Category: Investopia

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What is China’s equivalent to Nvidia?

AI microchips

Chinese firms are reportedly intensifying their efforts to develop a competitive alternative to Nvidia’s AI chips, as part of Beijing’s ongoing initiative to reduce its reliance on U.S. technology.

China faces several challenges that are impeding its technological progress, including U.S. export restrictions that limit domestic semiconductor production. The lack of technical expertise is also reported to be a problem.

Analysts have identified companies including Huawei as the principal competitors to Nvidia in China

China’s counterparts to Nvidia, such as Huawei, Alibaba, and Baidu, are actively developing AI chips to compete in the same market. Huawei’s HiSilicon division is known for its Ascend series of data centre processors.

Huawei’s HiSilicon division is known for its Ascend series of data centre processors, and Alibaba’s T-Head has produced the Hanguang 800 AI inference chip. Other significant players include Biren Technology and Cambricon Technologies.

Alibaba’s T-Head has developed the Hanguang 800 AI inference chip. Other significant players include Biren Technology and Cambricon Technologies.

These Chinese firms are intensifying their efforts to create alternatives to Nvidia’s AI-powering chips. This is a big part of Beijing’s broader initiative to reduce its reliance on U.S. technology.

Nvidia’s surge in growth is attributed to the demand from major cloud computing companies for its server products, which incorporate graphics processing units, or GPUs.

These GPUs are crucial for entities like OpenAI, the creator of ChatGPT, which requires substantial computational power to train extensive AI models on large datasets.

AI models are crucial for chatbots and other AI applications

Since 2022, the U.S. has limited the export of Nvidia’s top-tier chips to China, with further restrictions imposed last year.

The U.S. sanctions and Nvidia’s market dominance pose significant obstacles to China’s ambitions, particularly in the short term, according to analysts. The U.S. has curbed the export of Nvidia’s most sophisticated chips to China since 2022, with increased restrictions implemented last year.

China’s GPU designers rely on external manufacturers for chip production. Traditionally, this role was filled by Taiwan Semiconductor Manufacturing Co. (TSMC). However, due to U.S. restrictions, many Chinese firms are now unable to procure chips from TSMC.

As a result, they have shifted to using SMIC, China’s largest chipmaker, which is technologically several generations behind TSMC. This gap is partly due to Washington’s limitations on SMIC’s access to essential machinery from the Dutch company ASML, necessary for producing the most advanced chips.

Huawei is driving the development of more sophisticated chips for its smartphones and AI, which occupies a significant portion of SMIC’s capacity.

Nvidia has achieved success not only through its advanced semiconductors but also via its CUDA software platform. The system enables developers to build applications for Nvidia’s hardware. This has fostered an ecosystem around Nvidia’s designs, which will be challenging for competitors to emulate.

Huawei leading the pack for China

Huawei is at the forefront as a leading force in China for its Ascend series of data centre processors. The current generation, named Ascend 910B, is soon to be succeeded by the Ascend 910C. This new chip may come to rival Nvidia’s H100.

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Bitcoin tumbles back to the $60000 level after mini rally

Crypto

Cryptocurrencies fell on Tuesday evening 1st October 2024, with Bitcoin retreating to the $60,000 level following an unstable beginning to what is typically one of its best performing months.

Shares associated with digital currencies also fell in after-hours trading. Crypto exchange Coinbase saw a decline of about 1%, and MicroStrategy experienced a 2% drop, following a decrease of 7.4% and 3.5% at the close.

Escalating conflicts in the Middle East have curbed investors’ appetite for risk as the new trading month and quarter got underway. On Tuesday 1st October 2024, Iran executed a ballistic missile strike on Israel in response to the recent assassination of Hezbollah leader Hassan Nasrallah and an Iranian commander in Lebanon.

The growing turmoil in the Middle East has driven oil prices higher and bolstered the U.S. dollar, casting a shadow over Bitcoin and other speculative assets.

