Market snapshot: mixed fortunes for investors

US markets continued to drive higher, buoyed by ongoing optimism surrounding technology, the state of the economy and the future path of interest rates.

The euphoric anticipation of the potential for AI remains a central theme in the performance of the markets over recent months, with falling Treasury yields and the possibility of rate cuts on the horizon providing additional levels of support.

The strength of buying interest led the Nasdaq to another record high, with shares of the current tech poster child NVIDIA Corp (NASDAQ:NVDA) adding another 4% and cementing an astronomical gain of 250% over the last year. Advanced Micro Devices Inc (NASDAQ:AMD) also added over 5%, while Meta Platforms Inc Class A (NASDAQ:META) also added more than 2% in a broad read across for the other members of the “Magnificent Seven”.

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Meanwhile, comments from some Federal Reserve officials left the door open to interest rate cuts later this year, with a relatively weak manufacturing release potentially adding fuel to this fire.

In addition, a closely watched consumer sentiment survey suggested a weakening of outlook and expectations. Fed Chair Jerome Powell will be testifying before lawmakers for two days this week, where the latest views on inflation and the interest rate strategy are likely to be the main areas of interest.

This will be followed on Friday by the release of the non-farm payrolls report, where 200,000 jobs are expected to have been added in February, following the previous month’s blowout number of 353,000 and where unemployment is likely to remain unchanged at 3.7%.

In the meantime, the main indices’ march ahead continues unabated Stateside, with the Dow Jones up by 3.7%, the S&P500 by 7.7% and the Nasdaq by 8.4% in the year to date.

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Asian markets were generally higher in response to the moves on Wall Street at the beginning of a particularly important week in China. The National People’s Congress meeting starts tomorrow, with investors continuing to hang their hats on hopes of further and more meaningful stimulus measures. The economy remains littered with pockets of weakness, most notably the real estate sector, youth unemployment, deflation and sagging consumer confidence.

Although Chinese stocks have staged something of a rebound of late, the main drivers have been slightly illusory in the form of tighter regulations on short-selling and some reported state-led buying of stocks.

The Nikkei in Japan meanwhile has been the beneficiary of the exodus from Chinese shares, quite apart from its own currency weakness adding to the attraction, propelling the main index to over 40,000 for the first time.

In addition, the strength in tech shares has been an additional feature, while the latest report on GDP implied that growth could actually be revised to positive from negative, which would reverse the previous thought that Japan was actually in a technical recession.

In a well-worn repeat over recent times, UK stocks were unable to participate in the optimism being felt elsewhere, due to a combination of international investor insouciance, a lack of meaningful exposure to the technology sector and an uncertain economic outlook. The Budget, which follows later in the week, comes at an important time both politically and economically, with the possibility of some fiscal easing aimed at improving consumer sentiment generally.

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However, there are concerns that it will be interest rate cuts from the Bank of England rather than marginal tax rate reductions which are likely to be the main resuscitator of growth.

In the meantime, the FTSE250 remains down by 1.9% in the year to date, with the FTSE100 having fared only marginally better and behind by 0.8%. Despite some cautious progress among mining and oil stocks given a smattering of broker upgrades, the premier index was unable to escape the doldrums which have typically reflected investor caution over more recent times.