US Stock Futures Pause After Record-Busting Rally: Markets Wrap
Written by Black Hot Fire Network on February 23, 2024
(Bloomberg) — Markets took a breather on Friday as investors assessed the outlook for equities after benchmarks from the US to Europe and Japan hit all-time highs in the wake of Nvidia Corp.’s blockbuster earnings.
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US futures were little changed after gains overnight pushed the S&P 500 and Nasdaq 100, along with MSCI’s all-county index, to new records. Nvidia is on track to scale $2 trillion in market value for the first time ever after shares climbed as much as 2.7% in premarket trading, adding to Thursday’s meteoric rise.
Nvidia’s $277 billion one-day boost to its market capitalization on Thursday was the biggest single-session increase in value ever — eclipsing a recent $197 billion gain by Meta Platforms Inc. The question is whether the tech rally can be sustained and broadened to other sectors, even as bets on Federal Reserve rate cuts wane amid data showing the world’s largest economy is still going strong.
“The speed of the tech rally has left investors wondering whether to take profits,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “While we see merit in re-balancing portfolios, we believe that retaining strategic exposure to US large-cap technology is important, and the rise in tech stocks could go further still.”
The 10-year Treasury yield fell one basis point after top Fed officials hammered home the message Thursday that the US central bank is still on track to cut interest rates this year — just not anytime soon. A gauge of the dollar dipped, set for its first weekly decline in eight.
The Stoxx Europe 600 index gained after European Central Bank President Christine Lagarde said the latest euro-area labor compensation numbers are “encouraging,” though additional data for the start of 2024 will tell whether inflation is heading toward the target of 2%.
UK-based lender Standard Chartered Plc climbed more than 8% after unveiling a profit beat and share buyback. German insurer Allianz SE declined after non-life insurance earnings missed analysts’ expectations. Deutsche Telekom AG, Europe’s largest telecommunications operator, slipped after a miss in non-US earnings.
Concentration Risk
Just like the US, Europe now has its own concentration risk, with four megacap stocks — ASML Holding NV, SAP SE, LVMH and Novo Nordisk A/S — accounting for more than half of the Stoxx 600’s advance of 3% in 2024, against a combined weighting in the benchmark of only about 10%.
Still, global equity returns should broaden, though stock performance in 2024 is likely to be about earnings delivery, according to Citigroup Inc. strategists. The AI rally and optimism about economic growth at a time of easing monetary policy are a “magic sauce” for more gains in equity markets, according to Bank of America Corp.’s Michael Hartnett.
Haefele at UBS concurred: “Beyond technology, we think investors should also prepare for a potential broadening of the equity market rally, which could materialize with a combination of Fed interest rate cuts, still robust growth, and falling inflation,” he said.
In Asia, China’s benchmark index CSI 300 extended its gains to a ninth session, while Hong Kong shares were steady. Australian, Taiwanese and South Korean equities advanced. Japanese markets were closed Friday for a public holiday.
In commodities, oil slipped as investors weighed signs of a tightening market against persistent concerns around demand. Gold fluctuated. Nickel and copper climbed, but iron ore headed for the largest weekly drop in almost a year amid concerns that Chinese steel demand may disappoint.
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.1% as of 8:29 a.m. New York time
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Nasdaq 100 futures were little changed
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Futures on the Dow Jones Industrial Average rose 0.1%
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The Stoxx Europe 600 rose 0.4%
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The MSCI World index rose 0.1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0831
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The British pound rose 0.2% to $1.2689
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The Japanese yen was little changed at 150.45 per dollar
Cryptocurrencies
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Bitcoin fell 1.3% to $50,989.84
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Ether fell 1.8% to $2,932.5
Bonds
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The yield on 10-year Treasuries was little changed at 4.31%
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Germany’s 10-year yield declined four basis points to 2.40%
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Britain’s 10-year yield declined two basis points to 4.09%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika and Subrat Patnaik.
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