Investing.com — Wall Street looks set to start the new week on a positive note, although the Fed’s inflation gauge due later in the week could set the near-term direction. Apple has breached European Union rules, while Broadcom is working with Chinese firm ByteDance to supply AI chips.
1. Futures only higher before the release of core inflation
U.S. stock futures rose on Monday, starting the final week of the first half of the year near record highs, driven largely by enthusiasm surrounding artificial intelligence.
By 04:20 ET (0820 GMT), the contract was 70 points, or 0.2%, higher, up 12 points, or 0.2%, and up 45 points, or 0, 2%.
a broad-based benchmark index hit a new intraday high late last week and is up almost 15% so far this year, while tech-heavy has gained almost 18%.
In contrast, the blue chip has stagnated, gaining just under 4% in the first half of the year.
The main focus this week will be Friday’s release of May data, the Federal Reserve’s preferred gauge of inflation.
Investors have been trying to gauge when the US central bank will start cutting interest rates, with Fed officials expressing their desire for more inflation data that confirms price easing before agreeing to a cut.
There are also a number of major company earnings this week, including FedEx (NYSE: ), Micron (NASDAQ: ), Walgreens Boots Alliance (NASDAQ: ) and Nike (NYSE: ).
2. Apple has violated EU – EC rules
Apple (NASDAQ: ) has run into regulatory difficulties in the European Union.
The European Commission, which also acts as the EU’s antitrust and technology regulator, said on Monday that the iPhone maker’s App Store rules breach EU technology rules because they prevent app developers from running consumers towards alternative offers.
The EU executive said it was also opening an investigation into Apple over new contractual requirements for third-party app developers and app stores.
“None of these business terms allow developers to freely direct their customers. For example, developers may not provide in-app pricing information or otherwise communicate with their customers to promote offers available on alternative channels of distribution,” the EU watchdog said.
The EU opened an investigation into US tech giants in March under a landmark new law known as the Digital Markets Act.
So-called anti-driving rules were one of the main focus areas of the probe. According to the DMA, tech firms are not allowed to block businesses from telling their users about cheaper options for their products or subscriptions outside of an app store.
3. ByteDance working with chip maker Broadcom – Reuters
Chinese technology firm ByteDance is working with U.S. chipmaker Broadcom (NASDAQ: ) to develop an advanced artificial intelligence processor, even as the U.S. tries to limit exports of these vital chips to its main economic rival.
A deepening partnership between the two companies, which Reuters reported on Monday, represents more efforts by Chinese tech firms to secure supplies of advanced AI chips after the US blocked several major chipmakers, most notably NVIDIA Corporation (NASDAQ: ), by selling their cutting-edge AI technology to China.
The 5-nanometer chip will comply with US export limits and is likely to be outsourced to TSMC, the world’s largest contract chip maker.
Bytedance and Broadcom already have established partnerships, with the TikTok owner buying several AI-related chips from the firm over the past two years.
This follows a broad push into generative AI over the past year, which has served as a major source of demand for global chipmakers.
4. EU to hold EV trade talks with China
China and the European Union have agreed to begin talks on the planned imposition of tariffs on Chinese-made electric vehicles (EVs) imported into the European market.
The European Commission announced earlier this month that it is planning to impose temporary tariffs on Chinese-made electric vehicles of up to 38.1%, on top of the standard 10% tariff on car imports.
The tasks will be implemented until July 4.
The news angered Beijing, with Chinese authorities hinting at the possibility of retaliatory measures.
The state-linked Global Times reported on Sunday that China wants the European Union to revoke its decision to impose temporary tariffs on Chinese electric vehicles.
While the talks hint at the possibility of a de-escalation of this trade conflict, the United States also raised tariffs on Chinese cars in May, suggesting coordination in the West’s trade war with Beijing.
5. Talk of intervention in the rising yen
Talk of intervention is on the rise in currency markets on Monday as the Japanese yen weakened to its lowest level against the dollar since April 29 on Monday, with the pair climbing to a high of 159.93.
In April, the pair hit a 34-year low of 160,245, prompting Japanese authorities to spend around ¥9.8 trillion to prop up the currency.
The yen has come under fresh pressure after the Bank of Japan’s decision this month to hold off on tapering its bond-buying stimulus until its July meeting.
The yen’s losses prompted Japan’s top currency diplomat Masato Kanda to say on Monday that authorities will take appropriate action if there are excessive currency movements.
“We will respond firmly to moves that are too quick or driven by speculators,” Kanda said, while noting that authorities do not have specific levels in mind for when to intervene.
Kanda said Japan’s addition to the US Treasury’s foreign exchange manipulation watch list had “absolutely no impact” on Tokyo’s policy options.
A US Treasury report released last week added Japan to its foreign exchange watch list along with six countries previously on the list.
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