“Apple’s Wanderlust event under close watch by investors, Court rules in favour to overturn SEC’s initial rejection, LSEG to implement a blockchain-based marketplace.”
The Stock Market
Global Market: S&P 500 & NASDAQ
As of September 11, stocks have maintained their rally since the start of the week. The S&P 500 closed at $4487.46, while NASDAQ closed at $13917.90. Composite indexes have benefited from technology stocks like Intel, which have risen consistently over the past month due to the rise in supply of AI projects, coupled with the shortages of GPUs produced by top competitor NVIDIA. Although Intel’s AI chips are not as highly regarded in quality, they are carving out a niche in the market through convenience by streamlining their Gaudi AI chips with their Falcon Shores GPU set-ups. Markets remain hopeful about the iPhone 15 launch later today. Besides chip makers, other technology giants have been painted in a positive light by big finance players. Morgan Stanley has upgraded its stocks on Telsa following their analysis of its recently announced Dojo Supercomputer, which has the potential to bring their valuation to above $500 billion.
Technology News: Apple
The Wanderlust on 12th September is set to announce the release of the latest line of Apple products. As one of the biggest tech companies in the world, their stock performance as a result of consumer response to the product launch will make waves across the market, either ramping up existing rallies or bringing movements to a halt. Ordinarily, a high-interest rate environment would discourage consumerism. However, Apple has positioned its products as a necessity rather than a luxury for communication. Should the launch go successfully, Apple could supersede its competitor, Samsung, in sales, hitting 240 million units sold. The high volume of production will spill over into the contentious semiconductor industry.
The Apple-TSMC relationship has been a symbiotic one so far. Still, the prospect of solid sales has sparked rumours that Apple could completely monopolise their 3nm processing chips, adding a new threat to the industry. Alternatively, an unsuccessful launch could shake up the market as Apple is still TSMC’s largest client, making up 23% of their business. Nevertheless, there are positive signs that this monopolistic relationship will be broken up slightly as Apple wants to expand into their chip line. In contrast, TSMC wants to pipeline sales into other businesses like Qualcomm.
Global Market: FTSE100
The FTSE100 reflects signs of stabilisation as their markets close out with a monthly high of $7542.15. As a blue-chip stock, its performance reflects the favourable tailwinds from the Chinese-exposed industrial stocks like industrial metal miners, which rose by 2.7% as China’s consumer prices rose in tandem. These signals are highly favourable for the UK, which has been battling unplanned inflation for 2023 thus far. It is unlikely that this signals that interest rate hikes are ending. Still, it does make monetary policy analysts positive that the hikes are coming close to their peak, bringing clarity into the economy and setting it up for its path to recovery.
The Crypto Market
Cryptocurrency Market: Bitcoin & Ethereum
Bitcoin prices have tanked significantly in the year’s second half so far, thanks to the persistent poor macroeconomic conditions in fiat markets. As of today, it strayed even further away from the $26000 price line. Ethereum experienced similar dips, dropping by 3.2% from the previous day. Legal battles from the FTX collapse months ago shocked markets once again in anticipation of a new wave of mass selling. This is worsened by approval delays on the many spot ETFs submitted to the SEC since June.
Nevertheless, there have been positive signs for the market. The court has recently ruled in favour of Grayscale Investment in their appeal to have their spot in Bitcoin ETF, Grayscale Bitcoin Trust. While this is not a direct success for the market, the potential for a re-review means that there is sufficient belief in the safety and security of the project. Taking a deeper look, another piece of positive news that has slipped under the radar of investors is Coinbase’s new crypto lending service for US-based institutional clients. As of September 1, $57 million has been raised for the project, and if successful, Coinbase can overcollaterise loans given to them by clients through crypto assets and, in turn, provide securitised loans to institutional trading clients. While the SEC remains steadfast in their strict approval standards, this is also good for the market since these cryptocurrencies are intensely scrutinised to ensure they are as safe as possible for investors. Investors could see this crossroads as an opportunity to invest before the SEC finally passes the first ETF.
Tokenisation News: London Stock Exchange Group (LSEG)
LSEG is looking to leverage blockchain technology to lubricate the flow of capital through an end-to-end digital market token ecosystem. This is adjacent to the developments in cryptocurrency, as this plan seeks to make the asset trading process more secure and transparent. Their next steps are to seek approval from various regulators across stakeholders to stress test the viability of this idea.
This idea of tokenising assets is not entirely novel, and LSEG can take inspiration from AsiaNext, a joint venture between Japan’s SBI and Switzerland’s SIX. After gaining approval from the Monetary Association of Singapore (MAS) to be a Recognised Market Operator, they have sought permission to operate their digital market in a secondary location. The main benefits here can be seen tangibly when you visualise how many transaction frictions disappear through a decentralised token in a transaction between Swiss companies for a Japanese asset in the Singaporean market.
LSEG’s idea seeks to scale the potential of this idea onto a global level. Its existing relationship with one of the leading economies for decentralised finance, Singapore, would be a great one to leverage when it comes—for now, seeking support from the UK Treasury to work out kinks in how this idea will be collateralised, finding out the existing legal barriers and the economic impact of this idea needs to be analysed further.