Given the uptick in violence in the Middle East, it’s little wonder that there was so little positive reaction to the relatively benign June inflation reports last week. The futures market thinks there’s a two-thirds chance the Fed will pull the trigger on higher interest rates by September.
Shaky stocks are adding another big cloud to the horizon. South Korean markets were closed on Friday, but the chip selling resumed today, with the KOSPI down another 3%. Stocks elsewhere were calmer first thing, as Tokyo was on holiday.
While U.S. futures are up slightly before the bell, this follows a rough few weeks for tech stocks. High-flying U.S. chip stocks were down 10% last week and 20% from their nosebleed record highs in June, suggesting the market may be sobering up from the AI frenzy. It’ll now turn its eyes to the big hyperscaler earnings out this week and next. First up is Alphabet, which reports on Wednesday, with the likes of Intel and Tesla also out this week.
Meanwhile, China’s latest AI development from its Moonshot programme offers a glimpse at how the world’s second-biggest economy is keeping pace with the rapid tech transformation.
Finally, in the UK, Andy Burnham finally takes over as UK Prime Minister on Monday. The market will be keenly interested in his cabinet picks and choice of finance minister, with relatively conservative Home Secretary Shabana Mahmood expected to get the nod.
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