Global Markets: Nvidia fuels global stock records, bond yields rise
22/02/2024 21:53
(Adds closing market prices)
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Nvidia's eye-popping results drives global tech rally
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Tokyo's Nikkei scores first record high since 1989
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S&P 500, Dow, STOXX 600, MSCI ACWI also post records
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Bond yields mostly higher waiting for rate cuts
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Graphic: World FX rates http://tmsnrt.rs/2egbfVh
By Herbert Lash and Marc Jones
NEW YORK/LONDON, Feb 22 (Reuters) - AI chipmaker
Nvidia's stunning results sparked a worldwide wave of record
highs in equity markets on Thursday, including the first new
peak for Japan's Nikkei since 1989, while bond yields mostly
rose as economic data kept immediate hopes of interest rate cuts
at bay.
The benchmark S&P 500 index .SPX and Dow Jones Industrial
Average on Wall Street, along with Europe's pan-regional STOXX
600 index and MSCI's all-country world index also hit record
highs as Nvidia's NVDA.O shares surged 16.4% and lifted
artificial intelligence-related chip stocks around the globe.
National bourses in Frankfurt .GDAXI and Paris .FCHI set
fresh highs too, while Chinese stocks overnight extended their
winning streak to eight straight sessions.
After the bell on Wednesday, Nvidia forecast a roughly
three-fold jump in first-quarter revenue and beat expectations
for fourth-quarter revenue on strong demand for its AI chips.
Nvidia added $277 billion in stock market value, the biggest
one-day gain in a company's market capitalization in history.
Artificial intelligence provides the means to boost
productivity that economies have been seeking for two decades,
said Thomas Hayes, chairman and managing member of Great Hill
Capital LLC in New York.
"What Nvidia represents is the catalyst for the roaring '20s
in terms of productivity enhancement moving forward and as
productivity increases, it keeps a lid on inflation," he said.
MSCI's gauge of stocks across the globe .MIWD00000PUS
rallied 1.67% to set closing and intra-day record highs, while
the STOXX 600 index .STOXX in Europe closed up 0.82% after
hitting an all-time high.
The STOXX technology index .SX8P is up 12.4% year-to-date
and is trading at more than 23-year highs. Dutch chipmaking
equipment supplier BESI BESI.AS rose 4.9% to a record after
exceeding fourth-quarter targets on demand for AI-related parts.
On Wall Street, the Dow Jones Industrial Average .DJI rose
1.18%, to close above 39,000 for the first time. The S&P 500
.SPX advanced 2.11% and the Nasdaq Composite .IXIC climbed
2.96%. The S&P 500 and Nasdaq posted their biggest single-day
gains since January and February 2023, respectively.
The number of Americans filing new claims for unemployment
benefits unexpectedly fell last week, indicating job growth
likely remains solid in February and will reduce the urgency for
the Federal Reserve to start cutting interest rates.
The dollar index hit a three-week low and then pared losses
as investors awaited new data for insight into when the Fed
might begin cutting rates.
The dollar index =USD was down 0.038%, with the euro
EUR= rising 0.05% to $1.0822.
The Nikkei has jumped nearly 17% this year, with the S&P 500
and Nasdaq rallying about 7% and 8%, respectively, driven in
large part by the expectations for AI. Nvidia is at the center
of that boom.
Thursday's record-setting charge included Tokyo Electron
8035.T jumping 6%, chip-testing equipment maker Advantest
6857.T surging 7.5% and another chip-related share, Screen
Holdings 7735.T , rallying more than 10%.
"It has taken the Nikkei roughly 34 years to get to this
record high but it is all being driven by strong earnings
upgrades," said Absolute Strategy's global equities analyst
Nick Nelson.
There was a big difference from the last time the Nikkei
peaked during its bubble, Nelson said. When the Nikkei set the
all-time high in 1989, stocks were valued at almost four times
what they are now, Nelson said.
Euro zone yields drifted to multi-month highs as markets
scaled back their bets on European Central Bank rate cuts to
less than 100 bps this year after Fed minutes on Wednesday
showed policymakers were concerned about moving too early.
The latest ECB minutes showed its rate-setters were sticking
with patience while new PMI data showed the downturn in euro
zone business activity eased in February.
The two-year US2YT=RR U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 5.9 basis
points at 4.712%.
The yield on 10-year Treasury notes US10YT=RR was down 0.2
basis points to 4.321% as longer-duration bonds were flat.
While the bulk of Fed policymakers said they were concerned
about the risks of cutting too soon, according to its meeting
minutes, there was still broad uncertainty about how long
borrowing costs should remain at their current lofty level.
That reinforced the view among traders that any rate cut is
not imminent, with market pricing suggesting one-in-three odds
for a first reduction in May, according to CME Group's FedWatch
Tool.
Oil prices steadied as a big rise in U.S. crude inventories
offset the supportive impact of another attack on shipping near
Yemen.
U.S. crude CLc1 rose 70 cents to settle at $78.61 a
barrel, and Brent LCOc1 settled up 64 cents at $83.6 a barrel.
Gold prices fell from a near two-week high after jobless
claims data indicated a strong U.S. economy, while investors
awaited further economic data for guidance on the Fed's interest
rate stance.
U.S. gold futures GCcv1 settled 0.2% lower to $2030.70 an
ounce.
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Nvidia's rising results https://reut.rs/49n1T1j
Nvidia's race to $2 trillion https://tmsnrt.rs/3ORzl7Z
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(Reporting by Herbert Lash, additional reporting by Marc Jones
in London; Editing by Angus MacSwan, Will Dunham and David
Gregorio)
((herb.lash@thomsonreuters.com; 1-646-223-6019; Reuters
Messaging: herb.lash.reuters.com@reuters.net))
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