The US stock markets finished higher for the second straight week as the AI-powered tech rally continued to fuel a potential bullish trend at the year-end. Nvidia’s shares jumped 7.4% for the week, and Microsoft hit an all-time high. However, the US government bond yields spiked following Fed Chair Powell’s hawkish reiteration last week, which may keep Wall Street’s upside momentum in check.
Can the AI boom again save the stock market from a Fed-reinforced selloff? The upcoming US CPI data can be critical for risk sentiment, in turn determining funds allocation. It could be a cheerful time for market bulls as consensus calls for a meaningful decline in US inflation. The forecast is 3.3% year on year for October, down from the latest read of 3.7% in September. In addition, the US PPI and retail sales will also be on investor’s radar.
Chinese stock markets lost steam as the newly released CPI data showed the country fell into deflation again. Hence, the Chinese Yuan remained at its weakest level against the USD due to the same headwinds.
Despite tepid economic recovery, signs of improvement can be found in its imports and bank loans. More positive economic data will likely support Chinese stocks and the Yuan to shrug off the downtrend. This week, we will continue to monitor the key economic data from China, including its industrial production, retail sales, and fixed asset investment. The Chinese social media giant, Tencent is due to release its earnings on 15 November, which can be a price mover for the tech sector.
Unlike the Fed, the RBA did a dovish rate hike, sending the Australian dollar down and fuelled a short-lived ASX rally last week. The energy sector was the biggest laggard, while CSL led Healthcare to outperform in the Aussie markets.
Some very important economic data can be market movers for the ASX and the AUD this week. These include the NAB Business confidence, the third quarter wage growth, and the October employment change. The latter two data are key factors impacting the inflation outlook and the RBA’s policy stance. Australian wage growth is expected to remain elevated, hence putting upside pressure on inflation.
What are we watching?
- Nvidia surges: AI-related stocks, especially Nvidia and Microsoft, continued to take the lead in the recent tech rebound. Nvidia has been benefiting from the AI boom for its top-quality GPUs. The company will release its third-quarter earnings after the US markets close on 22 November (APAC time).
- Oil slumps: Crude oil fell for the third straight week as economic concerns darkened the demand outlook. China’s faltering economic recovery and the Fed’s hawkish stance are the major concerns of oil traders.
- Gold breaks key support: The precious metal finished lower for two weeks in a row due to weakened haven demand. A spike in the government bond yields added to its downside pressure. Spot gold finished below key support of 1,945 on Friday, approaching the 50-day moving
- Bitcoin tops 37,000: The largest cryptocurrency topped 37,000 last week amid the progress made for a spot ETF approval, reaching a fresh 17-month high. Bitcoin may head off 40,000 if the prevailing trend persists.
Economic Calendar (13 Nov – 19 Nov )