The Wall Street Challenge: On last Friday (25th), U.S. stocks rebounded as oil prices retreated and geopolitical risks eased. Early that day, falling international oil prices led to a decline in short-term yields. Subsequently, news emerged that U.S.-Iran talks had entered a technical consultation phase, further improving market sentiment and prompting capital to flow back into risk assets. At closing, the Dow Jones rose 0.9%, while both the S&P 500 and Nasdaq advanced 0.5%; the Philadelphia Semiconductor Index surged 1.4%.
*Xi-Biden Meeting as Expected, Likely Neutral for U.S. Stocks*
The Xi-Biden meeting placed U.S.-China relations at the center of attention last week. U.S. Trade Representative Grier revealed that the U.S. will announce detailed outcomes of negotiations with China this week, noting both sides have agreed to exclude certain key goods from disputes. According to CCTV, China and the U.S. reached an eight-point consensus. Due to space constraints, this article will not list or analyze these outcomes in detail. In the author's view, although the atmosphere between the two leaders was positive, the impact on capital markets may lean neutral, as the meeting could be summarized as "enhanced economic and trade cooperation, deferring discussion on differences, and no retreat on bottom lines," without substantial breakthroughs.
Regarding the U.S. economic situation, September's PMI preliminary figures were broadly stronger than expected, indicating robust economic momentum. During the period, the services PMI rose to 58.7, the composite PMI climbed to 58.4, and the manufacturing PMI jumped to 57, all remaining in expansion territory. These strong figures support corporate earnings outlooks but simultaneously increase inflationary pressures, making it harder for the Federal Reserve to ease its stance on interest rates.
Indeed, Fed officials adopted a notably hawkish tone last week. Harker pointed out that the U.S. economy is growing steadily, the labor market is nearly at full employment, but inflation still carries upside risks, and supply shocks have increased policy complexity. Ball stated bluntly, "further rate hikes are needed," listing past shocks that have driven up prices over the past five years, including tariffs, Middle East tensions, the Russia-Ukraine war, and surging AI infrastructure investment. He supported the Fed's recent rate hike decision and emphasized that supply shocks cannot be assumed to dissipate automatically.
Additionally, although the situation in the Middle East eased on last Friday as mentioned earlier, the situation has since changed again. Iran previously proposed three conditions: lifting maritime blockades, removing oil sanctions, and restoring regional ceasefire, promising that if the U.S. agrees, nuclear deal talks could resume within a week and the Strait of Hormuz would be reopened. Trump publicly rejected this, emphasizing that Iran has no right to use maritime passage as a bargaining chip. Despite the rejection, both sides continue communicating through intermediaries, while U.S. forces have increased escort operations. Within the past 72 hours, approximately 60 million barrels of crude oil passed through the strait under escort, temporarily calming oil market volatility. However, the stalemate in negotiations implies continued high regional uncertainty.
*Watch Labor Market Data This Week*
Looking ahead to this week, markets will focus on September's non-farm payrolls and August's core PCE. Non-farm payroll growth is expected to slow to 85,000, and core PCE is forecast to rise 0.3% month-on-month, though the specific impact of annual revisions may attract even greater attention. Additionally, earnings from key stocks (such as Micron) are also worth watching.
*NBIS Raises Prices Again, Computing Power Supply-Demand Imbalance*
This week's stock focus is on the AI cloud computing sector, with a brief introduction to Nebius (US.NBIS). Its share price surged sharply last Thursday (24th), mainly benefiting from the company's second comprehensive price increase this year, with H100 rental prices rising 17% to 21%, reflecting an expanding global computing power supply-demand gap.
Nebius does not manufacture chips but builds large-scale data centers and rents out computing power. Enterprises need not purchase expensive hardware but can rent computing power on demand, similar to "streaming games without buying a console." Nebius also provides software and system management, enabling clients to deploy models instantly and manage training processes, creating high customer stickiness.
Management noted that demand will expand across various applications by 2026, but infrastructure is constrained by electricity, land, equipment supply, and construction cycles. Industry-wide pricing has shifted upward, driving continuous rapid growth in its business scale and revenue. However, in the author's view, investment risks stem from its business model: it must bear construction costs and substantial depreciation itself. If computing demand declines or chip upgrades accelerate, its financial condition could face pressure.
Therefore, in simple terms, as long as the market continues to hype AI and computing power, its stock has attractive upside potential; however, when market conditions reverse, the risks of its business model will emerge. Given its relatively high valuation (over 100 times projected P/E ratio for 2027), it is recommended to take only small positions on pullbacks (initial entry range of 200 to 210 USD). Hong Kong Securities Analysts Association Council Member, Vincent Wan
*The author is not a licensed person under the Securities and Futures Commission and does not hold any financial interest in the issuers mentioned above.
