Today, European and Asian stock markets experienced declines following Wall Street’s losses on Thursday, exacerbated by unexpectedly strong US data that heightened fears the Federal Reserve might not cut interest rates this year.
Despite these concerns, US stocks opened higher this afternoon. Fawad Razaqzada, an analyst at City Index, noted that traders were keen to capitalize on profits from tech stocks on Thursday, with many opting to take Friday off in anticipation of the upcoming Memorial Day holiday. The technology sector received a boost from impressive results at US tech giant Nvidia, which saw its shares surge over 10% in early trading yesterday.
European and US markets have recently hit new highs, driven by robust first-quarter earnings and positive company outlooks, even though it seems increasingly unlikely that the Fed will reduce interest rates this year.
Joshua Mahony of Scope Markets commented, “With the earnings season largely behind us, market focus will shift more towards economic data, which suggests a prolonged period of high rates if recent inflation figures are considered.”
Further data showing the US economy managing well under high interest rates also diminishes the likelihood of the Fed reducing them soon, dampening hopes for a swift decrease in borrowing costs.
Notable among recent data releases, US durable goods orders for April, excluding the volatile transportation sector, rose by 0.4 percent month-on-month. This follows yesterday’s data indicating that activity in the services sector accelerated to its fastest pace in a year, while manufacturing also outperformed expectations.
These figures suggest that the world’s leading economy remains robust, tempering the initial enthusiasm following last week’s news that the consumer price index had slowed in April after three consecutive months of exceeding forecasts.
