Market snapshot: a firm end to the week for stocks worldwide

The “Magnificent Seven” rode back into town following the previous day’s sell off, sending the technology-heavy Nasdaq to a new record closing high.

Gains in NVIDIA Corp (NASDAQ:NVDA) and Apple Inc (NASDAQ:AAPL) reminded investors that the AI frenzy is still in evidence, while Amazon.com Inc (NASDAQ:AMZN) shares also hit a record high amid the broad mark-up. The return to form for the group of stocks which were a major driver for market gains last year followed some economic data which gave cause for optimism following the inflation shock earlier in the week.

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The Producer Price Index reading came in below estimates, rising 0.2% from the previous month and 2.1% from the previous year. The data provided some relief that inflation is at least cooling in some areas of the economy, while a lower jobless claims figure propelled hopes that the economy remains robust in spite of higher interest rates.

Investors are coming to grips with the fact that the Federal Reserve is content to hold fire on reducing interest rates for the moment, as evidenced by a new consensus which points to two cuts this year, as opposed to the six initially predicted.

The heavy lifting will now be passed to the onset of the corporate quarterly reporting season, which begins in earnest today with the release of results from the likes of Citigroup Inc (NYSE:C), JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC).

Quite apart from giving guidance on the current state of the nation and the consumer in particular, the banks will also update on any customer default trends amid higher lending, and whether dealmaking amid increased M&A activity has washed through to those with an investment banking exposure.

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In the meantime, the strength of performance from the Nasdaq pushed it to the top of the leaderboard in the year to date with gains of 9.5%. The S&P500 follows close behind with a rise of 9%, while the more traditional Dow Jones has added 2%.

In Asia, there was some strength in Japan’s Nikkei, where technology shares were buoyed by the trading action in the US. The yen continues to drift against the dollar, causing some headaches for officials who continue to threaten intervention, while also boosting prospect for the exporters on which the economy has some reliance.

China will later release some trade data to provide an update on an economy which has disappointed over the course of the year, facing the ominous challenges of a weak property sector, high youth unemployment and tepid consumer demand.

UK markets were off to a sprightly start as the optimism spilled over, while also being boosted by a GDP number which gave further evidence that the short and shallow recession may already have ended. Growth of 0.1% in February was boosted by manufacturing and production, although the wet weather was something of a headwind.

Set against such anaemic growth, and with the fight against inflation not yet won, the Bank of England remains between a rock and a hard place, with no firm indications as to when the first interest rate might arrive. Even so, the more domestically focused FTSE250 started strongly on the news, lifting the index to having added 1.5% so far this year. 

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The premier index also moved ahead, with strength in mining stocks reflecting both another surge in the gold price as well as a return to a risk-on approach. The housebuilders were also subject to a twin boost, with higher mortgage approvals and an improving landscape accompanying broker upgrades which lifted the likes of Persimmon (LSE:PSN), Taylor Wimpey (LSE:TW.) and Barratt Developments (LSE:BDEV).

The oil majors also strengthened on the back of an underlying commodity price which continues to rise, all of which propelled the FTSE100 to now stand up by 3.3% in the year to date, and knocking at the door of a potential record high once more.