Bitcoin 7-day chart from CoinMarketCap

Bitcoin 7-day chart from CoinMarketCap
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Freetrade buys UK arm of Australian investing platform Stake

Financial trading app

Freetrade acquires Stake’s UK customer base, increasing domestic presence amid intense competition with similar apps such as Robinhood

The British retail investment platform Freetrade is set to acquire the UK customer base of its Australian competitor Stake, highlighting the growing competition in the UK’s digital investment sector. The acquisition, initially reported by CNBC, entails Freetrade assuming responsibility for all of Stake’s UK clients and their assets.

Freetrade currently oversees more than £2 billion in assets for its UK customer base.

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Robinhood launches crypto transfers in Europe directly through its app

Crypto exchange

The retail investment platform Robinhood has announced the introduction of cryptocurrency transfers in and out of its app for European customers

As part of its international expansion efforts, the company aims to enhance its product offerings in the region.

According to a blog post-dated Tuesday 1st October 2024, Robinhood will enable customers within the European Union to deposit and withdraw over 20 different digital currencies via its platform, including Bitcoin, Ethereum, Solana, and USD Coin.

This development grants Robinhood’s European clientele the option of “self-custody” of assets, allowing them to personally hold their cryptocurrencies in a privately-owned wallet, rather than relying on a third-party service to manage their funds.

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Chinese stocks up sharply after Beijing confirms stimulus measures

China stocks up

Chinese stocks continued to rise following state media reports that China’s top leaders have endorsed the government’s recent measures to bolster their economy.

The CSI 300 index in Mainland China continued its rally for a seventh consecutive day, reaching its highest point in about four months, subsequent to a meeting of China’s highest officials confirming the government’s latest economic stimulus actions.

South Korea’s Kospi index surged by 1.9%, driven by advances in semiconductor company SK Hynix, which declared the commencement of mass production of the world’s inaugural 12-layer HBM3E chip, utilised in AI applications.

See SK Hynix Newsroom report here

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Big Tech aiming to raise $100 billion for AI data centres

Fund creation for AI

In a substantial effort to strengthen the infrastructure required for artificial intelligence (AI), BlackRock and Microsoft have unveiled a significant fundraising endeavour.

The initiative, dubbed the Global AI Infrastructure Investment Partnership (GAIIP), seeks to secure $30 billion in private equity capital, with the possibility of leveraging up to $100 billion including debt financing.

The main objective of this initiative is to establish new and larger data centers to accommodate the escalating demand for computing power spurred by advancements in AI. These data centres are vital for meeting the growing computational requirements of AI applications, which necessitate substantial processing power and storage capacity. Additionally, the partnership will focus on investing in the energy infrastructure required to operate these data centres in an environmentally sustainable manner.

BlackRock, the global investment management corporation, contributes its vast network of corporate relationships and private equity expertise. Microsoft, a pioneer in technology and AI, offers the necessary technological expertise and industry leadership. Together, their goal is to establish a strong infrastructure that will bolster AI innovation and contribute to economic expansion.

The investment will be primarily directed towards the United States, with a portion also being allocated to partner countries. This strategic emphasis aims to boost American AI competitiveness and encourage worldwide cooperation. The partnership is designed to support an open architecture and a wide-ranging ecosystem, enabling a variety of partners and companies to leverage the infrastructure.

NVIDIA, a leading force in AI technology, will contribute to GAIIP by providing its expertise in AI data centres and manufacturing facilities. This partnership is anticipated to improve AI supply chains and energy procurement, offering advantages to both consumers and the broader industry.

This collaboration marks a substantial move towards establishing the infrastructure of tomorrow and powering it in an eco-friendly manner.

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Gold rushes to a new all-time high

Gold high!

Gold prices have soared to unprecedented levels, reaching a new all-time high of $2,585 per ounce

This surge is driven by a mixture of economic and geopolitical factors that have heightened investor interest in the precious metal.

One of the primary catalysts for this rise is the anticipation of a significant interest rate cut by the U.S. Federal Reserve. Recent economic data indicating a slowdown in the U.S. economy has led to expectations of monetary easing, which in turn has weakened the dollar. As a result, gold, which is priced in dollars, has become more attractive to investors seeking a safe haven.

In addition to economic factors, ongoing geopolitical tensions and persistent inflation concerns have further bolstered gold’s appeal. With inflation eroding the value of fiat currencies, investors are turning to gold as a hedge against currency devaluation. The metal’s historical role as a reliable store of value during times of uncertainty continues to drive demand.

