U.S. Markets See Gains Led by Tech and AI
On Wednesday, U.S. equity markets closed higher, driven by a strong performance in technology and semiconductor stocks. The S&P 500 climbed 1%, the Dow Jones Industrial Average rose 0.3%, and the Nasdaq surged 2.2%, largely due to positive remarks about artificial intelligence from Nvidia’s CEO. Large-cap stocks performed particularly well, while sectors sensitive to interest rates lagged behind. The S&P 500’s close above its 50-day moving average of 5,500 signalled strength, especially after an earlier test of its 100-day moving average at 5,400. Meanwhile, European markets were mixed, and globally, the U.S. dollar strengthened, oil prices rebounded, and gold declined.
Global Market Update for September 12, 2024
Asian Markets Lead Gains on AI Optimism
Asian equity markets advanced on Thursday, fuelled by strong gains in technology stocks, particularly in the semiconductor sector. Japan’s Nikkei 225 and TOPIX surged by 2-3%, supported by a softer producer inflation report, which eased concerns over potential rate hikes from the Bank of Japan. South Korea’s KOSPI and Taiwan’s Weighted Index also posted gains, while Chinese stocks underperformed due to worries about ongoing U.S.-China trade tensions.
European Markets and U.S. Futures Outlook
European markets are set to open higher, with the Euro Stoxx 50 expected to rise by over 1%. However, U.S. equity index futures dropped slightly as the technology rally cooled, and investors remain cautious ahead of the Federal Reserve’s upcoming interest rate decision.
Oil Prices Steady as Traders Focus on Demand Concerns
Oil prices remained flat on Thursday morning as market attention shifted to concerns about weakening demand, despite gains from the previous session, which were driven by production disruptions caused by Hurricane Francine. The focus is now on rising U.S. oil stockpiles and reduced demand for gasoline and distillate fuels. Traders are eagerly awaiting the International Energy Agency’s (IEA) report for more insights into global demand trends.
Inflation Moderates, Boosting Expectations for Fed Rate Cuts
In August, the U.S. Consumer Price Index (CPI) increased by 2.5% year-over-year, marking the lowest inflation rate since February 2021. Core CPI remained steady at 3.2%, in line with expectations, while shelter inflation persisted at 5.2%. Average hourly earnings grew by 3.8%, outpacing inflation. These indicators suggest that inflation is moderating, raising hopes that the Federal Reserve could begin a cycle of rate cuts soon.
Electric Vehicle Sales Surge Globally Despite Decline in Europe
Global sales of fully electric and plug-in hybrid vehicles increased by 20% year-on-year in August, with record sales in China driving the growth, despite a 33% decline in Europe. In China, sales surged by 42%, surpassing one million vehicles, while Europe experienced a 4% decline year-to-date, largely attributed to reduced subsidies in Germany. The rise in Chinese subsidies and strong end-of-year sales are fueling demand.
Nvidia Leads Tech Surge with AI Optimism
Nvidia shares jumped 8.1% on Wednesday after CEO Jensen Huang highlighted robust demand for the company’s new AI chips and predicted broader applications of generative AI beyond data centers. Nvidia’s rally boosted the technology sector, which had experienced declines earlier in the week. Goldman Sachs reiterated its “Conviction Buy” rating for Nvidia, with a price target of $135, pointing to Nvidia’s central role in the AI-driven valuation boom.
European Market Movements: UniCredit, Inditex, and Roche
- UniCredit Acquires Stake in Commerzbank: UniCredit has acquired a 9% stake in Commerzbank, buying half of it from the German government at a premium, outbidding other potential buyers. UniCredit CEO Andrea Orcel has started discussions with Commerzbank regarding potential merger talks and is seeking regulatory approval to further increase the stake. Commerzbank’s share price has climbed by approximately 15% in response, while UniCredit’s remains stable.
- Inditex Reports Strong Sales: Zara owner Inditex saw its shares rise by 4.6% after reporting an 11% sales boost for its autumn/winter collection, recovering from a slow summer. The company plans to expand operations in the U.S. and India.
- Roche Faces Setback in Weight-Loss Pill Trials: Roche shares fell by 5.4% after disappointing trial results for its weight-loss drug CT-996, with a reported 6.1% weight loss in a small test group. This news came as competitors Novo Nordisk and Eli Lilly gained ground in the weight-loss market.
Outlook on Energy and AI: Morgan Stanley’s Picks
In a note to clients, Morgan Stanley highlighted companies poised to benefit from the rapid expansion of generative AI infrastructure. Among them were clean energy companies like Constellation Energy and First Solar, as well as gas solution providers like GE Vernova and Siemens Energy.
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