The American markets closed mixed on Thursday after strong US economic data, with AI-chip maker Nvidia losing ground following its largely expected forecast that failed to impress investors. The US economy grew faster than initial estimates thanks to strong consumer spending, according to the Department of Commerce. This boosts expectations that the US is likely to avoid a recession. Apple and Nvidia are in talks to invest in OpenAI as part of a new funding round that could value the Chat GPT maker at over $100 billion, media reports say. A report from the Department of Labor showed that the number of new jobless claims last week was slightly lower than expected. The broad S&P 500 and tech-heavy Nasdaq both fell 0.2%, while the Dow Jones Industrial Average rose 0.6%.
Commodities traded mixed yesterday. Oil prices rose by more than a dollar per barrel on Thursday as supply disruptions in Libya and plans to reduce production in Iraq raised concerns about tighter global supplies. Over half of Libya’s oil production was shut down on Thursday, and exports were halted at several ports due to a conflict between rival political factions. About 700,000 barrels per day of oil production are offline in the country, according to Reuters estimates. Elsewhere, Iraq plans to reduce oil production in September as part of a plan to compensate for producing above the agreed quota with the Organization of the Petroleum Exporting Countries and its allies, a source with direct knowledge of the matter told Reuters on Thursday. Expectations that the US Federal Reserve will begin cutting interest rates next month also helped support oil prices. WTI crude oil rose $1.4 to $75.9 per barrel, and Brent crude oil rose $1.3 to $79.9 per barrel.
Base metals also moved in different directions. Today’s losers were lead, which fell 1.4%, followed by aluminum, which dropped 0.7%. Tin declined 0.5% while nickel traded sideways. Copper climbed 0.4%, while zinc advanced 0.5%. Gold prices rose by around 1% on Thursday, driven by strong expectations of an interest rate cut from the Federal Reserve in September. Investors are focused on US inflation data for further insights into the potential size of the cut. Gold is used as a safe investment during times of economic and geopolitical uncertainty. The gold price rose by $22.8 to $2524.8 per ounce.
Among individual US stocks, Best Buy, the retail company, surged 14.1% after their report met expectations. Chip giant Nvidia fell heavily on Thursday, closing down 6.4% despite beating analysts’ expectations, but not by a large enough margin that the market has become accustomed to. Tech giant Apple and Google’s parent company Alphabet climbed 1.5% and fell 0.7%, respectively.
The US ten-year treasury bond rose 2 basis points to 3.86%.
Asian stocks rose on Friday and looked set to end August on a stable note, while the dollar was on track for its worst monthly performance in nine months amid expectations of a likely interest rate cut by the Federal Reserve. Data released on Friday showed that core consumer prices in Japan’s capital accelerated for the fourth consecutive month. This keeps market expectations alive for further rate hikes from the Bank of Japan in the coming months. Elsewhere, Chinese stocks surged on Friday from near seven-month lows, particularly with real estate stocks showing solid gains. At 07:50, the Japanese Nikkei 225 had risen by 0.3%, while the Chinese Shanghai and Hang Seng Indexes had climbed by 1.4% and 2.1%, respectively.
On the Stockholm Stock Exchange, there is a quiet day on the earnings front. Among today’s recommendations, HSBC raises its recommendation for AB Volvo to buy from hold and sets a target price of 340 SEK. Bioarctic’s target price is lowered to 278 SEK (347) by investment bank Goldman Sachs, which reiterates its buy recommendation. Barclays lowers the target price for H&M to 175 SEK (190) but maintains its overweight recommendation.
Friday is a relatively busy day on the macro front. The day begins with the release of German unemployment figures for August at 09:55. At 11:00, the annual consumer price index for August for the eurozone is announced. This is followed by the year-on-year US core PCE price deflator for July at 14:30, along with the country’s monthly personal consumption expenditures price index for July.
Analysis:
The global financial markets showed mixed results yesterday, with the American markets closing on a varied note. Strong US economic data bolstered expectations of continued growth, while concerns over supply disruptions in the oil market pushed prices higher. The tech sector saw some turbulence, with Nvidia disappointing investors despite meeting forecasts. Gold prices surged on expectations of a Fed rate cut, highlighting investors’ appetite for safe-haven assets. Asian markets were also up, with a positive end to August in sight. Overall, the markets remain sensitive to economic data and geopolitical developments, making it crucial for investors to stay informed and adapt their strategies accordingly.