Market analysts are now speculating whether gold could reach the $3,000 mark, given the current trajectory and market conditions. As the global economic landscape remains volatile, gold’s allure as a safe-haven asset is likely to persist, potentially pushing prices even higher in the coming months.

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The AI Race between China and the U.S.

AI development in China and U.S.

Artificial Intelligence (AI) has become a pivotal battleground in the technological race between China and the United States.

“AI is expected to become a crucial component of economic and military power in the near future,” Stanford University’s Artificial Intelligence Index Report 2023 stated.

Both countries are significantly investing in AI research and development, striving to achieve a leading role in this revolutionary sector. This post looks at the major figures in China’s AI scene, their progress, and their comparison with their American counterparts.

China’s AI Landscape

China’s AI aspirations are propelled by a number of significant technology firms, each forging their own AI models and applications.

Baidu: Often referred to as the ‘Google of China,’ Baidu leads in AI development. Its premier AI model, ERNIE (Enhanced Representation through Knowledge Integration), fuels the Ernie Bot, a chatbot aimed to compete with OpenAI’s ChatGPT. Baidu asserts that ERNIE 4.0 matches GPT-4’s capabilities, demonstrating sophisticated understanding and reasoning abilities.

Alibaba: Alibaba’s AI model, Tongyi Qianwen (commonly known as Qwen), is a comprehensive set of foundational models adept at a range of tasks, from generating content to solving mathematical problems. Select versions of Qwen are open-source, enabling developers to utilize and modify them for various uses. Alibaba has announced that Qwen models are in use by over 90,000 enterprise clients.

Tencent: The Hunyuan model from Tencent is a prominent component of China’s AI landscape. Offered through Tencent’s cloud computing division, Hunyuan is tailored to facilitate a broad spectrum of applications, encompassing natural language processing and computer vision.

Huawei: In spite of considerable obstacles stemming from U.S. sanctions, Huawei persists in AI innovation. The firm has created its own AI processors, like the Kunlun series, to diminish dependence on international technology. Huawei’s AI features are incorporated into a diverse array of products, including smartphones and cloud solutions.

Comparison to the U.S.

The U.S. continues to be a dominant force in AI, with leading companies such as OpenAI, Microsoft, Google, Anthropic and Meta spearheading advancements.

Generative AI: U.S. firms have advanced significantly in generative AI, with OpenAI’s GPT-4 and Google’s Gemini at the forefront. These models excel in creating text, images, and videos from user inputs. Although Chinese models like ERNIE and Qwen are strong contenders, the U.S. maintains a slight lead in capabilities and market penetration.

Semiconductor Design: The U.S. leads the semiconductor design industry, vital for AI progress. U.S. companies command an 85% global market share in chip design, crucial for AI model training and system operation. China’s dependence on imported semiconductors is a notable obstacle, but there are ongoing efforts to create homegrown solutions.

Research and Innovation: Both nations boast strong AI research sectors, yet the U.S. edges out slightly in generating state-of-the-art AI products. U.S. tech giants frequently introduce AI breakthroughs to the market, with Chinese firms quickly gaining ground.

Government Support: The Chinese government ardently backs AI advancement, enacting strategies to spur innovation and lessen foreign tech reliance. Such support has spurred China’s AI industry’s rapid expansion, positioning it as a strong rival to the U.S.

Conclusion

The competition in AI development between China and the U.S. is escalating, as both countries achieve significant breakthroughs. Although the U.S. maintains a marginal lead in some respects, China’s swift advancement and state backing indicate that the disparity might keep closing. The quest for AI dominance by these nations is set to influence the worldwide technological and innovative landscape profoundly.

As of September 2024, it is estimated that China’s AI development is approximately nine months behind that of the U.S.

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Rightmove rejects £5.6 billion takeover offer

House For Sale

The Australian property listing company REA Group announced on Wednesday that its £5.6 billion ($7.32 billion) cash-and-stock bid to take over Rightmove, Britain’s largest real estate portal, was rejected.

REA Group, which is 62% owned by Rupert Murdoch’s News Corp, reportedly did not provide a reason for Rightmove’s refusal of the offer.

