Weekly Market Wrap | 10 July 2023

#USJobMarket #Meta_Twitter #ChinaExports

US Job Market reports for June give mixed signals

US Private Employment (Source: ADP)

What happened?

Private employers in the United States added a significant number of jobs in June, surpassing expectations and indicating a robust job market. According to the private payroll supplier ADP, 497,000 new jobs were created last month, marking the largest monthly increase in over a year. The rise in hiring was primarily driven by consumer-facing service industries, with leisure and hospitality jobs contributing the most to the surge. 

On the other hand, the official data from the Bureau of Labor Statistics revealed that the US added 209,000 new jobs in June, which was the weakest gain since December 2020. This number fell short of economists’ expectations of 240,000 jobs and was lower than the 309,000 jobs added in May.

While President Joe Biden praised the stable and steady growth of the economy and job creation, some economists have expressed concerns over the Federal Reserve’s rate hikes and their potential impact on employment and a recession. 

With US inflation remaining twice as high as the Fed’s target at 4%, there are fears that the central bank’s steep rate increases could lead to job losses. Nonetheless, the Fed is expected to proceed with another rate hike later this month.

What does it mean for the investors?

The latest employment figures may have mixed implications. On one hand, the strong rise in hiring reported by ADP suggests continued labor market strength. However, the weaker job gain reported by the Bureau of Labor Statistics and signs of cooling in the labor market indicate a potential slowdown. This may lead investors to exercise caution and carefully assess the evolving economic conditions and market dynamics to make informed decisions regarding the interest rates going forward.

Meta launches Twitter rival, Threads 

Meta Price Chart (Source: Syfe Trade)

Mark Zuckerberg has taken a direct shot at Twitter by launching Threads, a new platform that quickly garnered millions of users within hours. Taking advantage of Twitter’s weakened state following a series of controversial decisions by owner Elon Musk, Threads attracted prominent figures like Kim Kardashian, Jennifer Lopez, and Democratic US Representative Alexandria Ocasio-Cortez. 

Threads, available as a standalone app, allows users to log in with their Instagram credentials and follow the same accounts. Its integration with Instagram provides a built-in user base and potential advertising capabilities, which could further impact Twitter’s struggling business.

Investors are optimistic about the potential impact of Threads on Meta’s stock, with some dubbing it a potential “Twitter-Killer.” While Twitter faces challenges such as staffing cuts, content moderation controversies, and declining value, Meta aims to capitalize on the opportunity to create a widely adopted public conversations app. 

Zuckerberg acknowledged the difficulty of achieving this goal and expressed hope that Threads would succeed where Twitter fell short. As Meta actively engages social media influencers and incorporates privacy considerations, the launch of Threads signals a competitive shift in the social media landscape.

China Implements Export Controls on Key Semiconductor Metals

China Exports (Source: TradingEconomics.com)

In a move to safeguard national security and interests, China’s commerce ministry has announced the implementation of export controls on certain metals widely utilized in the semiconductor industry. 

Exporters will now be required to obtain permission before shipping specific gallium and germanium products, which are crucial components for high-speed computer chips, defense systems, and renewable energy technologies. Failure to comply with these regulations or exceeding permitted volumes will result in punitive measures, according to the ministry.

Simultaneously, reports suggest that the United States is considering imposing new restrictions on the shipment of advanced microchips to China, while the United States and the Netherlands plan to further limit sales of chipmaking equipment to Chinese chipmakers.

The critical nature of these metals in the semiconductor industry, combined with the escalating technology rivalry between China and the United States, raises concerns about potential disruptions to global supply chains. 

Approximately 80 percent of the world’s gallium and 60 percent of the world’s germanium are currently produced in China. The move highlights the global reliance on China, impacting industries reliant on high-speed computer chips. Investors in the semiconductor industry should closely monitor these developments and assess their potential impact on supply chains and market dynamics.

IndexLevel1 Week1 MonthFrom Jan 1 2023
S&P 500 (US Stocks)4,399-0.53%+2.45%+15.03%
Nasdaq 100 (US Tech Stocks)15,036-0.32%+3.81%+38.43%
CSI-300 (Chinese Stocks)3,826-0.72%+0.14%-1.60%
Bitcoin (in USD)30,323-0.95%+14.39%+82.61%

Source: Google Finance, Bloomberg, Yahoo Finance, CNBC, Financial Times, Reuters, Business Times, CNN, Fashion United

Featured Image source: Guardian