S&P 500 Rebounds as Nvidia Lifts Global Chip Stocks

The S&P 500 and Nasdaq closed higher on Wednesday as Nvidia-driven optimism boosted technology shares and lifted semiconductor stocks globally. Samsung Electronics jumped after reaching a late pay deal with unions, while SK Hynix surged on strong AI-related sentiment. The FTSE 100 closed higher after softer UK inflation data eased pressure for further Bank of England tightening. The US dollar steadied below recent highs, while oil prices rebounded and gold slipped as traders monitored US-Iran negotiations.

Equities

The FTSE 100 closed 1% higher on Wednesday at 10,432.3, its strongest finish in around two weeks, after softer UK inflation data eased some expectations for further Bank of England rate rises. The FTSE 250 also gained 1.2% as investors responded positively to lower bond yields and falling oil prices.

Marks & Spencer closed 6.6% higher after forecasting a return to profit growth this year, making it one of the strongest performers in London trading. Defence contractor Babcock International Group rose 5.3% after Peel Hunt upgraded the shares to “buy” from “add”, helping lift the aerospace and defence sector by 3.7%.

Banking stocks also pushed higher, with Barclays and Lloyds Banking Group both ending more than 3% higher on Wednesday. Investors reacted to April inflation figures showing annual consumer price growth slowed to 2.8%, below expectations of 3.0% and down from 3.3% in March. Bank of England Governor Andrew Bailey said recent moves in market rates had given policymakers more time to assess the economic impact of the conflict involving Iran.

In the US, the S&P 500 closed 1.08% higher on Wednesday, while the Nasdaq Composite jumped 1.55% and the Dow Jones Industrial Average added 1.31%, recovering after three consecutive sessions of losses. Technology and semiconductor shares led gains ahead of quarterly results from Nvidia. Nvidia closed 1.3% higher during regular trading before volatile after-hours trading followed its earnings release and announcement of an $80 billion share buyback programme.

Chip-related stocks rallied strongly before the results. Astera Labs surged 17.7%, while US-listed shares in Arm Holdings jumped 15%. The Philadelphia Semiconductor index climbed 4.5% during the session.

Travel stocks also advanced as oil prices fell. Delta Air Lines, United Airlines, Southwest Airlines and Alaska Air Group closed between 6% and 10% higher on Wednesday. Cruise operators Carnival Corporation and Norwegian Cruise Line Holdings both gained more than 8%.

Retail stocks were weaker after Target fell 3.9% following a warning over the broader economic backdrop despite raising its annual sales growth forecast. Walmart slipped 2.5% ahead of its earnings results due on Thursday. Intuit dropped 3.9% after reports that the company plans to cut around 3,000 jobs.

Forex & Commodities

The US dollar eased slightly on Thursday morning after pulling back from a six-week high as traders reacted to signs of progress in negotiations between Washington and Tehran. The dollar traded at 158.9 yen after falling against the Japanese currency for the first time in eight sessions on Wednesday, while the euro held at $1.162 and sterling remained steady at $1.343.

The Australian dollar weakened to $0.7129 after new labour market data showed the unemployment rate climbed to 4.5%, its highest level since 2021 and above market expectations. Investors reduced expectations for further Reserve Bank of Australia tightening following the figures, while Westpac said its call for the RBA to pause at its June meeting had become “high-conviction”.

Comments from Bank of Japan policy board member Junko Koeda supported the yen after she said underlying inflation remained close to the central bank’s 2% target and further rate rises would still be needed. The dollar index held at 99.16 on Thursday morning after reaching 99.47 on Wednesday, its strongest level since early April.

Spot gold edged lower to $4,528 per ounce on Thursday morning as Treasury yields and the firmer dollar weighed on demand for bullion. The metal had risen more than 1% on Wednesday after earlier falling to its weakest level since March 30. Analysts said uncertainty around inflation and the duration of tensions involving Iran continued to limit buying interest.

Federal Reserve meeting minutes released overnight showed more policymakers believed tighter monetary policy could become appropriate if inflation remains above target. Markets are now pricing in a greater chance of a US rate increase later this year, with traders assigning a 39% probability of a quarter-point rise in December. The yield on the US 10-year Treasury note rose to 4.578% on Thursday.

Oil prices rebounded early on Thursday after heavy losses in the previous session. Brent crude rose to $106.3 a barrel, while US West Texas Intermediate traded at $99.55, supported by lower US crude inventories and continued disruption around the Strait of Hormuz.