Analysts have noted that Britain’s housing market is three times larger than Australia’s. A successful deal would have accelerated REA’s expansion into profitable international markets.

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Qualcomm intensifies competition with Intel and AMD and others as the company introduces its newest AI PC chip

New AI chip from Qualcomm

Qualcomm has introduced the Snapdragon X Plus 8-core processor, intensifying its venture into the AI PC market and challenging competitors like Intel and AMD

The U.S. semiconductor powerhouse announced that the Snapdragon X Plus 8-core targets PCs priced from $700, aiming to broaden its chip reach to additional devices.

Moreover, Qualcomm has enjoyed backing from Microsoft, which is incorporating Snapdragon processors in its Copilot+ PCs.

Qualcomm says the company is also working on mixed reality smart glasses with Samsung and Google.

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Burberry dropped from FTSE 100

Shoppers

The British luxury fashion house Burberry Group was relegated from the U.K.’s FTSE 100 on Wednesday 4th August 2024, amid declining sales and management upheavals, all adding to the challenges of the 168-year-old retailer

This demotion represents a new setback for Burberry, with its share price having plummeted over 53% this year.

Previous CEOs have endeavoured to refine the brand’s aesthetic. With the appointment of Joshua Schulman as the new chief executive in July 2024, a shift in strategy is now indicated.

Burberry is not alone in its waning fortunes. The luxury sector as a whole has suffered from a prolonged downturn in consumer spending amid inflationary pressures and broader economic uncertainty. Chinese luxury consumption has been especially hard hit.

In July, Hugo Boss cut its full-year guidance after reporting a fall in sales, notably in the U.K. and China, while Gucci owner Kering issued a weak forecast recognising a deceleration in China. LVMH revenue also fell in the second quarter on weaker sales.

Burberry’s FTSE relegation confirms a long fall from grace for the luxury fashion icon.

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Biggest one-day market capitalisation drop for a U.S. stock in history, and guess what… it was Nvidia

Nvidia

Nvidia $279 billion market cap wipeout — the biggest in U.S. history for just ONE company

On Tuesday 3rd September 2024, around $279 billion of value was wiped off of Nvidia. That was the biggest one-day market capitalisation drop for a U.S. stock in HISTORY!

Nvidia one-day chart closed 108 on 3rd September 2024

Nvidia one-day chart closed 108 on 3rd September 2024

Nvidia shares continued sliding in post-market trading Tuesday, falling 2%, after Bloomberg reported that the company received a subpoena from the Department of Justice as part of an antitrust investigation.

Global semiconductor stocks and related sectors subsequently experienced a decline on Wednesday 4th September 2024, after Nvidia’s share price in the U.S. saw a significant plunge overnight.

Update: in a subsequent statement Nvidia reportedly said it didn’t receive antitrust subpoena from DOJ. This according to a report on CNBC.

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BYD sales hit record high in August 2024

BYD EV

In August 2024, Chinese electric car behemoth BYD set a new sales record for passenger vehicles, with hybrid models outpacing battery-only vehicles in growth.

Zeekr, supported by Geely, experienced a rise in deliveries to 18,015 for August, although this was a decrease from the 20206 deliveries reported in June 2024.

Li Auto, renowned for its range-extender vehicles, saw a decrease in deliveries to 48,122 in August, a drop from the July record of 51,000.

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Berkshire Hathaway at $1 trillion market cap – the first U.S. non tech company to do so

$1 trillion club

Warren Buffett’s Berkshire Hathaway achieved a $1 trillion market capitalisation on Wednesday 28th August 2024, becoming the first non-technology company in the U.S. to reach this business accolade.

The shares of the conglomerate, headquartered in Omaha, Nebraska, have surged over 28% in 2024, outperforming the S&P 500’s 18% increase. This major achievement came just two days before Buffett, often referred to as the ‘Oracle of Omaha,’ was due to celebrate his 94th birthday.

On Wednesday, the company’s shares rose by 0.8% to $696,502.02, surpassing the $1 trillion mark, as reported. The shares soared even further in the subsequent trading session.