*Articles published on Economic Information Daily, signed or unsigned, represent the authors' personal opinions and do not reflect the stance of Economic Information Daily. The role of Economic Information Daily is to provide a free platform for expression.
*Xi-Biden Meeting as Expected, Likely Neutral for U.S. Stocks*
The Xi-Biden meeting placed U.S.-China relations at the center of attention last week. U.S. Trade Representative Grier revealed that the U.S. will announce detailed outcomes of negotiations with China this week, noting both sides have agreed to exclude certain key goods from disputes. According to CCTV, China and the U.S. reached an eight-point consensus. Due to space constraints, this article will not list or analyze these outcomes in detail. In the author's view, although the atmosphere between the two leaders was positive, the impact on capital markets may lean neutral, as the meeting could be summarized as "enhanced economic and trade cooperation, deferring discussion on differences, and no retreat on bottom lines," without substantial breakthroughs.
Regarding the U.S. economic situation, September's PMI preliminary figures were broadly stronger than expected, indicating robust economic momentum. During the period, the services PMI rose to 58.7, the composite PMI climbed to 58.4, and the manufacturing PMI jumped to 57, all remaining in expansion territory. These strong figures support corporate earnings outlooks but simultaneously increase inflationary pressures, making it harder for the Federal Reserve to ease its stance on interest rates.
Indeed, Fed officials adopted a notably hawkish tone last week. Harker pointed out that the U.S. economy is growing steadily, the labor market is nearly at full employment, but inflation still carries upside risks, and supply shocks have increased policy complexity. Ball stated bluntly, "further rate hikes are needed," listing past shocks that have driven up prices over the past five years, including tariffs, Middle East tensions, the Russia-Ukraine war, and surging AI infrastructure investment. He supported the Fed's recent rate hike decision and emphasized that supply shocks cannot be assumed to dissipate automatically.
Additionally, although the situation in the Middle East eased on last Friday as mentioned earlier, the situation has since changed again. Iran previously proposed three conditions: lifting maritime blockades, removing oil sanctions, and restoring regional ceasefire, promising that if the U.S. agrees, nuclear deal talks could resume within a week and the Strait of Hormuz would be reopened. Trump publicly rejected this, emphasizing that Iran has no right to use maritime passage as a bargaining chip. Despite the rejection, both sides continue communicating through intermediaries, while U.S. forces have increased escort operations. Within the past 72 hours, approximately 60 million barrels of crude oil passed through the strait under escort, temporarily calming oil market volatility. However, the stalemate in negotiations implies continued high regional uncertainty.
*Watch Labor Market Data This Week*
Looking ahead to this week, markets will focus on September's non-farm payrolls and August's core PCE. Non-farm payroll growth is expected to slow to 85,000, and core PCE is forecast to rise 0.3% month-on-month, though the specific impact of annual revisions may attract even greater attention. Additionally, earnings from key stocks (such as Micron) are also worth watching.
*NBIS Raises Prices Again, Computing Power Supply-Demand Imbalance*
This week's stock focus is on the AI cloud computing sector, with a brief introduction to Nebius (US.NBIS). Its share price surged sharply last Thursday (24th), mainly benefiting from the company's second comprehensive price increase this year, with H100 rental prices rising 17% to 21%, reflecting an expanding global computing power supply-demand gap.
Nebius does not manufacture chips but builds large-scale data centers and rents out computing power. Enterprises need not purchase expensive hardware but can rent computing power on demand, similar to "streaming games without buying a console." Nebius also provides software and system management, enabling clients to deploy models instantly and manage training processes, creating high customer stickiness.
Management noted that demand will expand across various applications by 2026, but infrastructure is constrained by electricity, land, equipment supply, and construction cycles. Industry-wide pricing has shifted upward, driving continuous rapid growth in its business scale and revenue. However, in the author's view, investment risks stem from its business model: it must bear construction costs and substantial depreciation itself. If computing demand declines or chip upgrades accelerate, its financial condition could face pressure.
Therefore, in simple terms, as long as the market continues to hype AI and computing power, its stock has attractive upside potential; however, when market conditions reverse, the risks of its business model will emerge. Given its relatively high valuation (over 100 times projected P/E ratio for 2027), it is recommended to take only small positions on pullbacks (initial entry range of 200 to 210 USD). Hong Kong Securities Analysts Association Council Member, Vincent Wan
*The author is not a licensed person under the Securities and Futures Commission and does not hold any financial interest in the issuers mentioned above.
*Articles published on Economic Information Daily, signed or unsigned, represent the authors' personal opinions and do not reflect the stance of Economic Information Daily. The role of Economic Information Daily is to provide a free platform for expression.
