Global Stock Markets Mixed After NVIDIA's New U.S. Records

Global stock markets showed varied performances on Wednesday, while U.S. index futures exhibited fluctuations after Nvidia surpassed Microsoft to become the most valuable publicly traded company in the United States.

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Although U.S. equity and bond markets were closed in observance of the Juneteenth holiday, futures trading persisted. Futures linked to the S&P 500 increased by 0.1%, Nasdaq-100 futures advanced by 0.2%, and Dow industrials futures slightly declined.

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Investor enthusiasm surrounding artificial intelligence continues to invigorate the markets. On Tuesday, the S&P 500 achieved its 31st record close for the year, while the Nasdaq Composite marked its 20th all-time high. This uplift in the indices was largely driven by a surge in Nvidia’s stock. The semiconductor company concluded Tuesday with a market valuation of $3.34 trillion, overtaking Microsoft as the most valuable U.S. company on the stock exchange.

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Market sentiment has been buoyed by indications that the U.S. economy is cooling down. Recent economic data had unnerved investors by suggesting a robust economy, which cast doubt on the Federal Reserve’s potential to cut interest rates this year. However, investors now generally anticipate that the Fed, which kept rates steady last week, will begin easing monetary policy in September, based on federal-funds futures data from CME Group.

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Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented on the market’s resilience despite the revised expectations for rate cuts. “What’s remarkable is, given the market’s reassessment of rate cuts this year—they’ve gone from expecting six cuts to now one—[equities] haven’t been upset by this,” she said, attributing the stability to the dominant narrative of AI advancements.

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Looking forward, investors are keenly awaiting the U.S. purchasing managers’ surveys scheduled for release on Friday. These surveys are anticipated to reveal a slowdown in both services and manufacturing activities in June. Earlier in the week, data showed that industrial production had accelerated in May, while retail sales growth fell short of expectations.

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European markets displayed a mixed performance on Wednesday. Most indexes declined, although the U.K.’s FTSE 100 saw a slight increase. Data from the U.K. revealed that inflation had dropped to the Bank of England’s 2% target in May for the first time in nearly three years, despite persistent price pressures in the services sector. This data bolstered investor expectations that the Bank of England would maintain its current interest rates in its upcoming meeting on Thursday. The Swiss National Bank, which initiated the continent’s rate-cutting cycle in March, also has a meeting on Thursday, and investors are split on whether it will further reduce rates. Meanwhile, the British pound appreciated by 0.2% against the U.S. dollar, while the Swiss franc remained stable.

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In Asia, several indexes mirrored the tech-driven gains seen in the U.S. on Tuesday. Hong Kong’s Hang Seng index surged nearly 3%, driven by increases in Lenovo and Xiaomi shares. South Korea’s Kospi rose by 1.2%, and Taiwan’s Taiex index increased by 2%, led by gains in TSMC, a major chip manufacturer.

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In the commodity markets, oil prices remained relatively steady. Brent crude, the global oil benchmark, edged up slightly to around $85.50 per barrel.

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In summary, the global financial markets experienced mixed results influenced by various factors, including the ascendance of Nvidia, AI-driven optimism, economic data reflecting a cooling U.S. economy, and upcoming monetary policy decisions in Europe. The market's future direction appears contingent on further economic indicators and central bank actions.

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