Weekly Market Update - 1 August 2022

Semiconductor Slowdown

The slowdown in semiconductor sales is yet another sign of the worsening state of the global economy. Chip sales show a good correlation with global demand and have decelerated for the sixth month in a row. US recession risks are also mounting, with Bloomberg's economists expecting one by the beginning of 2024 with 100% probability, while banks including Wells Fargo and Deutsche Bank see one occurring even sooner. Elon Musk also reiterated his comments that he thought a recession in the US was likely, expecting the downturn to be "mild" and lasting up to 18 months.

Source: Bloomberg

Futures Market Shows Little Change

Futures on US equities were little changed on Friday, while European shares drifted lower before the big data announcement. The Stoxx 600 fell 0.2% at 5:30 a.m. New York time, with the S&P 500, Nasdaq 100 and Dow Jones seen flat. In currency markets, the dollar rose against most peers and gold edged lower. Oil was steady after recent declines and Bitcoin advanced above $23,000.

Source: Bloomberg

Alibaba Effect

Chinese tech stocks listed in the US got a fresh dose of good news Thursday, after Alibaba reported a better-than-expected revenue haul for the first quarter, despite China’s economic turmoil. The company’s strong report helped drive a rally in its tech peers, with JD.com, Pinduoduo and Baidu all up. Shares in Alibaba rose for a fourth consecutive day, paring earlier gains to close 1.8% higher. News out of fellow tech behemoth Softbank was rather more downbeat. Founder Masayoshi Son is losing a growing number of top executives, piling more responsibility on his shoulders as the outlook for the Japanese conglomerate turns increasingly ominous.

Source: Bloomberg