US Futures, Chinese Inflation, Arm's AI Division

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Instagram Group Join Now — Wall Street looks poised to start the week on a positive note, but trade margins are likely to tighten ahead of the release of key inflation data that will determine the market's near-term direction. can do. arm Holdings is seen setting up an AI chip division, while Chinese consumer inflation picks up again.

1. Futures edge higher ahead of key CPI release.

US stock futures rose on Monday, continuing the recent positive tone ahead of the release of key inflation data, which could be a deciding factor in the near-term direction for markets.

By 04:00 ET (08:00 GMT), the contract was up 28 points, or 0.1%, up 6 points, or 0.1%, and up 36 points, or 0.2%.

The benchmark posted its eighth straight winning session on Friday as well as its best week of the year, helped by generally positive corporate earnings.

More than 90% of companies have reported results by Friday, with nearly 80% of firms beating forecasts, according to FactSet data.

However, gains are likely to be limited as investors await the release of April data on Wednesday.

Analysts expect core inflation to rise 3.6 percent on a year-over-year basis, the smallest increase in three years.

But a warmer-than-expected inflation reading will likely cut prices for the rest of the year, sparking market volatility again.

There are also plenty of Fed speakers this week, including the chair on Tuesday.

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2. Arms to establish AI chip division

Arm Holdings (NASDAQ: ) has announced plans to develop artificial intelligence chips, looking to capitalize on massive demand for all things AI, according to a report in Asia.

The UK-based chip designer will set up an AI chip division and aims to build a prototype by spring 2025, the report said, along with mass production, possibly under contract. will be handled by manufacturers, expected to begin in the fall of 2025.

Arm was acquired by Japanese investment holding company SoftBank (TYO: ) for $32 billion in 2016, and was listed on the Nasdaq last year, with SoftBank owning 90% of the shares.

The company will bear the initial development costs of the AI ​​chips, which are likely to be hefty, and once the mass production system is established, Arm's AI chips business “could be spun off and softbanked.” . Reports

Arm shares are up about 45 percent so far this year, benefiting from a surge in AI computing, with a market capitalization of more than $113 billion, according to LSEG data.

SoftBank Group turned in a quarterly profit on Monday, resulting in a smaller loss in the year to March 31, as the Japanese technology giant's holdings saw limited gains in value due to growing hype over artificial intelligence.

3. Chinese consumer inflation is rising again.

Chinese consumer price index inflation rose for a third consecutive month in April, indicating an improvement in domestic demand in the world's second-largest economy.

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It rose 0.3% year-on-year, beating expectations of 0.1%, data from the National Bureau of Statistics showed at the weekend. The reading also improved from the 0.1 percent increase seen in March.

Month-on-month CPI inflation also improved to 0.1% in April, reversing a 1% decline in the previous month.

The reading came days after stronger-than-expected Chinese import data, showing domestic demand is picking up amid policy support and stimulus measures.

But inflation remained an area of ​​weakness, falling to 2.5 percent in April, the 19th straight month of declines, beating expectations for 2.3 percent. Readings improved slightly from a 2.8 percent decline in the previous month.

4. Expect new tariffs from China.

The Biden administration could announce new Chinese tariffs as soon as this week, targeting industries of strategic importance as well as areas of national security.

The full announcement, expected on Tuesday, would likely maintain existing tariffs on many Chinese goods imposed by former President Donald Trump, but would add new tariffs on semiconductors and solar equipment, as well as Along with this, the tariff of electric vehicles will also increase.

Tariffs on Chinese EVs are expected to nearly quadruple in the long-awaited update, the Wall Street Journal reported, citing people familiar with the matter.

The moves could invite retaliation from China at a time of heightened tensions between the world's two largest economies. The imposition of wide-ranging tariffs during Trump's 2017-2021 presidency sparked a tariff war with China.

5. The raw hyperinflation data is in focus.

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Crude oil prices rose on Friday, as traders digested mixed inflation data from China, the world's biggest crude importer, while sentiment was also subdued ahead of this week's US inflation reading.

By 04:00 ET, futures traded up 0.4% at $78.54 a barrel, while the contract was up 0.4% at $83.08 a barrel.

China's producer price index contracted in April, showing that business demand remained sluggish, but consumer prices rose. [see above]signaling a recovery in consumer demand.

Crude oil prices have been facing mild losses since last week after weak readings on US consumer confidence and higher inflation estimates fueled concerns about an economic cooldown in the world's biggest fuel consumer.

Trade margins are likely to tighten ahead of key U.S. inflation data later this week, as warmer-than-expected numbers dampen hopes of an interest rate cut, boosting growth in the world's largest economy. can slow down and reduce energy consumption.

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