Lower “Unleashing the Power of AI: A Recap of the Global Stock Market Surge and the Yen’s Downward Drift
Economic Indicators & Central Banks:
- US labor-market data, strong weekly jobless claims, and higher-than-expected retail sales have added pressure against market rate-cut expectations.
- Markets now pricing a 57% chance of a US rate cut in March, down from 75% a week ago.
- Central bankers suggest markets are overly being aggressive in pricing rate cuts for 2024, contributing to the Dollar’s resurgence amid turbulence in China’s property and financial markets.
- Japan’s core inflation slowed to 2.3% in December, its lowest annual pace since June 2022, easing pressure on policymakers and weakening the Yen to 148.44 per dollar.
- UK: An unexpected rise in British inflation has also led to a pullback in bets on Bank of England rate cuts, supporting the Pound.
Market Trends:
- The TSMC projection of 2024 revenue growth of over 20% boosted Tokyo Electron and Advantest, contributing to a total 497-point jump in the Nikkei on the day, with respective advances of 6.03% and 8.2%.
- Chip-related shares, influenced by US peers’ gains, were prominent performers. Its earnings spurred the biggest rally in chipmakers in more than a month on Thursday and pushed the Nasdaq 100 index to close at an all-time high.
- Chip-industry stocks led a rally in Japan’s Nikkei share average, contributing to a 1.4% daily gain to close at 35,963.27, and a weekly gain of 1.09%.
- “The better-than-expected results from TSMC could be positive signals on demand recovery,” said An Hyungjin, chief executive officer and fund manager at Billionfold Asset Management Inc. “With strong AI demand, not only the US big tech firms but also most tech firms around the world have to invest in AI and that could be good news to stock markets.”
Financial Markets Performance:
- The USDIndex is set for a 2nd consecutive weekly gain as signs of strength in the US economy and cautious remarks from central bankers reduce expectations of rapid interest rate cuts.
- AUDUSD and NZDUSD are on track for their largest weekly gains since November and July, respectively.
- Bitcoin hit a 5-week low at $40,484 as traders took profits following US approval of spot Bitcoin ETFs. Investors poured $1.9 billion into new bitcoin ETFs in the first three trading days, falling short of some aggressive estimates.
- Oil prices held steady at a 3-week high amid escalating tensions in the Middle East, where the US and Iranian-backed Houthis engaged in tit-for-tat strikes affecting global shipping.
- UKOIL hovered around $79 per barrel after a 1.6% rise, while USOIL stood above $74, supported by a decline in US inventories. The US conducted multiple attacks on Houthi targets in Yemen, but shipping remains under threat. President Biden affirmed continued US strikes. Crude prices, marked by volatility, face conflicting factors, including Middle East tensions, Fed rate cut uncertainty, and a well-supplied market forecast by the International Energy Agency.
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Andria Pichidi
Market Analyst
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In recent years, the rapid advancements in technology have brought about significant changes in the global stock market landscape. With the rise of Artificial Intelligence (AI), the financial markets have experienced a surge in new opportunities and challenges. AI is, without a doubt, one of the most disruptive forces in the financial world today. In this article, we will discuss how AI has influenced the global stock market and the impact it has had on the Japanese Yen.
The Global Stock Market Surge
A significant breakthrough in AI technology has enabled investors to utilize sophisticated algorithms to predict market trends and make profitable trades. This has led to a dramatic surge in the global stock market. In 2020, the S&P 500 reached an all-time high of 3,386 points, while the Dow Jones Industrial Average hit a record of 29,551 points. These unprecedented milestones were not only a result of traditional investment strategies, but also the use of AI technology.
One of the key advantages of AI in the stock market is its ability to analyze large amounts of data and make accurate predictions in real-time. This has given traders a competitive edge, as they are able to quickly adapt to changing market conditions and capitalize on opportunities. AI algorithms can also factor in a variety of economic and political factors, making them more accurate and reliable than human traders.
The Role of AI in the Japanese Yen’s Downward Drift
The Japanese Yen (JPY) is the third most traded currency in the world, accounting for 16.3% of the global foreign exchange market. In recent years, the Yen has experienced a downward drift, which can be attributed to AI technology. As the use of AI in the global stock markets increases, more and more investors are turning to automated trading strategies, reducing their reliance on traditional safe-haven currencies like the Yen.
Moreover, the introduction of AI in the forex market has led to increased liquidity and volatility, resulting in larger fluctuations in currency values. As a result, the Yen has become more susceptible to external market factors, leading to its downward drift. This trend is expected to continue as AI technology continues to evolve and shape the stock market landscape.
Real-life Case Studies
The impact of AI on the stock market and the Yen’s downward drift can be seen through various real-life case studies. In 2016, Japanese technology giant Softbank launched the world’s largest technology fund, the Vision Fund, which was heavily backed by AI technology. This fund initially invested in 98 companies, with an estimated $100 billion. Within three years, the fund’s assets had grown to a staggering $317 billion, a clear indication of the power of AI in the stock market.
Another notable example is that of Japan’s largest brokerage firm, Nomura Holdings, and its efforts to incorporate AI technology into its investment strategies. In 2018, Nomura announced a partnership with Google to use AI in analyzing market trends and make trading decisions. The results have been impressive, with an average return of 31% on the firm’s AI-managed funds, compared to the 16% return from their traditionally managed funds.
Practical Tips for Investors
The rise of AI in the stock market has opened up new avenues for both investors and traders. Here are some practical tips for those looking to take advantage of this technology:
1. Stay Informed: Keep up with the latest developments in AI technology and its impact on the stock market. This will help you make informed and timely investment decisions.
2. Diversify Your Portfolio: Although AI technology has proven to be a valuable tool, it’s essential to have a diversified portfolio to minimize risk. Don’t rely solely on AI for investment decisions.
3. Set Realistic Expectations: AI technology is not a quick-fix for financial success. Be patient and set realistic expectations for your investments.
4. Use Reputable AI Tools: When using AI tools, it’s crucial to choose reputable and reliable sources to avoid scams and fraudulent activities.
The Bottom Line
AI technology has undoubtedly transformed the global stock market, making it more efficient and dynamic. The surge in market trends and the decrease in the Yen’s value can be attributed to the use of AI by investors. As this technology continues to evolve, we can expect even more significant changes in the stock market landscape. By staying informed and utilizing reputable AI tools, investors can capitalize on the vast opportunities presented by AI and unleash its power in the stock market.
