GENEVA — The downside correction in US technology stocks didn’t last long. Nasdaq rebounded more than 2% on Wednesday, and the S&P500 (+1.40%) traded above the all-time closing high completing a full circle to return to its pre-COVID levels. Apple (+3.32%), which announced a 4-to-1 split from September, is about to come under some pressure due to the US’ attack on Chinese TikTok and WeChat for security reasons. If WeChat, China’s most popular and most used messaging app is removed from Apple’s AppStore, it would be almost impossible to sell iPhones in China and the company’s global shipments would drop by 25-30%, until the decision is reversed. The emerging tensions over TikTok and WeChat will be sitting on top of the priority list for the upcoming trade discussions between the US and China. The two countries are expected to review the phase-one trade deal and we can already tell that the negotiations won’t be smooth, and the existing deal could be at jeopardy. A further deterioration in the US-China trade relationship is an important downside risk to the global equities at the moment, but the price pullbacks will likely remain short-lived as stock investors continue relying on government and central bank support to keep the illusion alive. Data-wise, the headline inflation in the US rose 0.6% m-o-m in July, more than expected. The 0.6% increase in core CPI was the fastest since 1991. Digging into these numbers, the surge in consumer prices came mostly from motor vehicle sales and apparels, which are volatile items, if filtered out showed there has not been a material change in overall inflation levels. Food prices, on the other hand, came off slightly following a sharp rise during the pandemic. To us, there is nothing alarming in the latest inflation figures. What’s more worrying is the army of 16 million jobless in the US, who are craving for the next fiscal stimulus package to pass as infection numbers continue surging. But talks haven’t borne fruit so far. Due today, the US unemployment claims are expected to remain above the 1 million mark. Elsewhere, the European July inflation figures are expected to print negative numbers in July despite business reopening and normalization. The Australian unemployment rate rose to 7.5% in July, the highest since November 1998, as the number of unemployed skyrocketed from 15.7K to above a million as the pandemic took a toll on the economic activity. The employment change has been better-than-expected however, as 114.7K new jobs were added in July, versus 30K expected by analysts. The AUDUSD remained bid above the 0.71 mark. While the global economic data is badly infected by the coronavirus pandemic, showing the worst numbers on record for growth and employment, the market reaction depends on the perspective investors look at it. As long as the data matches the expectations, it is assumed that the market prices already take the figures into account, no matter how bad they are. This is why we see the share prices climbing relentlessly. With of course the precious push from government and central bank stimuli. Trading in Asia was mixed and the activity on European futures hint at a flat-to-negative open on Thursday. The US dollar halted its three-day rise as the US yields advanced to 0.66%. Gold rebounded to $1,940 per oz following a sharp fall to $1,862 on Wednesday. The rising US inflation should overweigh the advance in US yields and provide support to gold on a firmer basis, after a part of the speculative long positions were cleared at this week’s downside correction. WTI crude tests the 200-day moving average ($42.90 pb) to the upside. The surprise 4.5-million-barrel decline in US oil inventories last week is supportive, but insufficient to whet the bulls’ appetite above this level. The EURUSD is back above $1.18, and the pound remains bid above the $1.30 mark on broadly softer US dollar. There is a decent potential for a deeper downside correction on both pairs, but the short-term direction remains highly contingent on the US dollar appetite. Price advances could be interesting top selling opportunities for traders betting on a further dollar correction in the coming days. — The writer is senior analyst at Swissquote Bank