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Today's markets: Chinese tech crackdown continues, Nvidia's Arm deal faces further hurdles, eyes on Jackson Hole & more

Markets in London are becalmed as traders await signals on tapering from Fed chair Jay Powell later today
August 27, 2021

China tech crackdown continues

China’s moves to rein in its technology sector continue. According to a report in the Wall Street Journal this morning, Chinese authorities will ban companies who hold significant amounts of customer data from listing in the US. This is a well trodden and lucrative route to seeking international funding but the Chinese government is intent on regaining some oversight and control over its technology sector. Previous regulatory moves hit the share prices of companies such as ride sharing app Didi, just days after it listed in the US, and internet giants Alibaba and Tencent. 

Read more: 

How the Chinese tech crackdown could hurt EM investors

Eyes on Jackson Hole

It’s all about today’s Jackson Hole event – lots of talk but ultimately, it’s going to come down to whether Powell talks up the taper or talks it down. Yesterday among the various ‘sideline’ chats, Dallas Fed president Robert Kaplan didn’t say anything new – he expects to taper this year and hike next year but stressed the two decisions are entirely separate. James Bullard and Esther George also reiterated their view that the taper should start sooner rather than later. All three are on the hawkish end of the committee so this is not that big a deal or anything we didn’t know already. What matters ultimately is what Powell, Williams and Clarida think. 

Neil Wilson is chief market analyst at Markets.com - read his full market outlook article here. 

Recovery stalling

The latest data drop from the Office for National Statistics added to the sense that the recovery in economic activity may have plateaued in recent weeks after the sharp surge in the middle months of the year as the UK came out of lockdown. Retail footfall in the week to 21 August fell by 2 per cent and was at 80 per cent of the level seen in the same week in 2019. Meanwhile, spending on debit and credit card purchases dipped by 1 per cent and remains at 94 per cent of its pre-pandemic levels. 

EU to probe Nvidia takeover

The proposed $54bn takeover of Arm Holdings by rival chip maker Nvidia has attracted the attention of EU regulators now. The deal has already been probed by the UK’s Competition and Markets Authority, who found ‘serious competition concerns’ during its first consideration of the deal. 

Nvidia first approached Softbank to buy UK based Arm almost a year ago and, according to a report in the Financial Times, will shortly submit notification of the deal to the European Commission, at which point it is highly likely that the EU will launch its own competition probe. 

There are certainly plenty of hurdles to overcome before any deal completes with rivals and customers raising concerns about the strength of the market position an enlarged Nvidia would enjoy. With increasing concern over prime UK assets being bought up there is also a chance the UK government could step in and try to block the deal on national security grounds, although that may appear a little ironic given Japanese investor Softbank’s purchase of Arm five years ago was waved through. 

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