Global stock markets showed a generally positive trend on Wednesday, buoyed by a rebound in technology stocks on Wall Street. Investors were eagerly awaiting the Federal Reserve’s interest rate decision, while trading activity was relatively light due to the Lunar New Year celebrations.
Market Performance Overview
France’s CAC 40 index fell by 0.4% to 7,867.03, while Germany’s DAX increased by 0.4% to 21,516.18. The UK’s FTSE 100 saw a slight rise of less than 0.1%, also settling at 21,516.18. In the U.S., futures for the S&P 500 rose by 0.1%, contrasting with a minor decline of 0.1% for the Dow Jones Industrial Average.
Most Asian markets remained closed for the Lunar New Year, but Japan’s Nikkei 225 index managed to recover from previous losses, climbing 1% to 39,414.78. Australia’s S&P/ASX 200 also rose by 0.6% to 8,447.00, following data indicating a modest 0.2% increase in the Consumer Price Index for the December 2024 quarter, marking the smallest rise since the June 2020 quarter.
- India’s Sensex increased by 0.9%
- The SET index in Bangkok experienced a slight decline of 0.1%
Technology Sector Highlights
In the technology sector, ASML, a Dutch semiconductor giant, reported record revenues of 9.3 billion euros ($9.7 billion), driven by strong demand for its advanced chipmaking tools. This announcement came despite recent concerns regarding AI spending, particularly following claims from DeepSeek, a Chinese-developed entity, suggesting it could produce a large language model that rivals those of major U.S. companies at a significantly lower cost.
ASML’s shares surged by 11% in early trading in Amsterdam, reflecting investor confidence in the company’s future. On Wall Street, tech stocks rebounded after a significant drop earlier in the week, with the S&P 500 climbing 0.9% to 6,067.70, recovering more than half of its earlier losses.
AI Sector Developments
The AI sector remains a focal point for investors, particularly in light of DeepSeek’s recent claims regarding its competitive large language model. This development raises questions about the sustainability of current spending trends on AI chips and data centers, which have been significant growth drivers in the tech sector.
While potential reduced spending could impact revenues for companies like Nvidia and Constellation Energy, it may also create opportunities in other market areas. AI-related stocks have been among the top performers on Wall Street in recent years, driven by expectations of continued growth in spending.
Economic Landscape and Federal Reserve Focus
In the broader economic landscape, a recent report indicated that consumer confidence in the U.S. was not as strong as economists had anticipated, which had a limited impact on the bond market. The market’s focus is now on the Federal Reserve, which is expected to announce its latest interest rate decision.
Analysts widely expect the Fed to maintain the current federal funds rate, marking the first meeting since September where no cuts are anticipated to stimulate the economy. This decision will be closely watched by market participants as it could influence investor sentiment and stock valuations.
Commodity and Currency Markets
In commodity markets, benchmark U.S. crude oil prices fell by 77 cents to $73.00 a barrel, while Brent crude decreased by 78 cents to $75.71 a barrel. Currency trading also saw fluctuations, with the U.S. dollar dropping to 155.35 Japanese yen from 155.53 yen, and the euro trading at $1.0405, down from $1.0432.
These movements reflect ongoing adjustments in response to economic indicators and market sentiment as investors navigate a complex financial landscape. The interplay between commodity prices and currency values continues to be a critical aspect of market dynamics.
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