monitoring list has no impact on Tokyo’s policy options.
Economic Calendar
- 10:30 AM ET Dallas Fed Manufacturing Index
- 2:00 PM ET Fed’s Daly Gives Remarks on Economy,
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Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow, the benchmark and tech-heavytouched record marks last week.
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow,
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
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MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
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U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.