Do you dare to believe？Tech giants' stocks can also rival gold as investors' inflation-fighting top picks.

Tech stocks can also fight inflation

According to the latest market survey, nearly one-third of respondents stated that tech giant stocks are their top choice for combating inflation.

This survey result highlights the dominant role played by technology giants such as Nvidia, Amazon, and Meta in the US financial market, as they are expanding their influence in major economic sectors. This also enables these tech giants to generate stable profits, making investors believe that they will continue to be a source of steady returns.

The inflation level in the United States has dropped significantly compared to 2022, and just as people feel that the Consumer Price Index (CPI) is gradually approaching the Federal Reserve's target of 2%, they find that the "last mile" is the most difficult. In the first three months of this year, the US CPI exceeded economists' expectations and remained above the Federal Reserve's target of 2%.

Moreover, in the latest inflation data in March, the US CPI once again recorded a higher than expected rise. The monthly CPI, which includes various goods and services, rose by 0.4%, while pushing the annual inflation rate to 3.5%, exceeding economists' general predictions. They expect the monthly increase to be more moderate, at 0.3%, and the annual inflation rate to be 3.4%.

The core CPI in March also showed significant growth, rising by 0.4% within a month, exceeding the expected 0.3%. On an annual basis, this core indicator has risen to 3.8%, exceeding the expected 3.7%. The accelerated rise in core prices indicates a broad inflation trend, rather than being limited to volatile market sectors.

This Wednesday (May 15th), consumer inflation data for April in the United States will be released, and the market is expected to be around 3.4%. If the inflation data is higher than expected, it may intensify investors' bets on the Fed's interest rate hike.

The stubbornness of inflation has made price increases the biggest concern for investors. In the survey, the majority of respondents (approximately 59%) saw a rebound in inflation as the biggest risk facing the financial market from now until the end of this year.

In the past two years, while inflation in the United States has been struggling to reach its target, the stock prices of tech giants in the US stock market have repeatedly hit new highs.

For example, since the inflation rate exceeded 2% for the first time in March 2021, Nvidia's stock price has surged more than six times. The growth rate of Meta exceeded 80%, while Microsoft rose by over 70%. Even Apple, which had recently underperformed, performed better than the overall market during this period, with a growth rate of over 50%, while the S&P 500 index rose by about 30%.

However, like other growth stocks, technology companies are sensitive to changes in inflation and interest rates, as their valuations largely depend on future profits.

What other assets are favored by investors？

46% of survey participants stated that gold, traditionally considered a safe haven asset, is still considered the best choice to resist the risk of price increases.

Since the Russia-Ukraine conflict, Russia's dollar assets have been confiscated. Many countries are trying to reduce their dependence on the dollar and diversify their assets, and gold is naturally the beneficiary. In addition, with the continuous buying by the People's Bank of China, the price of gold has risen by nearly 15% since the beginning of this year.

In addition, the US dollar and US bonds are also choices for many people.

In the survey, about a quarter of respondents pointed out that the US economic recession is the biggest risk in 2024. Therefore, in this case, they believe that treasury bond can provide better protection than stocks. Moreover, the yield of US treasury bond bonds has always been high, which can also bring good returns.

Despite the Federal Reserve tightening monetary policy, the overall US economy has shown resilience, causing many funds to flow back to the US and driving the appreciation of the US dollar. The US dollar is considered by most people as the best currency choice to weather market turbulence.

Nearly three-quarters of respondents stated that the US dollar is the best safe haven currency, followed by the Swiss franc (approximately 23%). The choice of safe haven currency is also related to geography. About 86% of respondents in the United States and Canada preferred the US dollar, while in Europe, about 43% of respondents preferred the Swiss franc.

The survey also showed that due to the continuous depreciation of the yen and Japan's ultra loose monetary policy, the safe haven position of the yen has significantly declined. At the end of April, due to the huge interest rate difference between Japan and the United States, the Japanese yen fell to its lowest level in 34 years, even falling below the 160 mark at one point.

In addition, in the survey, a small minority (13%) of respondents stated that they are also considering including Bitcoin in their asset portfolio, as Bitcoin is one of the few assets they are looking for that is not linked to geopolitics.