Dollar Hits 19-Month High as Wall Street's Tech Rally Builds

Wall Street rallied on Wednesday as a bullish CoreWeave update eased concerns over AI spending, while the dollar pushed on to a 19-month high on growing bets of a December Federal Reserve rate hike. Gold slipped and oil reversed lower on Thursday as Middle East tensions eased. Cisco, Applied Materials and Nebius all report results later today.

Equities

The FTSE 100 rose 0.78% on Wednesday, with the blue-chip index lifted by higher oil and copper prices as investors also looked for clues on the Bank of England's interest-rate path. The midcap FTSE 250 gained 0.72%. Energy stocks snapped a seven-session losing streak as crude rebounded from two-month lows, with BP and Shell both climbing.

Industrial metal miners also advanced as copper prices rose, lifting Anglo American, Antofagasta and Glencore. Financials provided the biggest boost to the index, with IG Group and London Stock Exchange Group both rising. Homebuilders were the main drag, with Taylor Wimpey falling after it cut its full-year UK completions forecast, blaming a subdued autumn selling season.

Traders are pricing in a near 72% chance of a quarter-point Bank of England rate rise at its December meeting, with policymakers continuing to debate the economy's inflation outlook. The National Institute of Economic and Social Research forecast stronger UK growth for 2026, but warned inflation may not return to the Bank's 2% target until late 2030.

Wall Street closed higher on Wednesday, led by technology stocks after CoreWeave's results eased concerns about AI spending. CoreWeave shares jumped 24.7% after the company said it expects to turn profitable in 2028, easing worries that demand might not support its debt-fuelled expansion. The S&P 500 rose 1.31% and the Nasdaq Composite gained 1.6%, while the Dow Jones Industrial Average added 0.49%.

Nvidia rose during the regular session but slumped in after-hours trading after reports that its board is preparing to replace chief executive Jensen Huang following an internal investigation. Tech shares had been sold off since last week's US midterm elections on worries over increased AI regulation and the AI rally's sustainability, before Wednesday's rebound.

Forex & Commodities

The dollar climbed to its highest level since April 2025 on Wednesday, extending its advance after Tuesday's hotter-than-expected US inflation data cemented expectations of a Federal Reserve rate hike next month. Traders raised the odds of a quarter-point hike in December to 87%, from around 70% a month ago. The dollar pushed further on Thursday to a fresh 19-month high.

Sterling fell to a two-week low near $1.33 on Wednesday as the broader dollar rally weighed, before slipping further to around $1.325 on Thursday. The euro fell to its weakest level since May 2025, pressured by the same hawkish Fed repricing. US Treasury markets were closed on Wednesday for the Veterans Day holiday, a day after two-year yields posted their biggest one-day jump since April 2025.

Gold fell to its lowest level in more than a week on Thursday, slipping to around $3,978 an ounce as the firmer dollar and rising Fed rate-hike bets curbed demand for the non-yielding metal. Prices touched their weakest since November 4 earlier in the session, with markets now awaiting Friday's US producer price data for further direction. Palladium bucked the trend, climbing to its highest level since October 22.

Oil fell by more than a dollar a barrel on Thursday, reversing Wednesday's gains, as easing fears of a Middle East escalation and oversupply worries weighed on crude. Brent slipped toward $91 a barrel and US crude toward $85. Hopes for a Russia-Ukraine ceasefire, after talks in Abu Dhabi produced an agreement on a prisoner exchange, added to the bearish tone, along with rising OPEC+ output and growing US inventories.