NVIDIA's growth pushed US stocks higher. Gold hits a 2-month low

The US stock indices traded yesterday without a single trend. The Dow Jones Index (US30) decreased by 0.11%, and S&P 500 (US500) gained 0.88%. Technology Index NASDAQ (US100) added 0.11% yesterday. The rise in Nvidia stock and slight progress in the debt ceiling negotiations boosted bullish investor sentiment.

Shares of NVIDIA (NVDA) surged by 27% to $956.52 billion, bringing its market capitalization close to $1 trillion, after reporting better-than-expected first-quarter results and forecasts that markedly beat Wall Street estimates. The chipmaker said it expects second-quarter revenue of about $11 billion, well above analysts' expectations of $7 billion, as the growing need for artificial intelligence supports the outlook for chip demand. Nvidia's record surge led Monolith Power Systems (MPWR), which provides power management solutions for some Nvidia chips, up by 16%, while Taiwan Semiconductor Manufacturing (TSM) and Advanced Micro Devices (AMD) also got a boost.

Rating agency Fitch warned that the US credit rating could be in jeopardy as the impasse over the government debt ceiling brings the world's largest economy closer to possible default.

An upward revision to US economic growth figures (from +1.1% to +1.3%) in the first quarter and lower-than-expected initial jobless claims, indicating a stronger economy, increased the likelihood of a Fed rate hike at the June meeting to 50% from 20% a day earlier.

Equity markets in Europe were mostly down yesterday. Germany's DAX (DE30) fell by 0.31%, France's CAC 40 (FR40) lost 0.33% on Thursday, Spain's IBEX 35 (ES35) decreased by 0.43%, and the British FTSE 100 (UK100) closed negative 0.74% yesterday.

Crude oil prices fell about 3% on Thursday after Russian Deputy Prime Minister Alexander Novak, who is also the country's oil minister, said he expected no new moves from OPEC+ at the June 4 meeting. A day ago, Saudi Arabia's energy minister hinted at the possibility of another round of production cuts, but this information has not been confirmed. OPEC+ is highly likely to keep production unchanged.

Gold hit a 2-month low as worries about raising the US government debt ceiling and expectations of high-interest rates forced investors to switch to the dollar. Gold is inversely correlated to the dollar index and government bond yields. But the medium-term outlook for the yellow metal remains bullish as the US Federal Reserve will end its tightening cycle in the summer, which will lead to falling government bond yields.

Asian markets traded yesterday without a single dynamic. Japan's Nikkei 225 (JP225) gained 0.39%, China's FTSE China A50 (CHA50) fell by 0.51%, Hong Kong's Hang Seng (HK50) ended the day down 1.93%, India's NIFTY 50 (IND50) added 0.20%, and Australia's S&P/ASX 200 (AU200) ended Thursday with a negative 1.05%.

The Bank of Japan (BOJ) may abandon the bond yield ceiling this year if risks such as global banking sector problems abate. Until it becomes clear that wages will continue to rise steadily next year, the Bank of Japan should refrain from raising the short-term interest rate from the current level of 0.1%. However, as long as short-term borrowing costs remain low, the Central Bank can lift the 0.5% cap on 10-year bond yields without hurting the economy too much. The Bank of Japan is likely to wait until worries about global banking problems and the US debt ceiling standoff subside.

Consumer confidence in New Zealand in May was unchanged from the previous month and remained at a low level as consumers continue to suffer from high inflationary pressures.

S&P 500 (F) (US500) 4,151.28 +36.04 (+0.88%)

Dow Jones (US30)32,764.65 −35.27 (−0.11%)

DAX (DE40) 15,793.80 −48.33 (−0.31%)

FTSE 100 (UK100) 7,570.87 −56.23 (−0.74%)

USD Index 104.24 +0.35 +0.34%

• – Japan Tokyo Core CPI (m/m) at 02:30 (GMT+3);
• – Australia Retail Sales (m/m) at 04:30 (GMT+3);
• – UK Retail Sales (m/m) at 09:00 (GMT+3);
• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – US PCE Price index (m/m) at 15:30 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

by JustMarkets, 2023.05.26

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.