One year chart for Berkshire Hathaway

One year chart for Berkshire Hathaway

The milestone serves as a testament to the firm’s financial robustness and the value of its franchise. It is particularly noteworthy given that Berkshire stands as one of the few remaining conglomerates today.

Buffett, serving as chairman and CEO, assumed command of Berkshire, a floundering textile enterprise, in the 1960s. He revolutionised the firm into a vast conglomerate covering insurance, railroads, retail, manufacturing, and energy sectors, boasting an unparalleled balance sheet and a formidable cash reserve.

Unlike the six other companies in the trillion-dollar club (Apple, Nvidia, Microsoft, Alphabet, Amazon and Meta), Berkshire is known for its old-economy focus as the owner of: BNSF Railway, Geico Insurance and Dairy Queen. (Although its sizable Apple position has helped drive recent gains.)

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Nvidia reports 122% revenue growth

Data centre

Nvidia has announced earnings surpassing Wall Street forecasts and has issued guidance for the current quarter that exceeds expectations.

As the artificial intelligence boom continues, Nvidia remains a major beneficiary. Despite a stock price dip, after trading hours, the stock has risen approximately 150% this year. The question remains whether Nvidia can sustain this growth trajectory.

Nvidia said it expects about $32.5 billion in current-quarter revenue, versus $31.7 billion expected by analysts, according to analysis That would be an increase of 80% from a year earlier.

Revenue continues to surge, rising 122% on an annual basis during the quarter, following three straight periods of year-on-year growth in excess of 200%.

Nvidia’s data centre business, which encompasses its AI processors, saw a 154% increase in revenue from the previous year, reaching $26.3 billion and representing 88% of the company’s total sales.

However, not all these sales were from AI chips. Nvidia reported that its networking products contributed $3.7 billion in revenue.

The company primarily serves a select group of cloud service providers and consumer internet firms, including Microsoft, Alphabet, Meta, and Tesla. Nvidia’s chips, notably the H100 and H200, are integral to the majority of generative AI applications, like OpenAI‘s ChatGPT.

Nvidia also announced a $50 billion stock buyback.

Nvidia shares dropped close to 5% in after-hours pre-market trade (29th August 2024).

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How frothy is the AI data centre market for investors?

AI market froth?

Nvidia investors have been on a rocket ride to the stars. But recently they have come back down to Earth, and it has become more of a roller coaster ride.

Benefiting significantly from the artificial intelligence surge, Nvidia’s market cap has increased approximately ninefold since late 2022 – a massive market cap gain.

However, after achieving a peak in June 2024 and momentarily claiming the title of the world’s most valuable public company, Nvidia then experienced close to a 30% decline in value over the subsequent seven weeks, resulting in an approximate $800 billion loss in market capitalisation.

Currently, the stock is experiencing a rally, bringing it within approximately 6% of its all-time peak. The chipmaker surpassed the $3 trillion market cap milestone in early June 2024, aligning with Microsoft and Apple. The question remains whether the company can reclaim and sustain that title.

Investors are closely monitoring Nvidia’s forecast for the October quarter, with the company anticipated to report a growth of approximately 75%. Positive guidance would imply that Nvidia’s affluent clients continue to invest heavily in AI development, whereas a lacklustre forecast might suggest that infrastructure investment is becoming excessive.

Should there be any signs of diminishing demand for AI or if a major cloud customer is reducing spending, it could lead to a notable decline in revenue.

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Dow Jones hits new record high

The Dow Jones Industrial Average (DJIA) reached a new record high on Monday 26th August 2024, closing at 41240. 

Investors have responded positively to the Federal Reserve’s recent indications that interest rate cuts are highly probable to commence in September 2024.

Market dynamics and sentiment

The rise of the DJIA was propelled by advances in sectors like materials, utilities, and energy. Conversely, the broader market exhibited mixed outcomes. The S&P 500 declined by 0.3%, and the Nasdaq Composite dropped by 0.8%, contrasting with the Dow’s notable performance. This disparity is largely due to the lagging of technology stocks, especially with significant drops in firms such as Nvidia and Tesla.

