Nasdaq surges as Nvidia soars while FTSE closes in the red
A look at how the major markets are performing on Thursday
The FTSE 100 and European stocks finished lower this Thursday as the risk of a US default on its debts draws ever closer.
The FTSE 100 (^FTSE) lost 0.48% to close at 7,590 points, while the CAC 40 (^FCHI) in Paris slipped 0.14% to 7,243 points. In Germany, the DAX (^GDAXI) fell 0.10% to 15,823 as Europe’s largest economy fell into a recession.
New data shows that Germany’s economy has shrunk over the last two quarters – the technical definition of a recession.
UK's FTSE 100 extended losses on Thursday as investors were anxious about further monetary tightening by the Bank of England.
Among the biggest fallers were DIY chain Kingfisher (KGF.L), down 2.70%, retailer Frasers Group (FRAS.L) lost 3.69% and luxury group Burberry (BRBY.L) tumbled 1.26%.
Cineworld Group (CINE.L) opened strong but plunged over 8.71% after the world's second-largest theatre operator said it expects to emerge from bankruptcy protection in July after its restructuring proposal received the support of lenders.
United Utilities Group (UU.L) lost 0.99% after the water company swung to an annual pre-tax loss due to high costs.
Read more: Trending tickers: Nvidia | Cineworld | United Utilities | Fevertree
Tate & Lyle (TATE.L) rose 1.66% after it posted a 27% surge in revenues in the year to March to £1.8bn ($2.22bn) and saw profits top £253m as it benefitted from a surge in the price of sugar over the past year.
However, the firm said it expects more modest growth of 4-6% in the year ahead.
Matt Britzman, equity analyst at Hargreaves Lansdown said: "The new and refreshed Tate & Lyle delivered strong results despite a challenging backdrop," adding "the Food & Beverage Solutions business was the standout performer and looks well-positioned to benefit from the growing demand for healthier and more sustainable food and beverage products."
Richard Hunter, head of markets at Interactive Investor, said Germany’s slide into recession and the heavy exposure of the index to the fortunes of the US in terms of overseas earnings meant little appetite for buying.
He added: “The index nonetheless remains in positive territory this year and is ahead by 2%, although the scale of potential and imminent challenges are certainly not being underestimated.”
“Fitch still expects a resolution to the debt limit before the x-date.”
US and Asia markets
US stocks were mixed on Thursday as outsized gains from Nvidia (NVDA) catapulted a tech rally while debt ceiling concerns continued to hang over markets.
The Dow Jones (^DJI) lost 0.45% to 32,663 points. The S&P 500 (^GSPC) rose 0.63% to 4,141 points and the tech-heavy NASDAQ (^IXIC) gained 1.55% to 12,677.
Shares of Nvidia soared, rising roughly 27% as the tech giant's second-quarter guidance shocked Wall Street to the upside. Nvidia, which has quickly become a leader in the growing artificial artificial intelligence arms race, projected second-quarter revenue of $11 billion. Analysts had expected $7.2 billion, per Bloomberg data.
Other AI related stocks jumped with Nvidia. C3.ai (AI) rallied more than 6%, while Alphabet (GOOGL) and Microsoft (MSFT) were also higher.
The hangup in Washington's debt-ceiling negotiations is turning out to be longer than expected. Speaker Kevin McCarthy reportedly left Tuesday’s meeting saying to his Republican colleagues, "We are nowhere near a deal yet." Just hours earlier, he said in the Oval Office: "I think, at the end of the day, we can find common ground."
On Wednesday, speaker McCarthy announced that talks would resume and said "I think we can make progress today" while also batting away suggestions that a deal is impossible at this point given the conservative Republican criticisms.
Read more: Interest rates: Markets expect a hike as UK 'core inflation' remains stubbornly high
Asia-Pacific markets were largely lower amid lingering concerns over the US debt ceiling negotiations and as the Bank of Korea held its benchmark interest rate steady for the third consecutive time.
Hong Kong’s Hang Seng index (^HSI) led losses in Asia as it fell 1.99% and breached its two-month low, falling below the 19,000 mark for the first time since March 20.
Mainland Chinese markets also fell, with the Shanghai Composite (000001.SS) down 1.09% to 3,201. Tokyo’s Nikkei 225 (^N225) remained an outlier in the region and rose 0.39% to 30,801 points.
The pound (GBPUSD=X) was struggling against the dollar, with sterling trading at $1.2334.
The dollar rose as the impasse in negotiations to raise the US debt ceiling sent investors toward safe-haven assets amid worries about the hit to the global economy if Washington defaults.
The sterling (GBPEUR=X) was flat against the euro, trading at €1.1510.
Meanwhile, Brent crude (BZ=F) lost ground and was trading at around $76/barrel even as Saudi Arabia's energy minister said short-sellers betting oil prices to fall should "watch out" for pain.
"Oil prices have been so focused on the debt ceiling and interest rates, but really they haven't focused on the supply and demand side which has tightened in the last couple of weeks."
Watch: China Stocks: What Are the Catalysts Needed for Revival?
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