Market Update

Nvidia's outstanding quarterly results and optimistic guidance ignited a global market rally, propelling Japan’s Nikkei 225, the US S&P 500, and Euro 600 Stoxx to record highs. The chip giant's impressive performance, featuring a remarkable 265% year-on-year increase in total revenue, spurred a 15% surge in its stock to an all-time high.
The robust earnings, surpassing expectations, underscored the significant role of Artificial Intelligence (AI) momentum in driving stock market gains over the past year.
Japan’s Nikkei 225 reached a historic peak, buoyed by Nvidia's strong results, surpassing its 1989 high. This milestone reflects investor enthusiasm over the AI investment boom and signifies a significant achievement for the Tokyo index. Factors such as optimism surrounding tech stocks, overcoming historical pricing hurdles, and a weakened yen attracting foreign investors all contributed to this surge.
It was a positive week for US markets, albeit shortened due to the Presidents’ Day holiday. Federal Reserve minutes from the previous policy meeting, released on Wednesday, held few surprises, with investors quickly turning their attention to Nvidia's earnings later in the day. The minutes revealed the Fed's cautious stance on interest rate cuts, with officials indicating a lack of urgency for policy easing. The policy rate was suggested to be at its peak for the current tightening cycle, with any reduction requiring increased confidence in sustained progress toward the 2% inflation goal.
US manufacturing PMI rose to 51.5 in February 2024, marking the strongest growth in the factory sector since September 2022. Output increased for the first time in three months, at the fastest pace since April 2023, driven by stronger client demand and a sharper uptick in new orders. Services PMI eased to 51.3 in February 2024 from 52.5 in the previous month, missing market expectations of 52. Despite the slower pace, the result indicated 13 consecutive months of expansion in the US private services sector, demonstrating resilience despite the Federal Reserve's prolonged restrictive policy.
In the UK, there are increasing signs pointing toward an improvement in the economy's prospects since the beginning of the year. Services PMI held steady at 54.3 in February, surpassing expectations. Increased business and consumer spending improved financial conditions, and a boost in new international business has left service providers feeling optimistic about the future.
UK consumer confidence unexpectedly fell to -21 in February 2024 from -19 in January, defying forecasts for a slight improvement to -18 and declining for the first time in four months amid weaker readings on personal finances and the broader economic outlook. Chancellor Jeremy Hunt is scheduled to deliver the spring Budget on March 6, raising anticipation about potential tax cuts ahead of the election.
Looking ahead to next week, we are anticipating Japanese inflation data, US durable goods orders, the Fed’s preferred measure of inflation Core PCE, as well as Irish retail sales, consumer confidence, and inflation rate, along with China’s manufacturing PMI and Eurozone inflation.