Global stock markets experienced a surge on Thursday, driven by a significant investment announcement and a decision by the US Federal Reserve to cut interest rates. Tech giant Nvidia revealed a $5 billion investment in Intel, a struggling US rival, sparking a notable increase in tech shares. The Nasdaq, which is heavily weighted with technology stocks, led the gains on Wall Street, with Intel’s shares soaring 29% and Nvidia’s gaining over 3%.
The Federal Reserve’s decision to lower interest rates by 25 basis points, its first cut of the year, also contributed to the positive market sentiment. Despite US inflation remaining above the target rate of 2%, the focus appears to be on the jobs market, with analysts speculating that policymakers will prioritize employment over inflation concerns. The dollar strengthened against other major currencies following the announcement.
In Europe, the news had a positive impact on stocks, with Paris and Frankfurt experiencing gains of around 1%. London’s rise was more modest, as the Bank of England opted to maintain its main interest rate at 4% in response to the UK’s persistently high inflation rate of 3.8%. Germany’s central bank, however, issued a statement suggesting that the country is likely to avoid a technical recession in the near future, which boosted sentiment.
Asian markets were more cautious, with Shanghai and Hong Kong stocks ending the day in decline. Tokyo, however, closed in positive territory, as the weaker yen against the dollar benefited Japanese exporters. The Nvidia-Intel deal is expected to involve joint development of chips for PCs and data centers, marking a significant collaboration between the two tech companies.
Key market figures at around 1540 GMT included the Dow rising 0.3% to 46,170.45 points, the S&P 500 increasing 0.7% to 6,645.33, and the Nasdaq advancing 1.2% to 22,519.80. In Europe, the FTSE 100, CAC 40, and DAX closed up 0.2%, 0.9%, and 1.4%, respectively. The Nikkei 225 in Tokyo rose 1.2% to 45,303.43, while the Shanghai Composite and Hang Seng Index declined 1.2% and 1.4%, respectively.
The euro and pound weakened against the dollar, with the euro/dollar exchange rate decreasing to $1.1775 from $1.1811 on Wednesday, and the pound/dollar rate falling to $1.3543 from $1.3626. The dollar/yen rate increased to 148.01 yen from 147.00 yen. Oil prices dipped, with West Texas Intermediate down 0.7% at $63.26 per barrel and Brent North Sea Crude decreasing 0.7% to $67.48 per barrel.