Federal Reserve

Federal Reserve Chair Jerome Powell’s recent address at the Jackson Hole Economic Symposium was pivotal in bolstering investor confidence. Powell’s remarks indicated that the Fed is ready to cut interest rates, which many investors believe will foster economic growth and stabilise the markets. The expectation of rate cuts has played a significant role in the recent market rally, with predictions of potential reductions up to 1% by the end of 2024.

Dow Jones one day chart at record high

Dow Jones 1 day chart

Despite varied performances across sectors, the Dow reaching a new high signals a wider optimism in the market. As the year unfolds, the dynamics among Federal Reserve policies, corporate earnings, and economic indicators will continue to influence market directions.

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OpenAI cements deal with Vogue owner Condé Nast

Magazine AI data

OpenAI has partnered with the global magazine conglomerate Condé Nast to enable ChatGPT and its search engine, SearchGPT, to showcase content from renowned publications such as Vogue, The New Yorker and GQ.

The agreement represents the most recent in a series of deals made by OpenAI with prominent media companies.

The material generated by media organizations is coveted by tech companies for training their AI (Artificial Intelligence) models.

Several media companies, such as the New York Times and the Chicago Tribune, have opposed this practice and have pursued legal measures to safeguard their content.

The financial details of the contract between OpenAI and Condé Nast were not revealed.

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U.S. stocks extend gains as S&P 500 and Nasdaq post eighth positive day

U.S. stocks

Highs and lows of one volatile week in the U.S. stock market

U.S. stocks climbed on Monday 19th August 2024, continuing the market’s rebound as investors prepared for the highly anticipated Federal Reserve symposium at Jackson Hole later in the week.

The S&P 500 ended the day at 5608

The S&P 500 ended the day at 5608

The Nasdaq Composite surged to finish at 17876

Both the S&P 500 and Nasdaq achieved their eighth consecutive day of gains, a record for 2024

The Dow Jones Industrial Average gained 236 points closing at 40896.

The day’s activity extended the recent rally, signalling another twist in what has been a volatile period for stocks. Last week saw the largest gains of the year for the three major indexes.

August began shakily with disappointing data igniting recession fears and intensifying concerns that the Federal Reserve was lagging in interest rate reductions. This led to a worldwide sell-off, culminating in the S&P 500’s worst day since 2022 on 5th August.

However, encouraging data last week appeared to calm the markets and raised hopes for a ‘soft landing’ of the economy. Positive figures in retail sales and initial jobless claims, along with robust earnings from Walmart, contributed to this optimism. Additionally, the annual inflation rate for July’s consumer price index reached its lowest point in over three years.

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Video game industry experiences slow growth in 2024

Game console

The video game industry is experiencing sluggish growth in 2024 for several reasons

Slow console sales

Gaming console sales have not met expectations. For example, sales of Sony’s PlayStation 5 have decreased from 3.3 million units in the same period last year to 2.4 million units in the fiscal first quarter of 2024.

Post-Pandemic

The gaming industry experienced a substantial increase during the COVID-19 pandemic due to people staying indoors more often. Yet, with the easing of restrictions, there has been a noticeable change in consumer habits, with a trend towards increased outdoor activities.

Economic considerations

Increased interest rates and inflation have diminished discretionary income, leading to a decrease in consumer spending on games.

Challenges

The industry has faced mass layoffs and other operational challenges, which have impacted growth.

Despite these challenges, there are optimistic projections for 2025 with anticipated major releases like the eagerly awaited successor to Nintendo’s Switch console and Grand Theft Auto (GTA) VI.

Future

Predictions for 2025 suggest that the new Nintendo console and GTA VI will make a significant impact, potentially revitalizing the industry.

The U.S. and China account for around half of consumer spending on games.

The gaming industry as a whole is currently estimated to be worth around $188 billion globally and this is projected to grow in 2025.

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Intel sells stake in UK chip designer Arm

Circuit board microchip

Intel has divested its 1.18 million share stake in the British chip company Arm Holdings, according to a regulatory filing.

Intel is undergoing significant restructuring and cost-cutting to address competitive challenges in the semiconductor industry.

The recent transaction, disclosed on Tuesday 13th August 2024, is believed to have earned Intel approximately $147 million, based on Arm’s average share price between April and June 2024.

