🎯The equity market experienced a notable surge in the early trading hours of Monday, only to lose some momentum towards the end of the session. This dynamic was primarily driven by the strong optimism surrounding the progress in AI technology, especially the potential partnership between Apple and Google. The tech behemoths are said to be considering the integration of Google’s AI tool, Gemini, into select iPhone models. This development significantly boosted the shares of both companies during the session.
🥁At its highly anticipated developer conference, Nvidia made substantial progress. CEO Jensen Huang unveiled Nvidia’s cutting-edge chip architecture, dubbed Blackwell. This innovative architecture and other products, such as the latest AI chip, B200, signify a significant technological breakthrough with the potential to significantly influence the market.
🎲All eyes will be on the Fed this week as it commences its March FOMC meeting. So far, hotter inflation economic data has remained the same as the stock market. Market participants expect the market to have a catalyst to pull back, given their projection that the Fed will be less likely to cut rates for the year.
🎢Indeed, we are seeing both the two-year Treasury and ten-year Treasury yields trending higher, supposedly putting pressure on stocks. The short front of the yield curve, the 2-year, has been rising by about 30 basis points to hit 4.7% for the year. When it reached that level in December, the S&P 500 fell 11%.
💰With the stock market ignoring all the headwinds, the Fed may be a wake-up call for the market should the economic projection or Uncle Powell’s tone sound hawkish. Although the “dot plot” suggests such rate cuts this year, the hotter inflation prints mean everything is fluid.
It is 19 March, 8.40 am in Singapore and 8.40 pm in New York. The pre-market is pulling back, and we do have some further positions to pare down. Hopefully, our hedge will fade soon as we prepare for a volatile FOMC session this week.
Cheers.
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All is well.