London (AFP) – Stock markets mostly rose Thursday after the Federal Reserve cut interest rates and US chip giant Nvidia announced a $5 billion investment in struggling rival Intel. Wall Street’s S&P 500 and the tech-heavy Nasdaq opened higher as shares in Intel jumped more than 25 percent and Nvidia gained 2.7 percent in early deals. The Dow, however, was flat while the dollar gained against other major currencies.
“Even if Intel needs handouts from its peers in Silicon Valley, investors like it,” said Kathleen Brooks, research director at trading platform XTB. Under the Nvidia-Intel deal, the companies will jointly develop chips for PCs and data centres. The deal comes on the heels of the United States taking a 10-percent stake in Intel. Investors were also reacting to Wednesday’s US central bank decision to lower rates by 25 basis points, its first cut of the year. US stocks had finished mixed Wednesday following the Fed’s announcement over uncertainty about the path forward.
But the mood changed Thursday, with investors now more confident that more cuts are coming this year, analysts said. “Markets are betting policymakers will continue to prioritise jobs over inflation, even with headline prices still running hot,” said Fawad Razaqzada, market analyst at City Index and FOREX.com. The decision to cut came even as US inflation runs well above policymakers’ two-percent target, but analysts said the main focus was on the jobs market. Fed policymakers are split between those who expect at least two interest rate cuts later this year and those who anticipate one or fewer. Fed boss Jerome Powell remained cagey, telling reporters decision-makers were approaching it “meeting by meeting.”
Paris and Frankfurt stocks were up around one percent in afternoon deals, with German sentiment buoyed by a central bank statement saying Germany should dodge a technical recession in the immediate future. London rose less enthusiastically as the Bank of England kept its main interest rate at four percent in the face of the UK’s stubbornly high inflation, which stands at 3.8 percent. “Although we expect inflation to return to our two-percent target, we’re not out of the woods yet, so any future cuts will need to be made gradually and carefully,” BoE governor Andrew Bailey said in a statement.
While Britain’s interest rate was kept unchanged, Norway’s central bank cut borrowing costs on Thursday, after a similar move by Canada on Wednesday. In Asia, investors were in a cautious mood on Thursday. Shanghai stocks retreated overall, and Hong Kong’s session also ended in the red. Tokyo closed in the green as the Fed decision boosted the dollar against the yen, helping Japanese exporters.
– Key figures at around 1335 GMT –
New York – Dow: FLAT at 45,998.71 points
New York – S&P 500: UP 0.5 percent at 6,631.04
New York – Nasdaq: UP 0.9 percent at 22,455.46
London – FTSE 100: UP 0.2 percent at 9,224.94
Paris – CAC 40: UP 1.0 percent at 7,862.96
Frankfurt – DAX: UP 1.0 percent at 23,601.89
Tokyo – Nikkei 225: UP 1.2 percent at 45,303.43 (close)
Shanghai – Composite: DOWN 1.2 percent at 3,831.66 (close)
Hong Kong – Hang Seng Index: DOWN 1.4 percent at 26,544.85 (close)
Euro/dollar: DOWN at $1.1759 from $1.1811 on Wednesday
Pound/dollar: DOWN at $1.3553 from $1.3626
Dollar/yen: UP at 148.19 yen from 147.00 yen
Euro/pound: UP at 86.76 pence from 86.70 pence
West Texas Intermediate: FLAT at $63.69 per barrel
Brent North Sea Crude: FLAT at $67.97 per barrel
© 2024 AFP
