Excitement over artificial intelligence helped lift tech stocks and Wall Street to new records on Thursday, while European shares rose as central banks made interest rate calls.
A day after the bank holiday, Wall Street’s S&P 500 and Nasdaq Composite rose to open Thursday from Tuesday’s record close, hitting new all-time highs.
“US markets reopened after a day off and AI chip giant Nvidia continued its rally,” said Dan Coatsworth, investment analyst at AJ Bell.
The market’s enthusiasm for artificial intelligence has led to a rise in tech stocks, particularly Nvidia, which makes award-winning high-end processors for artificial intelligence applications.
Nvidia’s market capitalization overtook Microsoft on Tuesday to become the world’s most valuable publicly traded company, and its shares hit a new record on Thursday.
However, gains in the Nasdaq and S&P 500 faded as the morning wore on, with analysts unconvinced that the rally has the legs to end the day higher.
With the election looming, the BoE was set to keep UK interest rates on hold
“This morning’s economic data aligned with an economic slowdown that could raise questions about meeting earnings growth expectations and the Fed’s decision to keep its policy rate higher for longer,” said an analyst at purchase Patrick O’Hare at Briefing.com.
Initial jobless claims last week were slightly higher than expected, while housing starts eased.
Data showing slowing growth gives the Federal Reserve some leeway to ease monetary policy, but U.S. central bank officials have so far said they wanted to see more signs of easing inflation before committing to a rate cut.
Analysts say that means there will be at most two cuts, with many predicting just one this year — according to the Fed’s dot plot gauge released last week.
Central banks
UK inflation is slowing to the central bank’s 2% target
Interest rate calls from central banks in Europe livened up trading across the Atlantic, helping stocks rise across the region.
The Swiss franc fell against the dollar after the Swiss National Bank (SNB) announced its second straight rate cut, after becoming the first western central bank in March to cut borrowing costs that had risen to fight inflation.
The Bank of England (BoE) kept interest rates steady as expected ahead of the UK general election on July 4, as did Norway’s central bank.
The BoE’s decision to keep its key interest rate at a 16-year high came just a day after official data showed UK consumer inflation had finally eased to the bank’s two percent target.
The post-meeting statement opened the door to a rate cut in August, however, according to Kathleen Brooks, director of research at trading firm XTB, satisfying the stock market but hitting the pound.
“The market took today’s news as a step towards a rate cut at the next BoE meeting. The market is now pricing in a 60% chance of a rate cut in August, up from a 35% chance before the meeting,” he said.
Most Asian markets advance after Wall St’s latest record high
The European Central Bank cut interest rates earlier this month, while the US Federal Reserve is expected to introduce just one rate cut this year.
Keys around 1530 GMT
New York – Dow: UP 0.2 percent at 38,892.00
New York – S&P 500: UP less than 0.1 percent to 5,491.87
New York – Nasdaq Composite: FLAT at 17,867.73
London – FTSE 100: UP 0.8 per cent at 8,272.46 (close)
Paris – CAC 40: UP 1.3 percent at 7,671.34 (close)
Frankfurt – DAX: UP 1.0 percent at 18,254.18 (close)
EURO STOXX 50: UP 1.3 percent at 4,947.73 (close)
Tokyo – Nikkei 225: UP 0.2 percent at 38,633.02 (close)
Hong Kong – Hang Seng Index: DOWN 0.5 percent at 18,335.32 (close)
Shanghai Composite: DOWN 0.4 percent at 3,005.44 (close)
EUR/USD: DOWN at $1.0717 from $1.0745 on Wednesday
Euro/pound: UP to 84.56 pence from 84.44 pence
Dollar/yen: UP to 158.68 yen from 157.90 yen
Asian markets edge up with Wall St as traders watch the latest US data
GBP/USD: DOWN to $1.2674 from $1.2726
West Texas Intermediate: UP 0.5 percent to $82.00 a barrel
North Sea Brent crude: UP 0.3 percent at $85.35 a barrel
Source: AFP