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Market Update: Commodity correction hits ASX while AI shines

14 June 2024 11:00

Global markets enjoyed a successful week, driven by the strength of the artificial intelligence (AI) industry and huge gains by Apple following the announcement of their new AI features. Meanwhile the ASX has taken a 1.5% hit during the shortened trading week due to tumbling commodity prices.

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Figure 1: The ASX 200 fell sharply on open Tuesday morning following golds huge losses on Friday. Source: Trading Economics

Following the King’s Birthday long weekend, the ASX opened up on Tuesday down 85 points on the back of golds biggest single day fall in over three years last Friday, plummeting by almost US$100 (4%). The market hasn’t recovered since, with commodity prices down across the board hurting the metals and mining sector which closed Thursday down over 4% on the week.

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Figure 2: Gold suffered its largest single day fall in over three years last Friday. Source: Trading Economics

China halts gold purchases

The commodity correction has been driven by China’s central bank announcing they have halted purchases of gold. The People’s Bank of China (PBOC), one of the world’s biggest gold buyers for years, snapped 18 months of continuous gold buying in May.

Industry players say there is no need to panic as China is expected to resume its bullion shopping spree once prices ease from the record highs hit in May. The fundamental case for the metal remains the same long term.

US Federal Reserve keep rates on hold

The Nasdaq has performed extremely well this week, closing Thursday up 3.1% from Monday’s open. It was a big week for economic news with US inflation data figures arriving for the month of May.

US inflation fell to 3.3 per cent in May, down 0.1% from the April figures. The slightly better than expected inflation figures have increased sentiment that the Fed may be heading for a rate cut in September’s meeting.

The Fed has kept its key interest rate unchanged for nearly a year, after rapidly raising it in 2022 and 2023 to fight the worst bout of inflation seen in decades following the COVID-19 Pandemic. Even though the figures are promising, headline and core inflation still sit well above their target inflation rate of 2%.

AI leads the charge

AI continues to lead the way in the recent rally. Last week it was NVIDA, the AI industry leader, who joined the $3 trillion dollar club in terms of market capitalisation, briefly toppling Apple and becoming the second most valuable company.

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Figure 3: NVIDIA has seen a meteoric rise since the start of 2023 and has only grown further in 2024. Source: Yahoo Finance

This week it was Apple’s turn to rally, recording an incredible 9% increase thanks to Tuesday’s biggest daily percentage gain since late 2022. It came on the back of the iPhone maker’s long-awaited announcement of its generative AI plans, which investors welcomed with open arms.

Apple plans to integrate OpenAI’s hit generative AI chatbot ChatGPT directly into iPhone applications, which they’re calling “Apple Intelligence”.

Demand for generative AI

The recent AI boom is no surprise, with most sectors including the banking and financial markets announcing their plans to implement and scale generative AI across their organisations. A recent global cross-industry survey found that generative AI is perceived as the key to unlocking competitiveness.

According to Bloomberg Intelligence the AI industry is expected to grow at a compound annual growth rate of 42% in the next 10 years. The demand for generative AI products could make the generative AI market worth $1.3 trillion by 2032.

Tech bull market

The rise of generative AI has led to a tech bull market. The top-tier group of tech stocks is known as the ‘Magnificent Seven’ and includes Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. They were up an average of 111% in 2023, and Nvidia alone is up a mind blowing 850% since January 2023.

With many companies surging on the back of advancements in AI technology, stocks who are both providers of AI or willing to integrate AI are on the rise. Here are a couple of relevant companies to keep an eye on.

BeEmotion.ai

BeEmotion.ai is an up and coming tech company dedicated to delivering extensive AI solutions across multiple industries, creating deeper and more meaningful interactions between humans and machines.

Their advanced human centric AI stands out with its cutting-edge technology that not only leads in innovation but also specialises in understanding and interpreting human behaviour, ensuring intuitive and user friendly interactions. They are focusing on four particular markets.

Smart mobility, with in-cabin sensing for advanced human-machine interactions to optimise comfort and enjoyment while in transit.

Smart living, with real-time human behaviour AI solutions to deliver advanced interactions to social robotics, gaming, avatars and more.

Smart health, thanks to automation of various aspects of healthcare through contactless sensing of patient state and vital signs, workflow optimisation, and improved accuracy and efficiency of diagnostics.

Smart security, with behaviour-based security technology that monitors users behaviour and identifies malicious activity that can be detected and acted upon.

BeEmotion is gearing up its go-to-market strategy, accelerating AI adoption by helping clients integrate innovative solutions that deliver creative business outcomes.

Live Verdure

Live Verdure (ASX:LV1) is an Australian Health, Wellness and Skincare products company making a range of naturally based products with effective active ingredients.

They have recently completed the initial stage of an AI enablement proof of concept with Decidr technology for its Edible Beauty brand, targeting improved business efficiency and performance. As the POC moves into its second stage, it’s expected to surpass traditional operations and boost customer acquisition and retention.

Live Verdure is one of many companies utilising AI to revolutionise business operations, aiming to enhance shareholder value through advanced technology and AI integration. Decidr.ai are providing an accessible and user-friendly platform that simplifies AI integration while remaining affordable. This enables companies to overcome cost barriers and leverage AI to enhance their operations and competitiveness.

LV1 has since reported significant growth and advancements in its operations. Emphasising their strategic partnership with Decidr.ai, the company showcases the integration of AI to boost efficiency and drive innovation across its brands.

Live Verdure are leading a new era of AI-driven organisations, aiming to transform business operations and sustain a competitive edge in the market.

LV1’s Australian Security Exchange-listed share price is currently trading at $0.43 (10:00 am UTC+ 8 hours)

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