01 August 2024
If you are covering the latest news in financial markets, please see the following comment from Lindsay James, investment strategist at Quilter Investors:
“Markets are today continuing to digest supportive news from both global central banks and mega cap technology names. Meanwhile, the front pages continue to remind investors that risks of an all-out war in the Middle East are growing, with implications not only for oil prices and international shipping, but also for inflation and the US election.
“The Federal Reserve opted to hold rates at 5.25-5.50% once more in a move that markets had already almost fully expected. However, the press conference alluded to a first rate cut in September provided inflation continues to ease, something that again was in line with expectations but was nevertheless well received. Despite the lack of real surprises, this was enough to extend the US equity rally that had begun earlier in the day. Mega cap technology names were buoyed first by comments from Microsoft that they would continue to invest heavily in AI, along with strong results from chip maker AMD. Meta followed closely behind and announced a significant profit beat after hours and a strong outlook, with development of its Llama AI model at the heart of future growth plans. This will be music to the ears of Nvidia, which designs the $25,000 chips that Meta use in abundance as part of this process.
“Returning to inflation, the Eurozone published data that showed inflation took a swerve in the wrong direction in July, increasing to an annual rate of 2.6% from 2.5% in June. This was blamed partly on rising goods costs, with international container shipping flagged as one rising element. While a slight dip in services inflation, which had previously been the primary source of concern in the data, should keep a further rate cut in September on the table, this is now more finely balanced. It acts as a reminder to investors that the data dependent approach taken by the Federal Reserve leaves, in this current backdrop of rising oil prices and shipping disruption, one added element of uncertainty ahead.”
