US equity futures edged higher, suggesting Wall Street’s tech-driven rally — fueled by Nvidia Corp.’s rebound from a $430 billion rout — still has momentum.
Nvidia climbed more than 2% in US premarket trading, adding to Tuesday’s 7% gain. Shares of the giant chip maker have soared this year amid unrelenting demand for its chips that dominate the market for artificial intelligence computing. Rival Micron Technology Inc. climbed more than 3% ahead of its third-quarter results later Wednesday.
“Nvidia’s volatility has weighed on market sentiment, but we think the structural investment case for artificial intelligence remains intact,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “We also hold a constructive outlook for broader equities amid solid fundamentals.”
FedEx Corp., a bellwether for economic growth, surged more than 13% after an upbeat profit forecast amid optimism the Federal Reserve will cut interest rates as the economy shows signs of cooling.
Fed officials recently forecast just 25 basis points of reductions by the end of this year and a total of 125 basis points by end-2025, while market participants are pricing in about 75 basis points by the first quarter of 2025.
But some are starting to hedge against deeper and more rapid easing: positioning in the rate options market shows an increase in bets that stand to benefit if the Fed reduces its key rate to as low as 2.25% over the next nine months — a whopping 3 percentage points of cuts.
The 10-year Treasury yield ticked higher and a gauge of the dollar rose for a second day. The US will sell $70 billion of five-year notes later Wednesday after a solid auction of two-year Treasuries yesterday.
Technology shares led a modest gain in the Stoxx Europe 600 index. Among individual movers in Europe, Deutsche Post AG added more than 3% after FedEx’s positive forecast. Danske Bank A/S rose more than 2% after lifting its full-year outlook.
In the absence of major data from the euro zone on Wednesday, traders are taking their cues from policy signals. Investor expectations for the European Central Bank to loosen monetary policy twice more this year are fair, according to Governing Council member Olli Rehn, who added that officials shouldn’t overly dampen economic activity.
Yen Watch
The yen breached 160 per dollar, a level that triggered a sharp reversal on April 29 due to suspected intervention, raising speculation Japanese authorities may take steps to support the currency again.
Japanese and Hong Kong equity gauges rose, while those in Australia declined. Australia’s dollar and bond yields climbed after the inflation numbers suggested price pressures remain stubbornly strong and bolstered the case for the central bank to resume raising interest rates.
China’s 10-year bond yield fell to a more than two-decade low as investors flocked to fixed-income securities amid concern about the slowing economy and expectations for further stimulus.
In commodities, oil rose ahead of a US government report on crude inventories and fuel demand following the release of mixed industry data. Iron ore climbed for a second day. Copper fell to the lowest in more than two months with prices facing sustained pressure from unusually weak Chinese demand. Gold was little changed.
Key events this week:
US new home sales, Wednesday
China industrial profits, Thursday
Eurozone economic confidence, consumer confidence, Thursday
US durable goods, initial jobless claims, GDP, Thursday
Nike releases earnings, Thursday
Japan Tokyo CPI, unemployment, industrial production, Friday
US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday
Fed’s Thomas Barkin speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 6:34 a.m. New York time
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 was little changed
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.3% to $1.0684
The British pound fell 0.2% to $1.2660
The Japanese yen fell 0.3% to 160.12 per dollar
Cryptocurrencies
Bitcoin fell 1% to $61,304.22
Ether fell 1.1% to $3,373.55
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.28%
Germany’s 10-year yield advanced two basis points to 2.43%
Britain’s 10-year yield advanced two basis points to 4.10%
Commodities
West Texas Intermediate crude rose 0.9% to $84.97 a barrel
Spot gold fell 0.4% to $2,321.0 an ounce
