The week started quietly, with Japan on holiday and President Trump playing golf. However, Nikkei futures traded in Chicago are only just approaching their all-time highs, suggesting the cash index could reach its peak this week.
The Nikkei’s current P/E ratio of 19 looks attractive compared to the S&P 500’s 22 and the Nasdaq’s 33, which represents a kind of premium for artificial intelligence.
However, Nvidia and AMD’s agreement to pay 15% of the revenue from AI chip sales to China to the US government is quite unusual, especially since sales were previously blocked on national security grounds. This agreement raises many questions about whether it’s a tax, a fee, or something else. For the dollar and bonds, US consumer prices on Tuesday will be a key economic indicator. Due to the impact of the tariffs, core inflation is expected to rise by 0.3% to 3.0% annually, which would mean the Federal Reserve moving further away from its 2% target. Tuesday is also the projected deadline for the US-China trade agreement. Everyone is assuming the agreement will be extended, but there has been no official statement from either side yet. Silver and copper markets have previously fluctuated due to the impact of the tariffs, while gold prices have risen last week. US customs stated that the tariffs on the most traded gold bars were a misunderstanding, but the situation is still unclear.Oil prices fell slightly ahead of the meeting between Trump and Putin this Friday.
However, no progress is expected on the Ukraine issue.Main developments that could affect markets on Monday:
No significant data expected.
