A view of a Nvidia logo at their headquarters in Taipei, Taiwan May 31, 2023. RushHourDaily/Ann Wang/File Photo Acquire Licensing Rights
Investors are once again adopting the mindset of “bad news is good news” as weak economic data has raised hopes that central banks may be finished or close to finishing their interest rate hikes. However, they are still keeping a close eye on the Federal Reserve’s Jackson Hole symposium.
Nvidia (NVDA.O) has also contributed to the positive sentiment in stock markets. The company’s impressive earnings and forecast have boosted AI-related stocks, U.S. futures, and Asian equities. The MSCI Asia ex-Japan IT Index (.MIAPJIT00NUS) is on track for its best day in over two months, surging 2.5%.
Nvidia has exceeded expectations with its quarterly revenue forecast, thanks to the booming demand for its chips in the artificial intelligence sector. The company has also announced a $25 billion buyback program.
On the other hand, there are signs that U.S. consumer spending is under pressure, as retailers like Macy’s (M.N) and Foot Locker (FL.N) have reported lackluster results and forecasts.
With a quiet economic calendar in Europe, the AI craze is expected to support stock markets. Futures indicate a higher open, which is good news for the pan-European STOXX 600 (.STOXX), which has experienced a 4% decline and is heading for its worst monthly performance this year.
Despite the current excitement, analysts remain concerned and expect global stock markets to undergo a correction in the coming months.
The broadest index of Asia-Pacific shares outside Japan has risen by 1.5%, but it is still on track for its worst monthly performance since February.
Investors will be closely watching Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole conference on Friday. His remarks will provide insights into the future of monetary policy.
Recent data has shown that U.S. business activity is approaching stagnation in August, with the weakest growth since February. Additionally, the downturn in euro zone activity has been more severe than anticipated. These factors have led to lower Treasury yields and a weaker U.S. dollar.
Key developments to watch on Thursday include the release of US jobless data.
Reporting by Ankur Banerjee; Editing by Jacqueline Wong
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