Stocks cheer mixed CPI report, trade wars migrate to more sectors – Stock Markets
September 14, 2023 3:25 pm
Markets post a risk-on session despite hotter-than-expected headline CPI
Renewed trade tensions affect electric vehicle manufacturer stocks and Apple
Tech giants discuss with US lawmakers over the need for AI regulation
Equities gain despite upbeat inflation reading
On Wednesday, markets got an updated US inflation report, which was highly anticipated as it would assess the impact of surging energy prices on the economy. The headline rate accelerated to 3.7% on an annual basis in August versus the 3.6% projection, while the core figure came out in line with expectations at 4.3% year-on-year, declining from 4.7% in July.
Normally, such a data print would underscore the case for interest rates staying higher for longer to tame resurfacing inflationary pressures. However, investor focus fell more on the fact that core CPI continues to show signs of a slowdown, which translated into gains for the tech sector and minor losses for non-cyclical stocks.
In general, markets tend to react more on surprises regarding economic releases as the direction of the move is pretty match priced in. Surprisingly, this time around, the anticipated drop in the core CPI rate outweighed the upside surprise in the headline figure.
Apple and EV manufacturers caught in West-China crossfire
The semiconductor industry has been negatively affected by the trade war between the US and China in recent years, but it seems that this theme is starting to spill over to more industries. Besides that, we are seeing more countries entering the battle on both sides and this could amplify the effect of further trade tensions.
Apple, which belongs in the broader tech sector, has been one of the new victims. There were some rumours lately that the Chinese government restricted the use of iPhones for officials working in government agencies. Shares of the tech giant fell around 5% on the back of this news and have not yet recovered despite Chinese officials denying those claims.
On the other hand, the EU recently made its first warning against China. The European Commission President Ursula Von der Leyen stated that the domestic market is flooded with cheap Chinese electric cars whose price is kept artificially low due to significant government subsidies.
This of course has been negatively impacting the European electric vehicle manufacturers as they are facing unfair competition. On that front, the EU is considering boosting its tariffs on Chinese-origin EV imports in an effort to support the domestic industry.
Could AI regulation suppress growth?
In other news, the CEOs of leading tech companies such as Tesla, Microsoft, Alphabet and others met with some US lawmakers on Wednesday to discuss the need for the establishment of a regulatory framework in the AI sphere. Both the companies and lawmakers agreed that there should be regulations in place that mitigate the dangers of the quickly evolving AI technology, but of course this would require some time. Does this mean that fresh AI initiatives could remain on pause until regulatory safeguards are ready?
Nasdaq 100 holds above 50-day SMA
The Nasdaq’s outperformance in 2023 has been mainly attributed to the AI mania, thus developments on the regulatory front could severely affect the index’s price. From a technical standpoint, the price experienced a moderate pullback from its 2023 highs, but it quickly bounced back and reclaimed its 50-day simple moving average (SMA).
Should the bulls attempt to push the price higher, the September resistance of 15,618 could prove to be the first barrier in their way ahead of the 2023 peak of 15,932.
Alternatively, bearish actions could send the price to test the recent support of 15,140 before the three-month low of 14,557 gets tested
Markets post a risk-on session despite hotter-than-expected headline CPI
Renewed trade tensions affect electric vehicle manufacturer stocks and Apple
Tech giants discuss with US lawmakers over the need for AI regulation
Equities gain despite upbeat inflation reading
On Wednesday, markets got an updated US inflation report, which was highly anticipated as it would assess the impact of surging energy prices on the economy. The headline rate accelerated to 3.7% on an annual basis in August versus the 3.6% projection, while the core figure came out in line with expectations at 4.3% year-on-year, declining from 4.7% in July.
Normally, such a data print would underscore the case for interest rates staying higher for longer to tame resurfacing inflationary pressures. However, investor focus fell more on the fact that core CPI continues to show signs of a slowdown, which translated into gains for the tech sector and minor losses for non-cyclical stocks.
In general, markets tend to react more on surprises regarding economic releases as the direction of the move is pretty match priced in. Surprisingly, this time around, the anticipated drop in the core CPI rate outweighed the upside surprise in the headline figure.
Apple and EV manufacturers caught in West-China crossfire
The semiconductor industry has been negatively affected by the trade war between the US and China in recent years, but it seems that this theme is starting to spill over to more industries. Besides that, we are seeing more countries entering the battle on both sides and this could amplify the effect of further trade tensions.
Apple, which belongs in the broader tech sector, has been one of the new victims. There were some rumours lately that the Chinese government restricted the use of iPhones for officials working in government agencies. Shares of the tech giant fell around 5% on the back of this news and have not yet recovered despite Chinese officials denying those claims.
On the other hand, the EU recently made its first warning against China. The European Commission President Ursula Von der Leyen stated that the domestic market is flooded with cheap Chinese electric cars whose price is kept artificially low due to significant government subsidies.
This of course has been negatively impacting the European electric vehicle manufacturers as they are facing unfair competition. On that front, the EU is considering boosting its tariffs on Chinese-origin EV imports in an effort to support the domestic industry.
Could AI regulation suppress growth?
In other news, the CEOs of leading tech companies such as Tesla, Microsoft, Alphabet and others met with some US lawmakers on Wednesday to discuss the need for the establishment of a regulatory framework in the AI sphere. Both the companies and lawmakers agreed that there should be regulations in place that mitigate the dangers of the quickly evolving AI technology, but of course this would require some time. Does this mean that fresh AI initiatives could remain on pause until regulatory safeguards are ready?
Nasdaq 100 holds above 50-day SMA
The Nasdaq’s outperformance in 2023 has been mainly attributed to the AI mania, thus developments on the regulatory front could severely affect the index’s price. From a technical standpoint, the price experienced a moderate pullback from its 2023 highs, but it quickly bounced back and reclaimed its 50-day simple moving average (SMA).
Should the bulls attempt to push the price higher, the September resistance of 15,618 could prove to be the first barrier in their way ahead of the 2023 peak of 15,932.
Alternatively, bearish actions could send the price to test the recent support of 15,140 before the three-month low of 14,557 gets tested
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