Market Summary
US Producer Prices Fall, Supporting Gold: U.S. Producer Price Index (PPI) data surprised to the downside, falling 0.3% in June and bringing annual PPI to 5.5%. Following the softer CPI reading earlier this week, the weaker producer inflation data further reinforced expectations that the Federal Reserve may not hike rates in the near future. Gold benefited from the shift in sentiment, with XAU/USD rising 0.32% to $4,061 yesterday as investors increased expectations for a more accommodative monetary policy.
TSMC Delivers Strong Earnings on AI Demand: Taiwan Semiconductor Manufacturing Co. (TSMC) reported quarterly profit that exceeded expectations, underscoring the continued strength of global demand for artificial intelligence infrastructure. The world's largest contract chipmaker, which manufactures advanced processors for Nvidia and Apple, posted June-quarter net income of NT$706.6 billion ($22 billion), well above the consensus estimate of NT$623.7 billion. Quarterly revenue climbed 36% to NT$1.27 trillion (approximately US$40 billion), highlighting TSMC's dominant position in supplying the world's most advanced semiconductors for AI data centres and smartphones.
AI-Focused Semiconductor Stocks Retreat: Despite TSMC's strong results, semiconductor stocks came under pressure across Asia overnight as investors questioned whether the AI-driven rally can continue to justify elevated valuations. South Korea's Kospi Index, widely viewed as a barometer for AI-related investments, fell as much as 7.6% before trimming some of its losses ahead of Friday's market holiday, weighing on broader regional equity markets.
Oil Reverses Higher After Iran Strikes; Sterling Hits One-Year High: Brent crude erased an overnight rally sparked by fresh U.S. airstrikes on Iran, falling 0.5% to $84.50 as traders focused on broader market fundamentals. Meanwhile, the British pound strengthened to a one-year high following reports that Shabana Mahmood will be appointed UK Chancellor under incoming Prime Minister Andy Burnham. GBP/USD climbed from 1.3387 to 1.3537, a gain of 150 basis points, reflecting increased optimism over the UK's fiscal outlook.
Economic Calendar
- U.S. Jobless Claims
- U.S. Retail Sales
- UK Industrial Production
- UK Monthly GDP
- Italy EU Harmonised CPI
Key Market Moves Today
- S&P 500 Futures: +0.14% (7,625.3)
- U.S. 10-Year Yield: +0.61 bps (4.55%)
- Brent Crude: -0.22% ($84.76)
- Bitcoin: -0.54% ($64,686)
- Spot Gold: -0.62% ($4,035.4)
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