Picture from OpenAI Sora generated video showcasing the prompt: "Photorealistic closeup video of two pirate ships battling each other as they sail inside a cup of coffee."
At the World Governments Summit in Dubai last week, Nvidia CEO Jensen Huang questioned if Sam Altman's attempts to raise up to $7 trillion to increase GPU chip supply were even realistic. However, with OpenAI's new release of "Sora," Altman's pitch becomes more enticing for investors. Sora is their video-generation AI model capable of creating realistic scenes from text that demonstrates remarkable progress in using advanced AI for practical video applications that could be highly valuable commercially. The computing power needed to scale such models globally would be immense. Thus, Altman's proposal to substantially expand chip production, though extraordinarily ambitious, may now seem more pragmatic given Sora's demonstrated capabilities and the massive data centre demands ahead for advanced AI video and graphics.
EQUITY
US equities rebounded to this week's opening as plummeted retail sales data may revive hopes for rate cuts, although economic momentum is beginning to spread globally. The S&P 500 and Dow Jones gained higher than Nasdaq, led by the energy and banking sectors, while mixed earnings and worse guidance on Cisco's limit gains. Zebra Technologies jumped 12% on better results, while West Pharma fell 14% after missing revenue consensus.
GOLD
Gold struggles for direction, caught between inflationary pressures persisting, with import prices surging and jobless claims suggesting a robust labour market and a surprise retail sales drop that may renew earlier rate cuts expectations that supported the precious metal Thursday, although it is pushing towards a second weekly decline.
OIL
Oil's price went sideways after the IEA revised down its 2024 demand growth forecast, limiting Thursday's rally. While geopolitical tensions in the Middle East, particularly the Hezbollah-Israel conflict, escalated, investors are cautiously adjusting positions ahead of a long US weekend and await further clarity on monetary policy and the potential for supply disruptions. The week is bound to end on a positive note unless upcoming PPI data swings the market in the opposite direction.
CURRENCY
The US dollar fell due to mixed US economic data that supports the Federal Reserve cutting interest rates by June, while the yen firmed up despite Japan reporting weak GDP growth that saw it lose its position as the world's third largest economy to Germany. The dollar's pullback is seen as temporary by strategists who expect it to stay strong given continued US economic outperformance compared to Europe and China's economies.
