Wall Street stocks lifted by tech rebound before key rate decisions / Photo: © AFP
Wall Street stocks lifted by tech rebound before key rate decisions
Renewed interest in tech stocks drove Wall Street's main indices higher Monday, while European shares dipped at the start of a busy week of central bank meetings that should shed more light on the direction of interest rates.
Oil prices rose as China reported robust industrial production growth and Ukraine continued to hit Russian oil refineries.
Investors' eyes are on the US Federal Reserve, whose policy making committee meets this week and will announce any decisions Wednesday. There are also decision-making meetings this week at the Reserve Bank of Australia, Bank of England, Bank of Japan and the Swiss National Bank.
The Fed is unlikely to alter its rates but it will release its latest so-called "dot plots" that lay out the central bank's interest rate forecasts.
At the moment, the chart points to three cuts this year, but recent hot inflation data could cut the number to two.
"Market hopes around the potential for Fed rate cuts continue to be downwardly revised," said Nathan Peterson, director of derivatives analysis at Charles Schwab.
"Right now, June looks like the first potential FOMC meeting where we may see a rate cut, but there's no guarantee as the probabilities have been dropping over time," he said.
Regardless, US shares rebounded Monday after three consecutive down days, lifted by renewed effervescence in the AI sector that lifted tech stocks.
Media reports said Apple is in talks to build Google's Gemini artificial intelligence engine into its iPhones. Apple shares climbed more than 4 percent, and Google's parent company Alphabet initially rose almost 13 percent, before giving up much of those gains.
"AI continues to excite investors, and the news has helped the stock to recoup almost all the losses from late January," said Chris Beauchamp, chief market analyst at IG. "This has propelled the Nasdaq higher, shrugging off the poor end to last week."
The tech-heavy Nasdaq is up almost 40 percent over the past year but has stalled in recent weeks as AI news dried up and concerns returned about overly hot inflation delaying rate cuts.
European markets, which lack anything comparable to the Nasdaq's heavyweights, closed slightly lower as they awaited clues about interest rate directions.
The Bank of England is expected to stand pat Thursday irrespective of the latest UK inflation reading due the previous day.
Investors also have their eyes on a Bank of Japan (BoJ) decision Tuesday, with policymakers expected to finally ditch the bank's negative interest rate.
Japanese companies recently agreed to the largest pay increases in three decades, indicating there may be less need for the long-standing loose policy aimed at boosting Japan's flagging economy.
"These wage hikes may prompt the BoJ to reconsider its negative interest rate policy, especially if they contribute to achieving sustained inflation closer to the 2 percent target," said Fawad Razaqzada, analyst at City Index.
Asia's leading stock markets rose Monday after China posted stronger-than-expected industrial production data in what has so far been an uneven recovery for the world's second-largest economy.
That also had an impact on oil prices.
"The stronger industrial data (in China) helped to keep hopes over a stronger demand recovery for commodities alive, sending crude prices modestly higher," said City Index's Razaqzada.
- Key figures around 1640 GMT -
New York - Dow: UP 0.4 percent at 38,866.58 points
New York - S&P 500: UP 0.9 percent at 5,160.84
New York - Nasdaq Composite: UP 1.1 percent at 16,150.52
London - FTSE 100: DOWN 0.1 percent at 7,722.55 points (close)
Paris - CAC 40: DOWN 0.2 percent at 8,148.14 (close)
Frankfurt - DAX: DOWN less than 0.1 percent at 17,932.68 (close)
EURO STOXX 50: DOWN 0.1 percent at 4,982.76 (close)
Tokyo - Nikkei 225: UP 2.7 percent at 39,740.44 (close)
Hong Kong - Hang Seng Index: UP 0.1 percent at 16,737.12 (close)
Shanghai - Composite: UP 1.0 percent at 3,084.93 (close)
Euro/dollar: DOWN at $1.0874 from $1.0891 on Friday
Dollar/yen: UP at 149.17 yen from 149.08 yen
Pound/dollar: DOWN at $1.2724 from $1.2737
Euro/pound: DOWN at 85.44 pence from 85.48 pence
West Texas Intermediate: UP 1.6 percent at $82.32 per barrel
Brent North Sea Crude: UP 1.3 percent at $86.48 per barrel
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V.Duran--ESF
