ASX set to edge up, Wall Street drifts higher; Apple dives after hiking prices - SMH.com.au

Apple shares took a significant tumble, diving over 6% on Thursday after the tech giant announced price hikes across its Mac and iPad lines, a direct consequence of surging memory and storage chip costs fueled by intense AI infrastructure demand. This downturn weighed heavily on the Nasdaq, which dipped 0.46%, contrasting sharply with a resilient Dow Jones Industrial Average that edged up 0.14%, while the broader S&P 500 remained largely flat. On the flip side, memory chip giant Micron Technology roared ahead, surging over 15% after reporting blockbuster earnings that obliterated Wall Street expectations, underscoring the diverging fortunes within the tech sector. The market's mixed signals are rooted in a complex interplay of forces. Apple unprecedented mid-cycle price increases, necessitated by a 'hundred-year flood' of component cost inflation, highlight how the AI boom is creating supply chain pressures for consumer electronics manufacturers, even as it generates immense profits for chipmakers like Micron. Adding to investor caution, the US Personal Consumption Expenditures (PCE) index, the Federal Reserve preferred inflation gauge, accelerated to a three-year high of 4.1% in May, strengthening expectations for further interest rate hikes. Geopolitical tensions also flared, with reports of a potential US-Iran ceasefire agreement initially easing oil prices, only for them to rebound on renewed concerns over shipping security in the Strait of Hormuz, underscoring persistent global risks. Looking ahead, investors are navigating a volatile landscape where AI's transformative power continues to reshape industries but also introduces new cost structures and supply chain vulnerabilities. The Federal Reserve next moves will be critical, as persistently high inflation could force further monetary tightening, potentially impacting consumer demand for Apple now pricier products. Meanwhile, the Australian ASX 200 continued its recent decline, battling falling commodity prices and a stronger US dollar. All eyes will be on the durability of the US-Iran de-escalation efforts, which remain a key determinant for global energy stability and broader market sentiment in the coming weeks.