Top Trading Stocks – Finbok analyses how stronger UK inflation than expected affects the world’s markets and the release of Nvidia EPS results affect the markets.
The world’s markets anticipate the key trading stocks to jump around.
The impact of everything from central bank policies to European and US stocks go from bullish to bearish and experience large moves today.
Top Trading Stocks: What should be trading today?
Shares declined on Wednesday as previously strong inflationary pressures in Britain took the wind from the sails of market hopes that Nvidia, a chipmaker boosted by the AI boom, would meet stratospheric expectations.
Investors are on tenterhooks about whether US Federal Reserve is preparing to raise interest rates to bankroll America’s transition to the old economy.
After handwringing early on, European stocks retreated 0.3% in afternoon trading because, apparently, the world economy is hinged to interest rate policy.
The performance of the best AI trading stocks is determined by how the blue-chip stocks react.
Top Trading Stocks and U.S. Market Reaction
Britain’s FTSE 100 led the way lower with a fall of half a per cent.
Meanwhile, futures markets suggested that shares in the S&P 500 and Nasdaq in Wall Street would open virtually unchanged today.
Top Trending Commodities: Gold Prices Soar Near Record Peaks
Inflation in Britain declined less than expected in April, and a closely watched core measure dropped only barely.
The pound jumped against the dollar and the Japanese yen.
So did UK government bond yields, and investors trimmed back their bets on a Bank of England interest rate cut to 20% in June.
The data fed into jitters about how fast governments and central banks will move to trim interest rates on the heels of the coronavirus crisis.
Top Trading Stocks in the AI Sector
Nonetheless, the U.S. artificial intelligence-heavyweight Nvidia will report earnings after the close.
That stock could provide the latest stress test for the U.S. stock market, which has taken indexes to record highs this year.
Few doubt that, as the most influential chip maker for AI, Nvidia’s earnings serve as another proxy for the burgeoning AI sector and its evolutions.
An evolution that has stoked investor enthusiasm and helped propel the U.S. stock market’s bull run.
Any tension around Nvidia’s results could be capitalised on, with options pricing $200 billion in encapsulation, a swing of 8.7% in either direction.
This is a watershed moment.’ The Deutsche Bank analysts added: ‘It may sound strange that markets take great notice of the results of a single company, but in the past few quarters, the release date has become one of the most important macro events on the calendar.’
The MSCI world equity index, which tracks share prices in 47 countries, dropped 0.1% while MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%, building on previous weekly gains for four weeks in a row, to a two-year high.
Top Trading Stocks and Central Bank Policies
The dollar slipped ahead of the minutes of the US Federal Reserve’s last meeting, due later in the day.
Fed chair Jerome Powell and other officials have abandoned what had been explicit guidance about the probability of interest rate reductions this year.
Instead, they are shifting attention to the broadly different near-term trajectories they see for the US economy and their likely reactions to each potential outcome.
Fed minutes could provide more detail on the shift in approach.
They should confirm that its next move on rates is still likely to be cut, but that policymakers want more confidence that inflation has returned on a downward trend.
Forex News Today: AI Boom, Yen Steady, and Nvidia’s Jaw-Dropping Earnings – start trading!
Fed fund futures imply a roughly 66% chance of a rate reduction by September and have 43 basis points of easing baked in for this year.
Top Trading Stocks in the UK Market
Sterling pushed up 0.3% in the wake of UK inflation data but gave back most of the gains to stand last at $1.2729, close to two-month highs.
The single currency likewise slid 0.2% to $1.0831, not far from the recent top of $1.0895 it reached as Wall Street extended the previous session’s assault on tech stocks.
New Zealand’s central bank published a gloomy assessment of its price rises and warned that the cost of getting them under control would last for longer than markets had expected last week, jolting local markets and lifting the local dollar.
The kiwi was last up 0.9% at $0.6151, having hit a one-month high on the back of a spike in the country’s bond yields.
It was similarly exuberant against the relatively low-yielding Japanese currency, which the kiwi, which surged to 17-year highs.
Top Trading Stocks in the Energy Sector
Crude prices declined since Tuesday on expectations the US central bank will maintain its tight monetary policy after data showed US inflation kept a tight grip over the world’s largest oil-consuming country.
Brent crude futures trimmed declines and were last down 0.5% at $82.46 a barrel, as did US West Texas Intermediate crude futures, which were last down 0.5% at $78.30.
Top Trading Stocks: Nvidia and Market Anticipation
US index futures were lower on Wednesday as investors displayed caution ahead of quarterly results from the AI chip bellwether Nvidia and minutes from the latest Federal Reserve policy meeting.
Investors will be waiting to see whether the chipmaker’s first-quarter results, due after the market closes, are up to formidable expectations and whether the rally can continue for shares of Nvidia and other AI stocks.
Shares of the company have become the largest boost to the S&P500 this year, up more than 92% and some three-and-a-half times over the year so far.
Top Trading Stocks: Major Indices climb
‘Work life balance is the big catchphrase at the moment’ Even as the stock has been on an absolute tear over the past year, there are questions now about whether the giant’s momentum entering 2023 has continued into early 2024.
