The chipmaker however posted a blowout earnings report after the bell on Wednesday, reigniting optimism around artificial intelligence stocks. On Thursday the chipmaker added a record $277bn to its market capitalisation and the following session it briefly topped the $2tn level. Nvidia’s rally helped propel markets and optimism carried across to other areas across the globe. For the week the S&P 500 added 1.7% and ended at a fresh record high. The Dow Jones was also up at an all time high and added 1.3% for the week, while the tech-heavy Nasdaq was up 1.4%.
The focus around AI overshadowed worries over central banks holding interest rates higher for longer. Minutes from the Federal Reserve’s last policy meeting reinforced the expectation for no rate cut by the central bank at its next meeting in March, and this was further supported by comments from policymakers, with Governor Christopher Waller saying that he wanted at least two more months of data to verify whether January’s uptick in inflation was a “speed bump or a pothole”. This week the Fed’s preferred inflation gauge, the personal consumption expenditures index, will be released to give the latest update on price pressures. For the week the yield on the 10-year Treasury yield ended little changed following a dip on Friday.
Another key event of the week was that, at long last, Japan’s Nikkei 225 closed at a record high. On Thursday the index managed to surpass the intraday peak low 38,957 points last set in December 1989. The index was closed on Friday for the Emperor’s Birthday holiday, ending up 1.6%. Its ascent has been driven by weakness in the yen, as well as improving corporate earnings and signs of a pickup in inflation. Chinese equities were also able to see another positive week, with the Shanghai Composite advancing 4.9% and the Hang Seng up 2.4%. There was growing optimism around more supportive stimulus measures from Beijing, with the People’s Bank of China cutting its 5-year Loan Prime Rate.
The pan-European STOXX 600 added 1.2% for a week, also hitting a record high for the first time since 2022 and seeing its fifth consecutive weekly gain. Most regional indices posted strong gains, although the UK FTSE 100 lagged and ended little changed owing to weakness in miners and energy names. Economic data for the week was mixed, with Germany’s 0.3% contraction of GDP in the fourth quarter being confirmed, while provisional estimates for the eurozone composite PMI rose to 48.9 in January, although still in contractionary territory.
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