Tech Soars, Markets Struggle With AI
Nvidia's shares have skyrocketed by almost a quarter because of the rising use of AI applications that require high-quality chips.
The world's stock markets were unsteady on Thursday. This was because the US debt problem was still ongoing. Germany also experienced a recession. However, the tech industry was booming. This was because US chip company Nvidia had made a lot of money. This was due to the advancement of artificial intelligence.
The stock market on Wall Street wasn't doing too good. The Dow was falling because of Fitch, a company that rates credit, said that the US's AAA-rating was on "rating watch negative". This is happening because the talks about raising the debt limit are not going well.
The stakes are high if there's a default, says Clifford Bennett, ACY Securities chief economist.
Bennett warned that the market shock will be big. The effects will last for years.
Bond prices in the US and globally will fall, leading to an initially strong US dollar due to safe-haven investments and high long-term yields. However, the stock market may experience a sudden and significant decline.
Fitch told about the US rating warning. The warning happened because of the political partisanship increasing. The warning is happening before the deadline for raising or suspending the debt limit.
A new announcement suggests that there could be a ratings downgrade. This would be the first time since S&P Global did so in 2011 during a similar situation.
The US Treasury Department said that June 1 is the "X-date." The government will not have any more money. This could cause a default. The consequences could be bad for the economy.
This week, President Biden and Republican House Speaker McCarthy talked. People said it was "productive". But since then, things haven't gotten much better. Republicans want spending cuts, but Democrats want a clean increase to the debt limit.
Experts predicted that although people anticipate a deal in the future, investors are getting more anxious and cautious.
US chip company Nvidia's positive earnings report caused the Nasdaq to rise. Nvidia's advanced chips, designed for artificial intelligence use, are in high demand.
TD Ameritrade analyst Alex Coffey said in a briefing note that the firm is one of a small number of tech stocks boosting the major indexes this year.
Nvidia's stocks soared by 25% when Wall Street began on Thursday. This made their market value almost $1 trillion.
Michael Hewson, the chief market analyst at CMC Markets UK, said that when the firm upgraded its results and guidance, it helped lift the rest of the chip sector. AMD and TSMC both gained, and Microsoft saw some good gains as well.
The German economy is experiencing a downturn. This is known as a recession. It means the economy is shrinking. It is bad news for businesses and workers. The causes of the recession include global trade tensions. Other factors include Brexit and a slowdown in China. The German government has responded with some measures to boost the economy. However, it remains to be seen how effective these will be.
The markets in Europe went down. The Frankfurt DAX lost 0.3 percent. The FTSE 100 in London went down by 0.7 percent. The CAC 40 in Paris went down by 0.2 percent.
Germany's economy shrank again. This happened in the first quarter. The economy contracted by 0.3 percent. It also shrank by 0.5 percent before. This happened in the last three months of 2022.
The euro went down to $1.0714, which is the lowest in two months. Afterwards, it gained some of its value back.
Joshua Mahoney, a Scope Markets analyst, stated that the German sentiment was affected this morning. He pointed out that the recession in Germany was mainly due to the decrease in household consumption and government spending.
Some people think that the economy in Europe's biggest country is getting worse and will affect the whole area. However, others think that this is good news because it means people are buying less and prices will eventually go down.
Asian stocks fell due to concerns about a possible US default. The retreat was also seen in oil prices due to profit-taking after three consecutive sessions of gains.
At 1530 GMT, important numbers are reported. - The stock market index is up by 2 percent. - The unemployment rate fell to 5.1 percent. - 500 new COVID-19 cases were confirmed today. - The price of oil rose by 3 dollars per barrel. - The prime interest rate remains at 3 percent.
The Dow in New York has gone down 0.5 percent. It's currently at 32,627.08 points.
The Frankfurt DAX index closed at 15,793.80. This is a decrease of 0.3 percent.
The FTSE 100 in London went down by 0.7 percent. It closed at 7,570.87.
The stock market in Paris, known as CAC 40, decreased by 0.2 percent. The closing value was 7,229.27.
The EURO STOXX 50 went up by 0.1 percent, finishing at 4,269.64.
The Nikkei 225 went up by 0.4 percent in Tokyo. It closed at 30,801.13.
The Hang Seng Index in Hong Kong went down by 1.9 percent. It closed at 18,746.92.
The Shanghai Composite went down by 0.1%. It ended at 3,201.26.
The euro/dollar has dropped to $1.0720 from $1.0750 on Wednesday.
The Pound/dollar is currently trading at $1.2323. This is a decrease from the previous trading session's rate of $1.2365.
The dollar has increased against the yen. It is now trading at 139.81 yen. This is up from 139.47 yen before.
The Euro/Pound is up. It's at 87.01 pence. Before, it was at 86.94 pence.
The price of West Texas Intermediate has decreased by 3.0 percent. It is now at $72.10 per barrel.
The Brent North Sea crude fell by 2.0 percent. Now, it's priced at $76.15 per barrel.
