Market Watch: Dow futures contract increased by 28 points, S&P 500 futures rose by 6 points, and Nasdaq 100 futures rose by 36 points.
Wall Street is expected to start the week positively, but trading ranges may be tight due to key inflation data, Arm Holdings’ AI chip division, and rising Chinese consumer inflation.
Arm Holdings plans to establish an AI chip division
Arm Holdings plans to establish an AI chip division to capitalize on the growing demand for AI. The UK-based chip designer plans to build a prototype by spring 2025, with mass production expected in autumn 2025. Arm was acquired by Japanese investment holding company SoftBank in 2016 for $32 billion and is listed on Nasdaq with SoftBank holding a 90% stake. Arm’s shares have risen nearly 45% this year due to AI computing surges.
New tariffs for China
The Biden administration is expected to announce new China tariffs this week, targeting strategic industries and national security areas. The announcement is expected to maintain existing tariffs on many Chinese goods, add new tariffs to semiconductors and solar equipment, and hike electric-vehicle tariffs.
China’s CPI inflation increased
Chinese consumer price index inflation increased for a third consecutive month in April, indicating an improvement in domestic demand in the second largest economy. The inflation rate improved to 0.1%, reversing a 1% decline in March. However, PPI inflation fell 2.5% for a 19th consecutive month, more than expectations.
Economic Calendar
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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.