Yahoo Finance FTSE 100 today: UK stocks set to open higher as rate cut odds strengthen; ECB in focus
Moving markets today: Asian markets rally with Wall Street surge, oil prices soar; Nvidia surpasses Apple with $3 trillion value; ECB policy decision in spotlight
The US stock market saw significant gains, with both the S&P 500 and Nasdaq Composite reaching record highs thanks to strong performances by technology companies. This positive momentum extended to Asian markets, where shares rose amidst growing expectations of a forthcoming interest rate cut by the US Federal Reserve in September. Oil prices also saw an uptick during early Asian trading, rebounding from recent declines attributed to increased US inventories and plans by OPEC+ to boost oil supply. Meanwhile, gold prices edged higher in anticipation of US payroll data. Nvidia surpassed Apple to become the world’s second most valuable company. Following Canada’s lead in cutting interest rates, the European Central Bank (ECB) is anticipated to follow suit as it continues its fight against inflation. Lululemon’s shares surged following optimistic full-year guidance. Today, all eyes are on the ECB as it is expected to announce a reduction in interest rates from historic highs. Before the ECB’s decision, economic data including construction PMI figures from the UK, Eurozone, and Germany will be released. Additionally, investors will closely watch Friday’s US nonfarm payroll report for May. The FTSE 100 closed higher on Wednesday, with futures suggesting a positive opening for Thursday. Here are five key takeaways for your day.
Nvidia surpasses Apple to claim second spot in market value rankings
Nvidia, a chipmaker, achieved a significant milestone by reaching a market value of $3 trillion for the first time. Its shares surged over 5 per cent, surpassing Apple to become the world’s second most valuable company. Nvidia is set to split its stock ten-for-one starting June 7, a move aimed at making its shares more accessible to individual investors. This development marks a notable shift in Silicon Valley, which has long been dominated by Apple since the launch of the iPhone in 2007.
Nvidia’s stock closed the day at $1,224.40, marking a 5.2 per cent increase and resulting in a market capitalization of $3.012 trillion. Meanwhile, Apple’s market capitalization reached $3.003 trillion after its stock rose by 0.8 per cent. The positive momentum extended to other tech giants, driving the Nasdaq Composite index up by nearly 2 per cent, while the broader S&P 500 also rose by 1.2 per cent during the trading session.
ECB poised for rate cut following Canada’s G7 rate reduction
After Canada led the way as the first G7 nation to lower interest rates, all eyes turned to the European Central Bank (ECB), which seemed poised to follow suit by cutting rates from their historic highs on Thursday. It was widely anticipated that the ECB would acknowledge progress in tackling high inflation while emphasizing that the battle was far from over.
Economists and market observers were expecting the ECB to trim its deposit rate to 3.75 per cent from the current record of 4.0 per cent, marking the first rate cut since 2019. This move came as ECB policymakers signalled their intention to reduce borrowing costs, responding to a decline in inflation across the eurozone from over 10 per cent in late 2022 to slightly above their 2 per cent target in recent months.
Lululemon’s bullish full-year outlook sparks share surge
Lululemon shares jumped over 10 per cent in after-hours trading after the company forecasted full-year earnings of $14.27 to $14.47 per share and revenues up to $10.8 billion, surpassing analysts’ expectations. First-quarter results also beat predictions with revenue up 10.4 per cent and earnings per share up 11.4 per cent. In contrast, Five Below shares fell over 14 per cent due to a disappointing sales outlook.
What’s coming up
The European Central Bank (ECB) is widely expected to lower interest rates from their historic highs on Thursday. ECB President Christine Lagarde confirmed in a press conference will be closely watched. While they will likely note progress in tackling inflation, they are expected to highlight that the fight against rising prices is ongoing.
Investors will be keenly observing the ECB’s statements and economic forecasts to understand the next steps after the rate cut. Currently, markets are predicting a total of 64 basis points of cuts this year.
Before the ECB’s decision, Thursday’s economic updates include construction PMI data from the UK, the Eurozone, and Germany. After the ECB announcement, the focus will shift to the nonfarm payroll report for May, with economists forecasting a job increase of 185,000.
Asian stocks surge amid growing rate cut speculation
The Dow Jones Industrial Average edged up 0.25 per cent to 38,807.33, while the S&P 500 climbed 1.18 per cent to 5,354.03, and the Nasdaq Composite surged 1.96 per cent to 17,187.91. Technology stocks were the biggest drivers of the S&P 500’s gains, followed by the communications and industrials sectors. In contrast, consumer staples stocks saw the most significant declines.
Hewlett Packard Enterprise saw a 10.7 per cent increase after forecasting third-quarter revenue above expectations due to strong demand for its AI servers. Meanwhile, Dollar Tree dropped 4.9 per cent following a disappointing profit forecast, with the retailer considering options like selling or spinning off Family Dollar.
In Asia, Japan’s Nikkei 225 rose by 1 per cent, China’s blue-chip CSI300 index increased by 0.38 per cent, and Hong Kong’s Hang Seng index went up by 0.81 per cent.
The FTSE 100 in Britain closed higher, supported by economic data that strengthened expectations for a September rate cut by the US Federal Reserve. Futures point to a positive start for Thursday, with EUROSTOXX 50 futures up 1.66 per cent and FTSE 100 futures rising 0.29 per cent to 8286.5. In the US, S&P 500 futures saw a 0.08 per cent increase, and Nasdaq futures went up by 0.14 per cent.
In commodities, Brent crude futures rose 0.48 per cent to $78.79 per barrel, and US West Texas Intermediate crude futures climbed 0.66 per cent to $74.55 per barrel.
