Written by Amanda Cooper
LONDON (Reuters) – Global stocks hit a record high on Wednesday, driven by a rally in technology stocks that made AI chipmaker Nvidia (NASDAQ: ) the world’s most valuable company, while the dollar held steady as soft U.S. sales data suggested prices may come down. this year.
The MSCI All-World index was up 0.15% at 805.12, having traded at a record high of 805.43.
A rally in US tech stocks on Tuesday allowed Nvidia to undercut Microsoft (NASDAQ:), which boosted shares of the Asian chipmaker overnight.
US stock index futures also rose, with the heavyweights up 0.23% and those up 0.1%. In Europe, it was down 0.1%.
The pound rose after data earlier showed inflation in Britain returned to the Bank of England’s 2% target in May for the first time since 2021.
Inflation will be welcomed by both Prime Minister Rishi Sunak and the BOE – but it may be too late to change Sunak’s fortunes in next month’s election or for the central bank’s rate cut on Thursday.
“Since inflation in the UK is 2% and inflation in the US – if you take PCE – at 2.7%, this is not at all disturbing,” said Lombard Odier economist Samy Chaar, referring to inflation chosen by the Federal Reserve to measure the Personal Consumption Expenditures index.
“It gives credence to the idea that the Bank of England acted in August as recently as August and that should be followed by the Fed in September,” he said.
Sterling, down about 0.2% so far this month, last traded at $1.2728, up 0.15%, while the euro rose 0.1% to $1.0747, but was down 1% from June.
The single currency has been under pressure since French President Emmanuel Macron called snap elections last week after his ruling conservative party lost to a far-right party in European Parliament elections.
US markets were closed on Wednesday, keeping market volatility low.
RATE YOU CUT EXPECTATIONS
Data on Tuesday showed US retail sales rose narrowly in May and last month’s figures were revised down sharply, suggesting economic activity remained weak in the second quarter.
The numbers led to a slight increase in expectations for a rate cut in September, with traders pricing in a 67% chance of easing compared with a 61% chance the previous day, the CME FedWatch tool showed. Markets are pricing in 48 basis points of reductions this year.
“(The Fed) will need more data to support its case for a rate cut and investors shouldn’t rely on one or two data points,” said Vasu Menon, managing director of investment strategy at OCBC.
Last week, the soft US inflation reading was contrasted with the stance of Fed officials, who revised their previous estimate of a three-point rate cut this year to one.
“Price reduction is a strong issue in 2025 but that’s okay because there is hope that it will happen in a big way in the next two years even if 2024 remains uncertain, and that will keep the markets supported,” said Menon.
Fed officials are looking for further assurances that inflation is cooling and any warning signs from a still-tight labor market as they carefully steer toward what most expect to be a rate cut or two later this year.
The , which measures the performance of the US currency against the other six, held at 105.19.
The Japanese yen drifted, leaving the dollar largely unchanged at 157.92, near a six-week high last week.
The yen has lost a third of its value against the dollar over the past 4-1/2 years, largely because of the wide gap between interest rates in Japan and those in the United States.
Minutes of the Bank of Japan’s April policy meeting showed policymakers arguing over the impact a weaker yen could have on prices, with some raising the possibility of raising interest rates sooner than expected if inflation jumps.
In commodities, oil prices rose, with futures up 0.6% at $85.80 a barrel, while futures gained 0.48% to trade at $81.96.
