The sunlight climbs behind the sky line of reduced Manhattan and One World Trade Center as individuals stroll along the Hudson River on September 14, 2024, in Jersey City,New Jersey
Gary Hershorn|Corbis News|Getty Images
This record is from today’s Daily Open, our global markets e-newsletter. Daily Open brings capitalists up to speed up on every little thing they require to understand, despite where they are. Like what you see? You can subscribe below
What you require to understand today
Record close for Dow
The S&P 500 and Dow Jones Industrial Average rose on Monday, with the Dow notching a record close. But the Nasdaq Composite fell. Asia-Pacific stocks were mixed. Japan’s Nikkei 225 fell 1.03% as the Japanese yen strengthened to 140.54 against the U.S. dollar. Hong Kong’s Hang Seng index climbed 1.15% as Midea Group shares jumped over 9% in their Hong Kong debut.
Next move for the BOJ
The Bank of Japan won’t be raising interest rates at its September meeting, according to a survey of 32 analysts. However, the outlook for its October and December meetings is less certain. Almost 20% think an October hike is likely, while 25% said the bank’s next hike will be in December.
India’s slowing deposit growth
Reserve Bank of India Governor Shaktikanta Das told in an exclusive interview that slowing growth in deposits is not a cause for concern currently, and said banks are “coming out with new products for deposit mobilization.”
Intel forges new path for foundry
Intel shares popped around 8% in extended trading on news the chipmaker plans to structure its foundry business as an independent unit with its own board and ability to raise outside funding. It might even spin off the business as a public company, according to a person with knowledge of the matter. Separately, the Biden administration on Monday awarded Intel up to $3 billion under the CHIPS Act.
[PRO] “Golden age of fixed income”
The U.S. Federal Reserve is poised to cut interest rates this week. Benchmark rates affect borrowing costs. This means bond yields will go down as the Fed lowers rates. Rick Rieder, BlackRock’s global chief investment officer of fixed income, thinks now’s the time for investors to take advantage of this “golden age of fixed income.”
The bottom line
Technology stocks benefit the most from low interest rates, conventional market wisdom says.
That’s because tech companies tend to promise future profit in exchange for present money. When rates are low, that proposition appears attractive because returns are low elsewhere. But when rates are high, those promises don’t seem as attractive as less risky returns from assets such as Treasurys.
The past two years have demolished this narrative. Tech has soared even as interest rates have been at 23-year highs, thanks to enthusiasm over artificial intelligence’s promise of new and explosive revenue streams.
Nvidia, the lynchpin of AI, has soared nearly 136% just this year. Meta, which has its own AI model named Llama, is up about 51%.
With the market pricing in a 67% chance — up from 30% last week — that the U.S. Federal Reserve will make a larger-than-usual cut of 50 basis points, according to the CME FedWatch Tool, it stands to factor technology will certainly stand out even more.
The industry, nevertheless, has actually been rough in current weeks. The VanEck Semiconductor ETF, for example, dropped 1.31% Monday, while Nvidia slid 1.95%.
The tech-heavy Nasdaq Composite dropped 0.52%, while the S&P 500 inched up 0.13% and the Dow Jones Industrial Average included 0.55% to shut at a brand-new document.
This suggests capitalists have actually been vacating technology to various other fields that could experience tailwinds in the middle of reduced prices. Case in factor: the economic and power fields increased greater than 1% on Monday, executing far better than the wider market.
Goldman Sachs kept in mind hedge funds’ regular acquisitions recently of economic supplies were the highest possible because June 2023.
“Other areas of the market are starting to perk up, and a lot of that has to do with the future rate cuts that are coming into play,” claimed Christopher Barto, elderly financial investment expert at Fort Pitt Capital.
That does not imply technology’s out of support. It’s most likely to proceed driving the marketplace. But various other fields could appear for the trip.
–‘s Hakyung Kim, Pia Singh and Yun Li added to this tale.
