GLOBAL MARKETS-Nikkei scores first record high since 1989 as Nvidia fuels frenzy

Reuters | Updated: 22-02-2024 19:10 IST | Created: 22-02-2024 19:10 IST
GLOBAL MARKETS-Nikkei scores first record high since 1989 as Nvidia fuels frenzy

Stocks bulls were on a supercharged stampede on Thursday as blockbuster earnings from world's most sought after company Nvidia set off a worldwide wave of record highs, including the first for Japan's Nikkei since 1989.

Tech-loving Tokyo had raced up over 2.2% to top its previous all-time closing and intraday highs set at the peak of the country's so-called bubble economy more than three decades ago. Europe then set its own fresh peaks, with the regional STOXX 600, Frankfurt and Paris all joining in thanks to 0.6% to 1.3% gains.

London's FTSE was a notable laggard due to its lack of tech firepower but Chinese equities had extended their winning run to an eighth straight session overnight and Wall Street's S&P and Nasdaq were expected to rocket at the open following Nvidia's stellar results. The firm, which has been the most magnificent of the so-called Magnificent 7 set of global tech stocks, had forecast a roughly 233% surge in quarterly revenue, sending its shares up some 10% in pre open Wall Street trading.

"U.S. futures are up, strong - that's just Nvidia, right there," said Kyle Rodda, senior markets analyst at Elsewhere, long-term U.S. bond yields were nudging lower and the dollar drooped after Wednesday's minutes from the last Federal Open Market Committee meeting bolstered the view that interest rate cuts will now come slower than previously expected.

BIG IN JAPAN The Nikkei has jumped nearly 17% already this year, with the S&P 500 and Nasdaq rallying some 5% each, driven in large part by mammoth expectations for artificial intelligence (AI), with Nvidia's chips at the centre of that boom.

Thursday record setting charge included Tokyo Electron jumping 6%, chip-testing equipment maker Advantest surged 7.5% and another chip-related share, Screen Holdings rallied more than 10%. "It has taken the Nikkei roughly 34 years to get to this record high but it is all being driven by strong earnings upgrades," said Absolute Strategy's global equities analyst Nick Nelson.

He said there was a big difference to the last time the Nikkei peaked during its bubble. Back then Japanese firm's trailing price-to-earnings were averaging at about 60 times. Now the metric is a more sensible 16 times. "Nvidia also came overnight and U.S. Q4 reporting season has been pretty strong overall. Basically companies have delivered," Nelson added.

Back in the bond markets it was all much more sedate. Euro zone yields drifted to multi-month highs as money markets scaled back their bets on European Central Bank rate cuts to less than 100 bps this year after Federal Reserve minutes showed its policymakers were concerned about moving too early.

The latest ECB minutes showed its ratesetters were sticking with patience while new PMI data showed the downturn in euro zone business activity eased in February. The 10-year U.S. Treasury yield eased slightly in both European and Asian time to 4.30%, but remained close to the 4.332% level marked a week ago, which had not been seen since the end of November.

While the bulk of Fed policymakers said they were concerned about the risks of cutting too soon according that its meeting minutes there was still broad uncertainty about how long borrowing costs should remain at their current lofty level. That reinforced the view among traders that any rate cut is not imminent, with market pricing suggesting one-in-three odds for a first reduction in May, according to CME Group's FedWatch Tool.

The dollar continued to retreat from a three-month high reached last week, when the U.S. dollar index, which tracks the currency against six major peers, reached 104.97. It was down 0.3% at 103.86 with the euro up 0.3% at $1.0851, sterling at $1.2647 and the yen broadly flat at 150.15 per dollar. Elsewhere, oil prices rose, adding to gains from the previous session that came amid signs of tighter supply.

U.S. West Texas Intermediate crude futures (WTI) gained 25 cents to $78.16 a barrel, while Brent added 47 cents to $83.47 a barrel and gold was on a 7-day winning streak at $2,030 an ounce.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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