In premarket trading on Wednesday, Nvidia’s shares were down 0.4% after rising more than 3% in the previous two days.
The company’s quarterly results will test if an unusually bullish streak that has now pushed all three major indexes to record highs this month – on the strength of a flurry of upbeat corporate results as well as renewed prospects for interest-rate cuts down the road and a so-called soft landing for the US economy – will last.
The tech-heavy Nasdaq and the benchmark S&P 500 hit fresh record highs on Tuesday.
Top Trading Stocks and Federal Reserve Minutes
Fellow market participants are also looking ahead to minutes from the latest meeting of the US central bank to be released at 2 p.m. ET, for more insight on exactly when a rate cut could come.
Several Fed policymakers have stressed that it’s important to wait for evidence that inflation shows some relief before cutting rates.
There is about a 0.51% chance of the Fed cutting rates by 25 basis points in September, according to CME’s FedWatch Tool, with at least near 69% odds of a cut, traders said.
By 7:00 a.m. ET, Dow e-minis were down 43 points, or 0.11%; S&P 500 e-minis were down 7.5 points, or 0.14%; and Nasdaq 100 e-minis were down 13.75 points, or 0.07%.
Top Trading Stocks in Retail and Apparel
Target shares fell 8.1% on disappointing quarterly results and second-quarter profit and comparable sales guidance that were below expectations.
Urban Outfitters climbed 5.8% after the apparel retailer’s first-quarter earnings beat expectations on strong demand.
Lululemon Athletica shares fell 4.3% after the athletic apparel retailer announced the resignation of Chief Product Officer Sun Choe.
Top Trading Stocks in the Canadian Market
While Canada’s commodity-linked main stock index is going to pause for the rest of this year, it is poised to post new record peaks as metal prices rally, with the expected lower borrowing costs supporting the outlook for the local economy, according to a Reuters poll.
The TSX has added 7.2% since the beginning of the year and has climbed above its prior record closing high from March 2022 to end at 22,468.16 on Tuesday.
We expect the stock market will continue to be strong into the summer and next year because of the burst of earnings and interest rate cuts later this year,” said Brandon Michael, senior investment analyst, ABC Funds.
Top Trading Stocks: Bank of Canada
Investors have bet bigger that the Bank of Canada will start an easing cycle with its next policy announcement on June 5, following data on Tuesday that showed the annual pace of inflation slide to a three-year low of 2.7%.
The median forecast of 21 portfolio managers and strategists in the May 13-22 poll was for the S P/TSX Composite Index to climb just 0.1% to 22,500 by the end of 2024, compared with 21,750 forecast in February’s poll.
It is then expected to jump to 24,300 by the end of 2025, a gain of 8.2%.
A pickup in activity would be helpful to resource shares at a global level,’ Nia added.
Top Trading Stocks: Financial sectors, banks, Gold!
The giant financials sector (banks, etc) represents 29% of the market’s weighting, and energy and materials combined account for almost another third (33%).
The materials sector includes fertiliser and metal mining companies.
Gold and copper have surged in recent days to all-time highs and all-time highs, respectively.
Eight of the 13 analysts who responded to a second question said a potential correction of 10% or more is unlikely or highly unlikely in the next three months.
“The data suggest strong momentum rolls with strong momentum. A correction is always possible, but no more so today than at any time in the past,” Petursson said.
Top Trading Stocks in the European Market
An unparalleled run for European shares puts them at the risk of pull-backs by the end of 2024, though with the region’s economy recovering and the beginning of a rate-cut cycle seen putting the continent’s equities back onto new highs in 2025.
After taking in a range of forecasts for European equities from fund managers and equity strategists surveyed from 13 to 22 May, the consensus sees the STOXX 600 index at 513 points at the end of 2024, implying a 1.9% fall from Tuesday’s close.
The region-wide index, which tracks the shares of some of Europe’s most popular large-cap companies, including the drugmaker Novo Nordisk, as well as tech hardware and software maker ASML, should reopen the climb in 2025, reaching 537 at the end of June, and a lifetime high of 556 by year-end.
Analysts see the Euro STOXX 50 index treading water for the rest of 2024, then resuming the climb to reach 5,400 by month-end December 2025, nearing the record high of 5,522 it set in March 2000.
Top Trading Stocks: Outlook for 2025
Europe’s equities had a strong first half of the year and ‘might very well take a summer hibernation period’, predicted Moz Afzal, Global CIO of EFG Asset Management in London.
‘But with inflation forecast to fall, growth that has bottomed, and monetary policy getting less restrictive, the economic backdrop could not be better for 2025.’
A full 73% – eight of 11 – said a more than 10% correction over the next three months in their own stock market was unlikely, with 27% saying such a decline was likely.
Top Trading Stocks: STOXX 600
Year-end predictions of the STOXX 600 index range from 435 to 600 points. Barclays’ strategist Emmanuel Cau remains ‘tactically’ overweight in Europe as he expects the region to benefit from upcoming rate cuts and the resulting stimulus to activity.
At the other extreme, BofA Global Research’s European Equity Strategist Andreas Bruckner sees the index dropping to a low of 450 in H1 of next year after a correction of more than 10% on weakness in the US economy.
