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BOE policy meeting, tech stocks, Tesla's EU sales - what's moving markets

Published 2024/06/20, 10:22
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Investing.com -- Tech stocks look set to drive Wall Street higher, with chipmaker Nvidia leading the way. The Bank of England is widely expected to keep interest rates unchanged, yet the Swiss National Bank cuts rates again.

1. Futures just higher with techs leading the way

U.S. stock futures traded marginally higher Thursday, with the tech-heavy Nasdaq Composite leading the way. 

By 08:08 ET (13:08 GMT), the Dow futures contract was 6 points, or 0.1%, higher, S&P 500 futures climbed 22 points, or 0.4%, and Nasdaq 100 futures rose by 140 points, or 0.7%.

The main Wall Street indices are all on course for a winning week, with both the S&P 500 and the NASDAQ Composite reaching fresh records on Tuesday. The stock market was closed Wednesday for the Juneteenth holiday.

Nvidia (NASDAQ:NVDA) has led the way, becoming the most valuable company in the world earlier this week [see below], with enthusiasm towards all things AI driving the gains.

The economic data slate includes initial jobless claims figures and housing starts data later in the session, as investors look for more clues towards when the Federal Reserve will start cutting interest rates.  

2. Bank of England set to hold rates unchanged

The Bank of England holds its latest policy meeting later Thursday, with the central bank widely expected to hold interest rates unchanged.

U.K. inflation returned to its 2% target for the first time in nearly three years in May, data released on Wednesday showed, but wage growth and underlying pricing pressure remain a concern for the central bank.

Bank of England Governor Andrew Bailey opened the door early last month to a rate cut, saying he was "optimistic that things are moving in the right direction", but not quite yet.

Most economists in a Reuters poll last week thought the central bank would start to cut rates in August, but markets see only a 30% chance of an August rate cut and think a first move is more likely in September or November.

Earlier Thursday, the Swiss National Bank trimmed its key interest rate by 25 basis points to 1.25%, its second cut in a row.

The SNB surprised markets with a cut in March, with inflation remaining within the central bank's target of 0%-2%.

3. Nvidia still in spotlight

Nvidia is likely to remain in the spotlight Thursday, after the chipmaker became the world’s most valuable company earlier this week, as it has been a major beneficiary of a spike in enthusiasm around the applications of artificial intelligence.

It is now worth $3.34 trillion, having ended trading on Tuesday at nearly $136, making it more valuable than fellow tech giant Microsoft (NASDAQ:MSFT), having overtaken Apple (NASDAQ:AAPL) earlier this month.

Analysts at Stifel lifted their price target for Nvidia's shares to $165 from $114, citing the company’s longer-term growth prospects and profitability metrics.

"We expect the majority of near-to-medium term opportunities will come from high performance computing, hyperscale and cloud data center, and enterprise and edge computing," they argued. "While we continue to view Nvidia’s exposure to Gaming, Automotive and Professional Visualization favorably, the shift from general purpose compute to accelerated compute represents the company’s most significant revenue and profitability growth opportunity over the next several years."

But they noted several risks to the updated price target, including a "potential digestion period following several quarters of significant investment", unforeseen tightening of U.S. trade restrictions on technology shipped to China and "general macro[economic] events."

4. Tesla’s EU sales slumped in May

Tesla’s sales slumped in the European Union in May, falling 34.2%, as part of a sharp drop in demand for new battery-electric cars in the region.

Demand for EVs in Europe has cooled in recent months, after rising strongly for several years, while competition to produce more affordable models has grown.

To shield domestic automakers from an influx of cheap EV imports, the European Commission said last week it would impose provisional duties of up to 38.1% on China-made EVs starting July.

This prompted Tesla (NASDAQ:TSLA), a U.S. electric carmaker, to state that it was likely to increase the price of its China-made Model 3 when the EU measures come into effect. 

Total EV sales in the European Union dropped 12% in May from a year earlier, data from the European Automobile Manufacturers Association showed on Thursday.

This drop was led by a sharp 30% reduction in Germany, the bloc's largest electric vehicle market, after the country ended late last year subsidies for buying EVs. 

5. Crude awaits official US inventories

Crude prices were stable Thursday, ahead of the release of the official U.S. inventory data.

By 04:10 ET, the U.S. crude futures (WTI) traded 0.1% lower at $80.61 a barrel, while the Brent contract climbed 0.1% to $85.18 per barrel.

There was no WTI settlement on Wednesday due to a U.S. holiday, which kept trading largely subdued. 

Data released on Tuesday by the American Petroleum Institute showed U.S. crude stocks rose by just over 2 million barrels in the week ended June 14, suggesting weakening demand even during the important summer driving season.

The Energy Information Administration releases the official figures later Thursday, a day later than usual due to Wednesday’s Juneteenth holiday.

The continued unrest in the oil-rich Middle East has provided a degree of support for the market, with Israeli Foreign Minister Israel Katz warning of a possible "all out war" with Lebanon's Hezbollah, even as his country continues to battle Hamas in Gaza.

 

 

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