This move away from Arm occurs during a challenging financial phase for Intel, as it embarks on what CEO Pat Gelsinger reportedly describes as “the most extensive restructuring of Intel since the memory microprocessor transition four decades ago.”

In early August, Intel announced a cost-reduction plan designed to save $10 billion. This includes the layoff of about 15,000 employees, the elimination of the fiscal fourth-quarter dividend, and a reduction in capital expenditures.

At the same time, Intel disclosed quarterly figures that fell short of expectations and provided conservative guidance for the upcoming quarter.

This announcement precipitated the steepest single-day decline in Intel’s stock value in half a century, plummeting 26%.

Intel one year chart as of 15th August 2024

Intel one year chart as of 15th August 2024
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Nikkei rises 3% to lead gains in Asia

Japan shares

Japanese stocks led gains across Asia on Friday 16th August 2024, poised for their best week in four years, with the Nikkei 225 climbing over 3% following a Wall Street rally.

The surge came as new economic data alleviated concerns of a U.S. recession.

In the U.S., retail sales saw a 1% increase in July, significantly exceeding the Dow Jones estimate of a 0.3% rise. Additionally, weekly jobless claims experienced a decline.

The rise in the Nikkei came after the biggest fall in history just days ago where it hit historic lows last seen in 1987 making it a remarkably fast recovery.

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Comeback rally gains steam – Nasdaq, S&P 500 and Dow up

U.S. stocks rally

U.S. stocks surged on Thursday, buoyed by investor confidence bolstered by positive consumer and labour data, which alleviated fears of a recession.

The Dow Jones Industrial Average soared 554 points to close at 40563 – one year chart

The S&P 500 ended up 1.61% at 5,543.22, marking its sixth consecutive gain. The S&P 500 index has risen approximately 8% from its intraday low on 5th August 2024 – one year chart

The Nasdaq Composite escalated 2.34% to 17594 – one year chart

Positive U.S. economic data

Retail sales saw a 1% increase in July 2024, significantly exceeding the prediction of a 0.3% rise. Additionally, the number of weekly jobless claims dropped. This data provided a boost to investors and the broader market, which is recovering from an August downturn linked to worries over a slowing economy, sparked by a disappointing U.S. jobs report on 2nd August 2024.

With over a 3% increase this week, the S&P 500 is now just about 2% shy of its record high. All three major U.S. indexes are trading above their 2nd August closing levels, which preceded the global stock market plunge on 5th August.

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Do falling commodity prices indicate there is trouble brewing with the U.S. economy?

Commodities

Falling commodity prices can be a signal of economic trouble ahead

When commodity prices drop, it often reflects a decrease in demand for raw materials, which can be a sign of slowing economic activity. For instance, the recent decline in copper prices is seen as a potential indicator of economic slowdown.

Sugar, cotton, soybean, oil and iron ore are some examples where demand has fallen during this year.

However, it’s important to consider other factors as well. The global economic slowdown has reduced demand for energy, minerals, and agricultural products. While this trend is evident in many countries, the U.S. economy has shown some resilience.

So, while falling commodity prices can be a warning sign, they are just one piece of the puzzle. It’s essential to look at a broader range of economic indicators to get a complete picture.

Commodity price charts as of: 13th August 2024

Copper one year chart

Iron ore one year chart

Cotton price one year chart

Sugar one year price chart

Soybeans one year price chart

U.S. oil one year price chart

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S&P 500 enjoys its best day since 2022 after market rout just 4 days before

Stock chart S&P 500

Stocks rose on Thursday 8th August 2024 as the latest U.S. employment data bolstered investor confidence in the economy, following a significant market downturn earlier in the week.

The S&P 500 increased by 2.3%, closing at 5319.31, marking its best day since November 2022. The Dow Jones Industrial Average jumped by 683.04 points to 39446.49.

S&P 500 5-day chart as of 8th August 2024

S&P 500 5-day chart as of 8th August 2024

The Nasdaq Composite climbed to 16660.02. And all these gains just 4 days after the market rout on Monday 5th August 2024.

The most recent weekly unemployment claims were lower than expected, easing some of the recent worries about the U.S. labour market.

The initial claims for unemployment benefits last week were 233,000, a decrease of 17,000 from the previous week.