The infoshot to help kick-start your week
Coming up this week:
SpaceX results and insider shares unlock – Tuesday & Thursday
It’s been a tough six weeks for SpaceX investors. The shares have nearly halved since their post-IPO peak. Elon Musk’s net worth has taken a $600bn hit in the same period.
The company will release their first results since the IPO on Tuesday. Pre-IPO investors and early backers will get their first chance to offload up to 20% of their holdings two days later. It’s looking likely that both will put more downward pressure on the stock.
US jobs data – Tuesday & Friday
The Federal Reserve and analysts will have a keen eye on US jobs data releases this week. Markets are now pricing in a 68% chance of a US rate hike in September, however an increase in jobless claims or a fall in job openings will scupper those expectations.
Last week:
US interest rates held
Following a 9-3 vote, the Federal Reserve held interest rates for the fifth time in a row on Wednesday.
With prices rising well above the Fed’s 2% inflation target, and the ongoing situation in Iran constantly muddying the inflation picture, the Fed has been coming under increasing pressure to raise rates.
During a tough press conference, Fed Chair Kevin Warsh’s responded to questions over why the Fed didn’t hike rates saying, “we will deliver, we are focused like a laser on making sure we can do it, but the suggestion we are going to wave a magic wand is one I want to disabuse you and everyone else of.” Bond markets reacted badly to the news sending 30-year US treasury yields past 5.2% and their highest level in two decades.
Cloud revenue growth gives the tech index a breather
Last week we had another round of big tech results. Microsoft and Amazon both reported better-than-expected growth thanks to surging cloud revenue. Apple became only the second company to ever pass the $5tn valuation mark on Tuesday. However, they took hits on Thursday and Friday after their quarterly report forecasted softer Q4 growth.
Meta shares tumbled after they vowed to keep spending heavily on AI projects while profits continue to fall. They now plan to spend $130bn to $145bn on mainly AI-related projects this year. Their free cash flow of $784mn was the lowest it’s been in five years. Overall, the numbers from Amazon and Microsoft helped the US’s tech index end a two-week losing streak, finishing up 0.55%.
In other tech news, Nvidia spooked investors again after announcing more AI infrastructure deals full of circular funding, including a possible $250bn deal with OpenAI to guarantee financing for a new data centre in Ohio.
As the threat from China to US AI firms continues to grow, on Monday it emerged that an unnamed Chinese company has begun manufacturing a deep ultraviolet lithography (DUV) machine, an important expansion to their home-grown semiconductor technology kit.
US propping up yen
This morning, Japanese and American officials confirmed they had jointly intervened to halt the yen’s slide after it dropped to a 40-year low.
Rumours of a possible intervention have been floating around for a while now. Japan have been the largest holders of US federal debt since 2019 and currently hold an estimated $1.1tn. The Americans will be hoping that their intervention will help avoid a situation where Japan dumps a large quantity of US treasuries to help prop up the yen. A weakening yen also has the potential to trigger a selloff in Japanese government bonds pushing up bond yields across the globe.
Notice:
For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such.
The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.
