Global Markets Update
Market Update: S&P 500 Nears All-Time High as Tech Stocks Lead the Charge
The S&P 500 edged closer to its historic high of 5,500 points yesterday, fueled by a significant 3.5% rise in Nvidia’s stock, which has now surpassed Microsoft to become the most valuable company on Wall Street. Today’s futures on US indices show a slight uptick, although European and German stock futures are down by 0.15% to 0.2%.
US Tech Sector Gains Momentum
The rally in the US market was bolstered by gains in tech giants Qualcomm and Dell, as positive sentiment around artificial intelligence (AI) continued to drive enthusiasm. The Dow Jones Industrial Average (DJIA) also saw a modest increase, closing 0.15% higher.
Strong Performances in Asian Markets
Asian markets reflected mixed sentiments. China’s Hang Seng Index surged nearly 2%, buoyed by better-than-expected economic data for May and hopes for additional policy support from government meetings scheduled for July. South Korea’s KOSPI gained 1% following the strong performance of US tech stocks, while Japanese stocks remained stable, with investors awaiting the Bank of Japan’s upcoming interest rate decision.
Japanese Export Growth Surpasses Expectations
Japan’s export growth in May was robust, recording a 13.5% year-on-year increase, exceeding the expected 13% and previous month’s 8.3%. Import growth, however, was slightly lower than anticipated at 9.4%, compared to the expected 10.4% and April’s 8.3%.
Optimism from the Fed Amid Economic Uncertainties
Federal Reserve members expressed optimism about the US economy’s ability to reduce inflation this year but emphasized the need for more data to confirm economic trends. Fed members Goolsbee and Collins conveyed long-term optimism, with Collins suggesting potential for one or two interest rate cuts within the year. Musalem noted the significant long-term productivity benefits of AI adoption and identified persistent supply chain challenges.
CBO Economic Projections and Federal Deficit Forecast
The Congressional Budget Office (CBO) revised its economic forecasts, projecting an average real GDP growth of 1.8% from 2024 to 2034, slightly down from the previous 2.0%. The real GDP growth for next year is expected to be 2%, a reduction from the 2.2% forecasted in February. The CBO also anticipates a US federal deficit of $1.915 trillion for 2024, $408 billion higher than earlier estimates due to factors including student loan impacts, new FDIC bank resolutions, the Ukraine-Israel aid bill, and Medicaid solutions.
Energy Markets: Oil and Natural Gas
Oil prices remained stable near their highest level since May 1, 2024, trading above $85 per barrel. The latest API estimates showed a decrease in US gasoline inventories and an increase in crude oil stocks. Natural gas prices rose from $2.83 to nearly $3 per MMBtu due to increasing heat across the United States.
Mixed Signals in the Chinese Electric Vehicle Market
The Chinese electric vehicle market saw mixed reactions. BYD’s stock remained unaffected by Berkshire Hathaway’s decision to sell shares. However, Tesla’s vehicle registrations in China dropped by 9% in the second quarter.
Bitcoin Shows Modest Recovery
Bitcoin experienced a slight recovery, reaching $65,500, though the overall sentiment in the cryptocurrency market remains weak.
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