London (AFP) – Stock markets fluctuated Wednesday as optimism that the US government shutdown was nearing an end and another Federal Reserve interest rate cut was on the horizon failed to sustain a rally. Traders broadly welcomed an expected vote to reopen the government, after the longest shutdown in US history effectively stemmed the flow of official economic data and closed down vital services.
The House of Representatives appeared likely to vote Wednesday on a spending bill to solve the budget standoff after eight Democrats broke ranks in the Senate on Monday. But the news failed to sustain a rally across the board on US markets — the Dow rising while the tech heavy Nasdaq and the S&P 500 fell back in the first few hours of trading. In Europe, Paris hit a new record and Frankfurt also rose after a mixed day on Asian markets.
“The end of the shutdown is positive for financial markets as we should get a clear read on economic data in the next week or so,” said Kathleen Brooks, research director at trading group XTB. However, she said the prospect of a resumption of government services was fuelling demand for “risk assets”. The dearth of key data points left investors and the Federal Reserve unable to make informed decisions on policy.
Adam Sarhan of 50 Park Investments said traders were now waiting for another possible tech rally later in the month. “Investors are going to wait for the next bullish catalyst, which could be Nvidia, arguably the most important AI stock out there right now,” Sarhan said. The chipmaker is set to report earnings on November 19.
Traders had been spooked on Tuesday by news that Japanese investment titan SoftBank had sold all its shares in US chip giant Nvidia for $5.8 billion, without giving a reason. Shares in Nvidia fell three percent on Tuesday but clawed that back Wednesday, and SoftBank plunged as much as 10 percent in Tokyo after Wednesday’s open before closing down 3.5 percent.
Meanwhile, expectations grew that the Fed would cut rates in December after data from private payrolls firm ADP pointed to a slower rate of hiring. “Is it a problem? It depends for whom,” said Ipek Ozkardeskaya, Senior Analyst at Swissquote bank. “It’s certainly a problem for politicians, but not for investors.” She said investors needed that kind of jobs data to justify a rate cut, which in turn would lower the cost of borrowing and make their huge AI investments more affordable.
– Key figures at around 1640 GMT –
New York – Dow: UP 0.7 percent at 48,247.24 points
New York – S&P 500: DOWN 0.2 percent at 6,835.20
New York – Nasdaq Composite: DOWN 0.7 percent at 23,304.46
London – FTSE 100: UP 0.1 percent at 9,911.42 (close)
Paris – CAC 40: UP 1.0 percent at 8,241.24 (close)
Frankfurt – DAX: UP 1.2 percent at 24,381.46 (close)
Tokyo – Nikkei 225: UP 0.4 percent at 51,063.31 (close)
Hong Kong – Hang Seng Index: UP 0.9 percent at 26,922.73 (close)
Shanghai – Composite: DOWN 0.1 percent at 4,000.14 (close)
Euro/dollar: UP at $1.1591 from $1.1588 on Tuesday
Pound/dollar: DOWN at $1.3130 from $1.3168
Dollar/yen: UP at 154.66 yen from 154.10 yen
Euro/pound: UP at 88.28 pence from 87.99 pence
West Texas Intermediate: DOWN 4.1 percent at $58.50 per barrel
Brent North Sea Crude: DOWN 3.8 percent at $62.71 per barrel
© 2024 AFP
