S&P and Nasdaq at Record Levels, Nvidia Surpasses Apple

On Wall Street, on Wednesday, the S&P 500 and Nasdaq indices reached record levels, primarily due to the rise in technology stocks as the market considers the latest employment data in the U.S. that could support the easing of the Fed’s monetary policy.

The New York Dow Jones index rose by 96.04 points or 0.25 percent, to 38,807 points. At the same time, the S&P 500 index strengthened by 1.18 percent, to 5,354 points, and the Nasdaq by 1.96 percent, to 17,187 points, both reaching new record levels, surpassing previous ones achieved in May.

Among the 11 stock sectors, the technology sector led the rise, while the communication and industrial sectors also saw significant increases, with the consumer goods sector being the biggest loser.

The latest data from the U.S. labor market, from the private employment agency ADP, showed that 152,000 new jobs were created in May, significantly lower than in April, when 188,000 jobs were created, and below analysts’ expectations of 175,000 new jobs.

With earlier data released this week showing a slowdown in U.S. industrial activity and a lower-than-expected JOLTS job openings report, expectations are rising that the Fed will indeed begin a cycle of easing monetary policy in September. Traders now believe the chances of this are 69 percent, up from 50 percent at the end of last week.

In stock market news, Nvidia’s market capitalization reached 3 trillion dollars for the first time, making the chip manufacturer more valuable than Apple and becoming the second most valuable company in the world.

On European exchanges on Wednesday, the main indices also rose ahead of the European Central Bank’s meeting and the expected interest rate cuts. The London FTSE index strengthened by 0.18 percent, to 8,246 points, the Frankfurt DAX by 0.93 percent, to 18,575 points, and the Paris CAC by 0.87 percent, to 8,006 points.

Surge in Asian Markets in Anticipation of Interest Rate Cuts

On Asian markets on Thursday, leading regional indices strengthened on the wings of expectations for the beginning of a cycle of easing monetary policies by the largest central banks – the Fed in September and the European Central Bank (ECB) at a meeting later in the day.

The MSCI Asia-Pacific index excluding Japan was up 1.14 percent around 6:00 AM, led by technology stocks. This index is thus on track for a gain of 2.7 percent since the beginning of the week.

At the same time, the Japanese Nikkei was up 1 percent, and Chinese markets also strengthened – the Shanghai stock index by 0.4 percent, and Hong Kong by 0.81 percent.

Markets expect that the ECB will begin a cycle of monetary easing today, that is, cut interest rates from a record level of 4 percent by a quarter of a percentage point for the first time since 2019.

This week’s data from the U.S., on the other hand, regarding the slowdown in industrial activity and employment, supports expectations that the Fed will also begin a cycle of interest rate cuts in September, making investments in stocks more attractive due to higher returns in the stock markets.

– Bad economic news is still good for stocks, as it supports Fed rate cuts – emphasizes Ben Bennett, a strategist at Legal And General Investment Management.

On the Brink of a Global Interest Rate Cut Cycle

On the foreign exchange markets, the dollar generally weakened against the major world currencies, with the yen strengthening by 0.1 percent against the dollar, to 155.93 yen, and the euro by 0.16 percent, standing at 1.0885 dollars.

In such conditions, the dollar index weakened by 0.14 percent compared to the previous day, to 104.145 points.

In focus for currency traders are interest rates. The ECB will almost certainly cut interest rates from record highs later in the day and will likely acknowledge that progress has been made in the fight against inflation, but also emphasize that this fight is not over. Investors’ focus will be on comments from monetary officials and economic projections to assess what follows after the expected rate cut. Markets estimate that interest rates in the eurozone will be reduced by 64 basis points this year.

The central bank of Canada, on the other hand, cut its key interest rate on Wednesday as the first in the G7 group, but indicated that further easing will be gradual and dependent on data. Meetings of the Fed and the Bank of Japan are scheduled for next week.