Amanda Cooper
LONDON (Reuters) – Global shares rose on Thursday after artificial intelligence poster boy Nvidia’s (NASDAQ:) results sparked a rally in technology stocks, although the prospect that interest rates could remain high for longer than many expected was tempered some investor optimism.
The dollar was set for its best weekly performance since early April after minutes from the Federal Reserve’s latest meeting on Wednesday reflected ratemakers’ confidence that it will take longer than previously thought for inflation to return to the central bank’s 2% target. .
Nvidia shares rose nearly 7% in premarket trading. Beloved AI forecast quarterly revenue to beat estimates after Wednesday’s bell lifted shares of other AI-related companies such as ASML (AS:), Infineon (OTC:) and Taiwan Semiconductor Manufacturing.
The MSCI All-World index moved into positive territory, helped by a rally in European shares, with technology shares outperforming broader stocks, which rose 0.4%.
The prospect of a tighter Fed policy stance, warmer-than-expected UK inflation and a sobering assessment of New Zealand’s inflation woes by the country’s central bank have led investors to lower their expectations for the pace and extent of global rate cuts expected this year. .
“One interesting thing to take away from the last 24 hours is there is still uncertainty among central banks about policy settings and what level interest rates should be and where they should potentially stay to curb inflation. ” said Kyle Rodda, senior financial market analyst at Capital.com.
“It causes uncertainty from a policy perspective, but obviously it also causes uncertainty from a market perspective.”
NVIDIA CONTINUES TO SPREAD
rose 0.6% and Nasdaq futures rose 1%, thanks in part to a rally in Nvidia shares, which have already risen 200% since this time last year.
“Nvidia has had a great performance, but the reality is that it’s a very narrow market right now and you’re only exposed to one sector, and we see from history that exposure to just one sector is a big risk,” said Pascal Keppel, chief investment officer Vontobel. Swiss financial consultants.
“We saw this with many sectors, oil and banks before 2008,” he said. “As an investor, you should diversify a little.”
Meanwhile, geopolitical tensions were not far from investors’ minds as the Chinese military began a two-day “punishment” exercise in five regions around Taiwan, just days after Taiwan’s new President Lai Ching-te took office.
As a result, Chinese blue chip shares fell 0.9% and Hong Kong shares fell 1.4%.
In Britain, Prime Minister Rishi Sunak surprised markets and other lawmakers on Wednesday by calling national elections for July 4.
The pound, which hit a two-month high after data on Wednesday showed UK inflation was slowing less than expected, was last up 0.1% at $1.2726. Investors have quashed their bets that the Bank of England will cut rates next month to around 10% from 50%.
The euro received a boost from a survey that showed business activity in Germany rose for a second month in a row in May, bolstering confidence that the euro zone’s largest economy could turn around. It was last up 0.2% at $1,084.
The New Zealand dollar held near a two-month high of $0.61265 after the Reserve Bank of New Zealand rattled markets on Wednesday by warning that rate cuts were unlikely until 2025.
The yen held steady at 156.71 per dollar that day, having hit its lowest level in more than three weeks earlier.
In commodities, gold fell 0.4% to $2,368 an ounce but was still within sight of Monday’s record high of $2,449.89.
Oil prices rose, with futures up 0.8% to $82.53 a barrel.