This week's hot review: Expectations of the Fed's interest rate hike plummeted, and the AI frenzy and the Middle East crisis dominated the market
Comparing news, the global market this week focused on cooling inflation, the Federal Reserve's policy, the situation in the Middle East, and the wave of AI investment. The US CPI and PPI both declined in July, and the market drastically lowered expectations for interest rate hikes during the year, but long-term US debt was still suppressed by fiscal pressure. US technology stocks have rebounded, the South Korean stock market has risen more than 20% in two weeks, and the AI industry chain has once again become the main capital line.
US CPI rose 3.4% yoy in July, core CPI rose 2.5% yoy, PPI fell to 4.7% yoy, and market expectations for the Fed's September rate hike declined markedly. However, the yield on US 30-year Treasury bonds rose to 5.22%, a record high since 2001, and investors are concerned that the widening US deficit is driving up long-term financing costs.
The situation in the Middle East continues to heat up. Trump said that the US will declare the Strait of Hormuz as US territory after defeating Iran, and said that it will carry out further economic attacks on Iran. Iran responded that the opening and closing of the straits can only be decided by Iran. The US military continued to strengthen regional deployment, and the USS Washington aircraft carrier went to the Middle East to take over defense.
The AI capital market continues to expand. Nvidia, in partnership with BlackRock, Goldman Sachs and other institutions, plans to raise more than 500 billion US dollars in capital to support the construction of AI data centers. Hwang In-hoon said that AI computing is becoming a new type of infrastructure similar to energy and transportation, but the market is also beginning to pay attention to the risks of AI financing models.
Korea's KOSPI Index rebounded strongly this week, rising nearly 22% from its low at the end of July, and re-entering a technical bull market. Samsung Electronics and SK Hynix are led by growing demand for AI servers and HBM.
AI company valuations continue to heat up. According to reports, Anthropic is planning an IPO, and the market is expecting a valuation that could reach $2 trillion. OpenAI, on the other hand, has accelerated commercialization, and its annual revenue is said to have exceeded 40 billion US dollars.
As a tech giant, it was revealed that Apple is cooperating with Alibaba to train a big model exclusive to the Chinese market and adjust the AI localization strategy. Meanwhile, there is still controversy over whether to advance Apple's 20th anniversary all-glass iPhone project.
On the market side, the S&P 500 and NASDAQ continued to rise this week, and investors are betting again on interest rate cut expectations and AI profit cashing logic. However, Bank of America warns that the current bullish sentiment in the market is close to the extreme level since 2021, and we need to be wary of geopolitical risks and valuation pressures.
