The S&P 500 and Nasdaq 100 have finally turned positive for first time since February. The Dow 30 index is still in negative territory, down by 0.95%.
What turned the tables for the markets was the de-escalation of US-China trade tensions and softer inflation data that boosted market sentiments.
On May 9, Trump talked up the US-UK deal, which he implied would be the first of many. “You better go out and buy stock now,” he told reporters in the Oval Office, adding that the economy “will be like a rocket ship that goes straight up.” On may 13, Trump takes credit for surging stocks, when he said, ‘It’s going to go a lot higher’.
Nvidia climbed above the $3 trillion mark for the first time in several months. Nvidia jumped 5.6% after announcing a big AI chip deal with Saudi Arabia, boosting peers such as AMD and Broadcom, which all rose more than 4%. Meanwhile, Coinbase jumped 24% after being admitted to the S&P 500 index. In other news, the social trading platform eToro has priced its initial public offering at $52 a share.
The Shanghai 50 index reached a seven-week high of 2729.00 points. Shanghai 50 is up 3.57% in the previous four weeks and 10.15% in the last year.
On Monday, stocks surged following US and China’s agreement to cut tariffs for 90 days, temporarily alleviating concerns about inflation, economic growth, and corporate profits, as the two countries work on a broader trade agreement.
On Tuesday, sentiments got further boost when inflation data showed a 2.3% annual increase in April, marking the lowest 12-month level since early 2021.
The yield on the 10-year Treasury note is singing a different tune. The 10-year yield, which affects borrowing costs on all sorts of personal and business loans, was at 4.47%, up from 4.46% at yesterday’s close and near its highest level in more than a month.
Investors are still evaluating the effects of a temporary US-China tariff pullback, which will reduce duties to 30% and 10%, respectively, for 90 days starting today. US stock futures were little changed on Wednesday.
Although traders’ expectations for aggressive rate reduction from the US Federal Reserve have decreased as a result of the easing of trade tensions, the perceived danger to inflation has also decreased, which may allow policymakers greater leeway.
Easing of trade tensions is leading to reduced demand for precious metals as a safe haven asset. Both, silver and gold are down 0.25% and 0.5% respectively on Wednesday.