Market snapshot: tech continues to lead fightback

Markets staged another turnaround, bolstered once more by some tech sector buying later in the trading session.

NVIDIA Corp (NASDAQ:NVDA) was again at the vanguard, rising by around 2% to bring its weekly gain to more than 15%. After a dip of around 20% over the last couple of months, partly driven by valuation concerns, the stock nonetheless remains up by 147% this year alone, easily remaining the market darling with a disproportionate effect on sentiment.

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The likes of Alphabet Inc Class A (NASDAQ:GOOGL) and Meta Platforms Inc Class A (NASDAQ:META) also added around 2%, while more broadly the benchmark S&P500 is not only all but flat for the month after some turbulent trading sessions, but is also just over 1% away from the record highs which it has set on several occasions this year.

The latest release of the Producer Price Index gave little additional cause for concern, with a rise of 0.2% in August being in line with expectations and suggesting a further cooling of inflationary pressure. Taken in tandem with the Consumer Price Index the previous day, the readings have done little to move the dial on an economy which is slowing but sustainable, and where the inflation genie could finally be back in the bottle.

It is a little less clear exactly what the market wants to hear next week. While a 0.25% interest rate cut from the Federal Reserve remains the most likely in terms of consensus, there also remains the possibility of a larger 0.5% cut which would both please the optimists and, all things being equal, boost risk appetite.

However, current economic data does not necessarily support the need for a larger reduction, such that the Fed would need to assuage investors that the economy is not inching towards recessionary territory.

In the meantime, the main indices made further progress, leaving the Dow Jones up by 9% so far this year, with the more tech exposed Nasdaq ahead by 17% and the S&P500 by 17.3%.

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Asian markets traded mixed overnight, with some further dollar weakness propping up the yen, which in turn added some pressure on exporters and weighed slightly on the Nikkei. There is also a central bank decision expected next week in Japan, although no change to interest rates is expected. However, more recent comments from the Bank of Japan have moved to the side of being slightly hawkish, potentially paving the way for further hikes either later this year or early next.

In a subdued start to trading in the UK, the main indices for the most part made measured progress. The dollar weakness also translated to some further strength in sterling, which weighed on a premier index which has a major exposure to overseas earnings.

A broker downgrade to AstraZeneca (LSE:AZN) took some shine from a recent run which has seen the stock rise by more than 15% over the last six months. Meanwhile, Vodafone Group (LSE:VOD) was largely unmoved despite comments from the Competition and Markets Authority that it had concerns over the proposed merger with Three, which will result in a likely challenge to come from the involved parties.

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With the gold price testing new record highs, miners such as Fresnillo (LSE:FRES) and Endeavour Mining (LSE:EDV) received a boost in early trade, while there was also some tentative buying interest in the more junior index. The moves mean that the FTSE100 has now risen by 6.8% in the year to date and the FTSE250 by 5.5% as interest in the UK as an investment destination continues to gather some momentum.