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Wall Street rises amid a Tesla-led tech rally ahead of key CPI

Tesla

US stocks finished higher to kick off the week as tech stocks gained momentum on economic optimism ahead of the key inflation data later this week. Tesla’s shares surged 10% after Morgan Stanley upgraded the EV stock to US$400 amid its AI technology development. Other famous names, such as Meta Platforms and Amazon, also jumped more than 3% on the tech rally. It looks like markets are still in favour of AI stocks, even though the Fed will likely continue its rate hikes as the US bond yields stay at their decades-high levels.

In FX, the US dollar dropped the most in two months after both the BOJ and the PBOC signalled to boost their currencies amid the recent slump in the Japanese Yen and the Chinese Yuan. This also lifted commodity currencies, such as the Australian dollar and the New Zealand dollar, due to a rebound in commodity prices.

In Asia, China’s economy may have hit a bottom as the country’s inflation and lending activities started showing signs of recovery in August when the government ramped up stimulus measures. Futures point to a mixed open across the APAC region, with the Nikkei 225 futures up 0.65%, the ASX 200 futures up 0.11%, and the Hang Seng Index futures down 0.20%.

Price movers:

  • 9 out of 11 sectors finished higher in the S&P 500, with Consumer Discretionary and Communication Services leading gains, up 2.77% and 1.17%, respectively. Energy was the biggest laggard down 1.31%. Industrials also finished slightly lower, down 0.01%.
  • Tesla’s shares soared 10% on Morgan Stanley’s upgrade. The financial institution set its new price target for Tesla to US$400 from US$250 as it believes the EV maker will grow significantly with its Dojo supercomputer project, which is an AI-powered EV software that enables self-driving, healthcare, and security. CEO Elon Musk planned to spend more than US$1 billion on Dojo by the end of 2024.
  • Qualcomm’s shares jumped 3.8% on Apple’s extension to order its modem semiconductors for three more years, which can be the last agreement that Apple relied on a third party before using its own chips. Apple will launch its new series of products, including the iPhone 15 and Apple Watch, tomorrow.
  • The UK-based software company Arm expects its revenue to grow 11% this fiscal year and an increase of mid-20% in 2025 due to strong AI chip demand. The company was owned by SoftBank, and it is set to launch the largest IPO of the year to raise US$4.87 billion.
  • USD/JPY fell to a one-week low after the BOJ’s governor, Kazuo Ueda, signalled to bring the negative interest rate to an end to boost the Yen. The Japanese 10-year government bond yield jumped to 0.71%, the highest since 2013 on the news.

ASX and NZX announcements/news:

  • No major announcement.

Today’s agenda:

  • New Zealand Visitor Arrivals for July
  • Australian NAB Business Confidence for August
  • UK Employment Change for August

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