This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
What To Note Today
Tech Pulls The Nasdaq Down
Monday’s U.S. markets were erratic. Amidst a widespread tech sell-off, the Nasdaq Composite sank while the S&P 500 and Dow Jones Industrial Average increased. Tuesday saw largely positive trading in Asia-Pacific markets. Hong Kong’s Hang Seng index gained 2.3%, while China’s CSI 300 increased by almost 2.7%. According to LSEG statistics, Japan’s 40-year government bond yield increased to 2.766%, the highest level since 2007, and the country’s Nikkei 225, the only exception, dropped by about 2%.
Possible New US Steel Bid
According to sources who spoke to CNBC’s David Faber, Cleveland Cliffs is collaborating with rival Nucor in a possible takeover play for U.S. Steel, whose acquisition by Japan’s Nippon Steel was thwarted by the White House earlier this month. The price per share would be in the mid $30s. In a deal worth over $14 billion, Nippon had intended to purchase U.S. Steel for $55 per share.
HSBC Predicts China’s Electric Vehicle Boom To Stall In 2025
HSBC analysts predict that sales of alternative energy vehicles, such as hybrid and battery-only vehicles, in China will increase by just 20% in 2025. According to figures from the China Passenger Car Association, that represents a sharp decline from the 42% growth in 2024. According to the association, by the second part of the year, the percentage of new automobiles sold that were NEVs had surpassed 50%.
More Limitations On Exporting Chips
The U.S. administration said Monday that it would enact new export limits on artificial intelligence processors depending on the tier in which nations are categorized. For example, access to AI chips won’t be restricted for close allies of the United States. The largest provider of AI processors, Nvidia, referred to the regulation as “sweeping overreach” on Monday.
Will Elon Musk Buy TikTok In The US?
Bloomberg News said Monday, citing unnamed sources, that the Chinese government is contemplating a plan to sell Elon Musk TikTok’s U.S. business. If the U.S. Supreme Court upholds a statute that would essentially ban a Chinese-owned TikTok in the U.S., that would permit the company to continue functioning in the nation.
Possibilities Beyond The “Magnificent Seven”
The S&P 500’s 23% returns in 2024 were mostly driven by the “Magnificent Seven” stocks. A portfolio manager suggests that investors use discretion when choosing from the Magnificent Seven firms, even if he believes those stocks still have the opportunity to rise this year. He also sees potential in tech stocks not included in that basket.
Bottom Line
As investors profited from the 2024 winners and searched for this year’s winner, tech stocks fell on Monday.
The tech-dominated Nasdaq Composite had a 0.38% decline. During Monday’s session, major tech companies well-liked by investors saw a general decline. Nvidia lost 2%, and Palantir, the best-performing company in the S&P last year, fell 3.4%, which increased their losses from the previous week. Palantir lost over 15%, while Nvidia dropped around 6%.
Greg Bassuk, CEO of AXS Investments, stated that Friday’s jobs report “cemented” those worries. “That’s a necessary part of a corrective phase in our view, and we are likely further along in this correction than many investors recognize since many stocks peaked in late November, early December,” Bassuk said.
Nonetheless, as investors shifted their holdings to nontech stocks like Amgen, Caterpillar, and UnitedHealth, the S&P 500 increased by 0.16%, and the Dow Jones Industrial Index increased by 0.86%.
This does not imply that those industries will assume the role of market leader in the near future or at all. As investors protect their profits and search for the next equities with upside potential, sectoral rotation is a typical occurrence in markets. Additionally, growth-oriented tech firms are under more pressure from rising rates than value equities, which normally comprise the Dow.
Furthermore, based on the most recent earnings results from TSMC and Foxconn, which trades as Hon Hai Precision Industry, the artificial intelligence craze is still going strong. Due to the strong demand for AI-related products, both businesses saw a surge in income.
There is little chance of a long-term shift away from technology and AI. However, one in the field cannot be disregarded.
