APAC Morning Roundup: Wall Street rises on Tesla-led tech rally ahead of key CPI

U.S. stocks rose early in the week as technology stocks rallied on economic optimism ahead of key inflation data later this week. Tesla shares rose 10% after Morgan Stanley raised its price target on the electric car maker to $400 amid advances in artificial intelligence technology. Other big names like Meta Platforms and Amazon also jumped more than 3% on the tech rally. Markets still appear to favor AI stocks, even as the Fed is likely to continue raising rates as U.S. Treasury yields remain at a multi-decade high.

In foreign currencies, the U.S. dollar fell the most in two months after the Bank of Japan and the Central Bank of Japan signaled to raise their currencies amid recent falls in the Japanese yen and Chinese yuan. It also lifted commodity currencies such as the Australian dollar and the New Zealand dollar due to a rebound in commodity prices.

In Asia, China’s economy may have bottomed out as inflation and credit activity in the country began to show signs of recovery in August as the government stepped up stimulus measures. Futures point to a mixed opening in APAC, with Nikkei 225 futures up 0.65%, ASX 200 futures up 0.11% and Hang Seng futures down 0.20 %.

Price drivers:

  • 9 of 11 sectors finished higher in the S&P 500, with consumer discretionary and communications services leading gains, up 2.77% and 1.17%, respectively. Energy was the biggest laggard, down 1.31%. Industrials also finished slightly lower, down 0.01%.
  • Tesla shares soar 10% on Morgan Stanley upgrade. The financial institution has set a new price target on Tesla at US$400, down from US$250, as it sees the electric car maker as a big boost thanks to its supercomputer project Dojo, an AI-powered electric car software that provides self-driving, health and safety . CEO Elon Musk planned to spend more than $1 billion on Dojo by the end of 2024.
  • Qualcomm shares jumped 3.8% after Apple extended its modem semiconductor order for another three years, which may be the last deal Apple relies on a third party before using its own chips. Apple will launch a new series of products tomorrow, including the iPhone 15 and the Apple Watch.
  • Arm, a UK-based software company, expects its revenue to grow 11% this fiscal year and to increase by a mid-20% in 2025 due to strong demand for artificial intelligence chips. The company was owned by SoftBank and is set to launch its biggest IPO of the year to raise US$4.87 billion.
  • USD/JPY fell to a one-week low after Bank of Japan Governor Kazua Ueda signaled an end to negative interest rate cuts to boost the yen. The yield on Japan’s 10-year government bond jumped to 0.71%, the highest since 2013 on the news.

ASX and NZX announcements/news:

Today’s agenda:

  • Arrival of guests from New Zealand in July
  • Australian NAB Business Confidence for August
  • UK employment change for August

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