The S&P 500 and the Nasdaq extended gains to break fresh record levels for a 5th day on Wednesday while the Dow Jones swung around the flatline. Traders continue to parse prospects the Fed will cut interest rates this year. During his Congressional testimony, Chair Powell stressed that the Fed would not consider cutting rates until there is clear evidence that inflation is moving sustainably toward 2%, but noted some progress on inflation while the labor market is "not a source of broad inflationary pressures for the economy now”. Investors continue to bet on two rate reductions this year, with the odds for a September cut standing around 75%. Materials and tech were the top performing sectors while financials underperformed. Nvidia extended gains and added 1.4% and Tesla was down 0.3%, following 10 straight sessions of gains, as Goldman Sachs raised its price target. Apple (0.9%), Amazon (0.3%) and Alphabet (0.8%) were in the green while Microsoft and Meta were little changed.
The Nikkei 225 Index rose 0.61% to close at 41,832 on Wednesday, hitting a new all-time high as a rally in artificial intelligence-related stocks and a weak yen continued to push Japanese markets higher. The broader Topix Index also gained 0.47% to 2,909, the highest in 34 years. Japanese shares tracked gains on Wall Street as well after Federal Reserve Chair Jerome Powell warned that keeping restrictive policy for too long could stunt economic growth. Meanwhile, data showed that Japan’s corporate goods price index increased 2.9% year-on-year in June, the highest reading since August last year. Notable gains were seen from index heavyweights such as Disco Corp (2.5%), Mitsubishi UFJ (1.5%), Sony Group (1.6%), Tokyo Electron (1.1%) and Fast Retailing (1.4%). In corporate news, Recruit Holdings jumped 3.6% after revealing that it will buy back up 5.7% of its outstanding shares over a one-year period.
The DAX added 0.3% to trade around the 18290 level on Wednesday, rebounding from two consecutive sessions of losses, and tracking its European peers higher, as traders focus on key US inflation data due tomorrow to assess the timing of the first interest rate cut by the Fed. Federal Reserve Chair Powell's statements before Congress and any news from France will also be closely watched. On the corporate front, Porsche (4.4%), Vonovia (1.9%), Qiagen (1.3%) and Adidas (1.2%) were the top performers while VW (-2.1%), BASF (-1%) and MTU Aero Engines (-1%) fell the most.
The Shanghai Composite fell 0.68% to close at 2,939 while the Shenzhen Component dropped 0.1% to 8,697 on Wednesday, giving back gains from the previous session as investors digested the latest inflation figures. China’s consumer prices grew 0.2% YoY in June, the lowest in three months and falling short of market estimates of 0.4%. Moreover, producer prices shrank 0.8% YoY last month, remaining in negative territory for 21 months, although the softest decline in 17 months. On the corporate front, Ping An Insurance, China’s largest insurer, is considering issuing convertible bonds worth up to USD 5 billion to bolster its capital and enhance its financial flexibility in response to evolving market conditions. Shares of Yihai Kerry Arawana Food Group fell 4.4% amid food safety issues concerning cooking oil transportation. Notable losses were also seen from Aluminum Corporation of China (-6.8%), China Fortune (-5.7%), and GD Power Development (-5.3%).
