Global stocks drop as inflation data offsets Nvidia boost

by Jonathan Adams
Global stocks

MSCI’s global share index, which touched intraday highs earlier in the week, slid 0.2% and was set for a 0.9% weekly loss, while Europe’s Stoxx 600 share index was down 0.5%

Global stocks slid on Friday, heading for a weekly loss, after data indicating a rebound in U.S. inflation outweighed a boost to sentiment in the wake of strong earnings from AI giant Nvidia.

MSCI’s global share index, which touched intraday highs earlier in the week, slid 0.2% and was set for a 0.9% weekly loss. Europe’s Stoxx 600 share index was down 0.5%.

Nvidia, the $2.6 trillion chipmaker, has contributed nearly a third of total U.S. stock market returns this year meaning the run-up to its quarterly earnings on Wednesday kept traders on edge for days.

The AI giant’s shares have advanced 12% this week, but failed to lift broader sentiment after surveys showed U.S. business activity was improving but firms were also reporting higher prices across a sweep of input categories, from timber to wages.

Wall Street’s S&P 500 share index is down 0.7% this week.

Minutes from the Fed’s last meeting released on Wednesday showed some policymakers might consider raising benchmark interest rates beyond their current 23-year high of 5.25%-5.5% if inflation does not drop steadily towards an average 2% target.

Traders expect just 35 bps of Fed rate cuts in 2024, versus 150 basis points at the beginning of the year..

Premier Miton Investors CIO Neil Birrell said stock markets may not rally much further if higher rate forecasts keep lifting the income yields on government bonds and make stocks less attractive in comparison.

Earnings are strong but the bar for the sort of upside surprise needed to push markets higher is rising, he added.

A rise in U.S. Treasury yields back towards 5% is the sort of thing people get concerned about, he said.

Ross Yarrow, MD of U.S. equities at investment bank Baird, said it was not the time to sell out of the tech stocks that dominate U.S. and world equity markets.

There are significant risks in not owning stocks that have become very large contributors to the market, he said.

But inflation, and specifically inflation led by oil, is also a big risk, he added.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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