Welcome to this week’s edition of top stock market highlights.
Singapore’s core inflation
There is good news if you have been worried about the soaring prices of basic goods and services.
Singapore’s core inflation continued to ease in May, falling to 4.7% from 5% in April.
Core inflation was at its highest at the beginning of this year at 5.5% in both January and February before falling to 5% in March.
Both the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) attributed the decline to lower prices for services and food.
Overall inflation, which includes the effects of accommodation and private transport costs, came in at 5.1% for May.
This level was lower than the 5.7% reported in April.
For this year, headline inflation is expected to range between 5.5% and 6.5% while core inflation is projected to come in between 3.5% and 4.5%.
If the rise of 1% for the Goods and Services Tax is excluded, then core inflation should end up between 2.5% and 3.5%.
Both MAS and MTI have warned that a sharp recession in advanced economies could bring inflation down further than anticipated.
However, such a scenario will not be good for Singapore as the country is an open economy and may also suffer from the knock-on effects of an economic slowdown.
Micron Technology (NASDAQ: MU)
For investors who are tracking the semiconductor and microchip markets, it is insightful to look at the earnings report from major chipmakers to obtain more clarity on where we are in the cycle.
This round, Micro Technology has provided some guidance as it released its fiscal 2023’s third quarter (3Q FY2023) ending 1 June.
Revenue plunged by 56.6% year on year to US$3.75 billion but was still better than analysts’ expectations of US$3.65 billion.
The microchip manufacturer reported a net loss of US$1.9 billion for the quarter, a sharp reversal from the US$2.6 billion net profit in the prior year but an improvement from the previous quarter’s US$2.3 billion loss.
Importantly, Micron’s president and CEO Sanjay Mehrotra believes that the memory industry has passed its trough and that the supply-demand imbalance is disappearing.
As a result, margins should start improving and investors are also optimistic that the company’s memory chips will see higher demand from the explosion in usage of generative artificial intelligence (AI) with the popularity of ChatGPT.
Meanwhile, customers are also reducing excess inventory and prices are slowly edging up, giving the CEO confidence that the company has seen the worst behind it.
However, China continues to be a major headache for Micron.
The biggest US memory chipmaker was failed by China’s cyberspace regulator last month and was barred from selling its products to key infrastructure operators.
Because of this decision, up to half of its Chinese market share may be at risk.
Oracle Corporation (NYSE: ORCL)
In another sign that AI looks set to boost the semiconductor industry, Oracle Corporation has announced that it will be spending “billions of dollars” on microchips from Nvidia Corporation (NASDAQ: NVDA) as it expands its cloud computing service.
Larry Ellison, founder and CEO of Oracle, said that the company is also buying large numbers of graphics processing units (GPUs) that can crunch the data required for AI work.
In addition, Oracle will also spend billions on central processing units (CPUs) from both Ampere Computing, a chip startup, and Advanced Micro Devices (NASDAQ: AMD).
Oracle plans to boost its cloud division by bolstering its capabilities with AI-infused technology to compete against larger rivals such as Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT).
To do so, the company is focused on building fast networks that can handle huge amounts of data that power the generative AI movement.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
