January 30, 2024, US Federal Reserve Board, Washington, DC.
Mandel Gunn | AFP | Getty Images
Hello, my name is Justina Lee from Singapore. Welcome to another edition of CNBC’s Daily Open.
Traders continue to watch for clues about a possible rate hike as the U.S. budget deficit soars to its highest monthly level in more than five years.
From deficit to investment: “Made in the USA” continues to be a focus in the U.S. auto sector, with Ford Motor Co. announcing that it will increase domestic production of Lincoln vehicles starting in 2030.
In the technology sector, the AI competition between the US and China continues to intensify following the release of open-weight AI models by Meta and Nvidia.
What you need to know today
The U.S. budget deficit surged to its highest monthly level in more than five years, putting pressure on interest rates on the federal debt and raising concerns about the country’s fiscal health.
The shortfall in July was $432.3 billion, the largest monthly deficit since March 2021. Weak employment data and positive inflation data have tempered expectations for Fed rate hikes, but traders are not pricing in the possibility of rate cuts over the next five years.
Turning to the Nordic region, Norway reported a record profit of $184 billion, with fund returns reaching 9.4%, supported by gains in Asian technology stocks.
The world’s largest sovereign wealth fund, currently valued at about $2.34 trillion, has about 40% of its portfolio in U.S. stocks, with Nvidia, Apple and Microsoft among its most prized holdings.
In the Middle East, deadly attacks on ships in the Gulf of Oman and the Red Sea have further heightened concerns about supply disruptions. While there are signs that diplomatic efforts are underway to reopen the Strait of Hormuz, more than five months of war continue to disrupt energy flows.
Markets appear to have come to terms with geopolitical uncertainty. Two of the three U.S. benchmark indexes rose overnight, but futures remained roughly flat. Asian markets were broadly higher on Thursday.
Ford Motor Co., Ltd. has signaled a push toward domestic production, announcing that it will increase production of Lincoln vehicles in the United States starting in 2030.
The U.S. automaker is also phasing out Chinese vehicle imports for the U.S. market, which it says will “further strengthen Ford’s position as America’s number one auto producer.”
In the technology sector, the AI competition between the US and China continues to intensify.
As part of a broader effort by U.S. tech companies to compete with big Chinese labs, Meta and Nvidia this week released an open weight AI model that developers can download for free through the open source ecosystem.
From AI to sports: The Los Angeles Lakers are on the market again, with Bob Iger and Joshua Kushner buying them at a valuation of $12.5 billion, according to sources.
—Justina Lee
And finally…
Solar eclipse causes European hotel prices to soar to more than $1,000 a night
In parts of Europe where the eclipse was visible, hotel and short-term rental prices soared to more than $1,000 a night.
The solar eclipse, which will be visible across the UK, Iceland, northern Spain, Greenland and Portugal on August 12, will cause a surge in travel demand across destinations, and hospitality businesses in the region are capitalizing on the opportunity.
Prices for hotels and short-term rentals soared in some European cities in the eclipse’s path, including Iceland’s capital Reykjavik and Spanish cities such as A Coruña and Bilbao, according to data obtained by commercial travel and hospitality company Lighthouse Intelligence, which looked at prices in mid-July, about four weeks after the eclipse.
—Soda Baymiya
