Marketmind: Tech stocks can’t stop, won’t stop

By Thomson Reuters Feb 22, 2024 | 11:37 PM

A look at the day ahead in European and global markets from Ankur Banerjee

Investors head to the weekend holding on to their risk-on hats as bourses across the world swell to all-time highs after AI darling Nvidia’s blockbuster earnings revived a fiery rally in tech shares that may still rage on.

They will have a sprinkle of economic data from Germany to ponder on Friday, with European bourses due for a higher open, futures indicate.

Nvidia added an eye-watering $277 billion, or half a TSMC, to its market value on Thursday, with the optimism around AI taking the Nikkei, the STOXX 600 and the S&P 500 to record peaks on the same day.

Friday is turning into more of the same, with Asian stocks at more than a six-month high, led by technology shares. Japan markets are closed for a holiday.

Technology shares in Europe have been on a tear, climbing 12.5% so far this year but with technical indicators flashing warnings of overheating, we may yet see some profit taking by investors in the near term.

The pan-European STOXX 600’s relative strength index sits just below the 70 threshold that signals an overbought market.

In the currency market, the yen hogs the spotlight, sliding to fresh lows on the euro, sterling and other crosses this week. The yen is the worst-performing G10 currency this year, with a 6.4% slide on the dollar. [FRX/]

The dollar index, which measures the U.S. currency against six rivals, is up 2.5% as traders come to the realisation that the Fed was perhaps not bluffing when it pushed back against early and steep expectations of interest rate cuts.

Goldman Sachs was the latest to push back its starting point of the Fed’s easing cycle to June from May. Markets are also now pricing in June as the point at which the U.S. central bank will first cut rates.

Traders have also priced in 78 basis points of cuts in the year, down from 150 bps of easing at the start of the year and closer to the Fed’s own projection of 75 bps of cuts.

In company news, Standard Chartered will be in focus at the open after the Asia-focused bank announced a $1 billion share buyback and a jump in dividend, while reporting an 18% rise in 2023 pre-tax profit.

Key developments that could influence markets on Friday:

Economic events: Germany Q4 detailed GDP data; Germany Feb IFO data

Earnings: BASF

(Editing by Muralikumar Anantharaman)