Receive free Markets updates

US stocks rose slightly on Wednesday as investors prepared for a pair of earnings results from big tech groups after the closing bell.

On Wall Street, the benchmark S&P 500 pared an early advance to finish the session with a 0.2 per cent gain, while the tech-focused Nasdaq Composite ended fractionally higher.

Traders prepared for Tesla and Netflix to kick off the earnings season for megacap tech companies.

Both are among the heavyweight companies that have lifted the S&P 500 almost 20 per cent since the start of the year, in a rally where tech sector valuations have been boosted by hype around artificial intelligence and expectations of peaking interest rates.

Tesla shares fell 0.7 per cent during the regular session, but were up more than 1 per cent in choppy after-hours trading. The carmaker said gross margins were squeezed in the second quarter by efforts to boost sales by offering price discounts on its vehicles.

Netflix was 0.6 per cent higher at Wall Street’s closing bell. Shares in the streaming group fell more than 3 per cent in after-hours trading as it reported lower than expected revenue for the second quarter and set a weak sales forecast for the current three-month period.

Apple closed 0.7 per cent higher. Its shares rose as much as 2.3 per cent earlier in the day after a media report said it was building generative artificial intelligence tools, which could challenge products such as OpenAI’s ChatGPT.

Meanwhile, Goldman Sachs shares advanced 1 per cent, even as the bank reported its lowest quarterly profit in three years, citing a slowdown in its investment banking and trading business. The company’s share price swung into positive territory in morning trading as its chief financial officer told analysts it planned to increase its level of share buybacks.

The KBW index of bank stocks added 2.6 per cent and extended its gains from the previous session, when upbeat earnings news from Morgan Stanley and Bank of America lifted investor sentiment.

In Europe, the region-wide Stoxx 600 closed 0.3 per cent higher, extending gains from the previous session, while France’s Cac 40 edged up 0.1 per cent and Germany’s Dax ended the day 0.1 per cent lower.

London’s FTSE 100 jumped 1.8 per cent, its steepest one-day gain since November, as shares of UK property companies surged following signs that inflation was slowing and interest rates could peak lower.

The moves came after the Office for National Statistics said the UK’s annual consumer price inflation eased to 7.9 per cent in June, from 8.7 per cent in the previous month, landing below analysts’ forecasts.

The reading ended a four-month streak of UK price growth readings that exceeded expectations, easing the pressure on Bank of England policymakers who have lifted interest rates to 5 per cent, their highest level since 2008.

“We finally got a much-needed and long-awaited cooling in UK inflation, which will come as a huge relief to both policymakers and the government,” said Jamie Dutta, market analyst at Vantage.

The figures come a week after slower than expected US inflation boosted global markets.

The FTSE 100 index of the largest London-listed companies has trailed far behind its peers in the region since the start of the year, as investors worried that sticky price pressures in the UK would force the central bank to keep interest rates higher for longer. 

But the inflation reading on Wednesday pushed traders to bet that it is more likely that the BoE’s Monetary Policy Committee will lift rates by 0.25 percentage points at its next meeting in August, instead of another 0.5 percentage point increase.

Line chart of $ per £ showing Sterling falls after inflation slows

The pound, which tends to weaken when investors expect lower interest rates, dropped more than 1 per cent against the dollar to trade at $1.2867, its lowest level in a week.

That helped push the greenback higher, with an index tracking the US currency against a basket of six peers — including the pound — rising 0.3 per cent in afternoon trading in New York. The dollar index tumbled 2.2 per cent last week, the biggest weekly drop since November.

Earlier, Asian equities had slipped, as China’s stalled economic recovery and the government’s slow rollout of stimulus measures weighed on market sentiment. The Hang Seng index dropped 0.3 per cent, while China’s blue-chip CSI 300 index slipped 0.1 per cent.

Source link