Stocks get tech sparkle; dollar steadies as investors assess rate outlook
By Amanda Cooper
LONDON (Reuters) — Global stocks rose on Thursday, powered by a rally in technology shares that pushed Japan’s Nikkei to a new 34-year high, while the dollar steadied around three-month peaks as investors assessed the chances of when U.S. rates might fall.
A warmer reading of U.S. inflation earlier this week prompted traders to cut the chances of a prompt rate cut from the Federal Reserve, which lifted the dollar and sparked a sell-off in the fixed income market.
However, with other measures of economic activity pointing to resilient U.S. growth, analysts say investors are banking increasingly on a soft landing — a gradual slowing in growth and inflation that does not result in recession.
Stocks particularly have got a boost this week and on Thursday were fired up by another scorching rally in big U.S. tech shares, which tend to be more sensitive to the growth outlook, that spread to other markets.
The MSCI All-World index, which is trading around two-year highs, was up 0.27%, while in Europe, the STOXX 600 benchmark rose 0.6%, lifted by strong semiconductor stocks and auto shares after results from carmakers Renault (EPA:RENA) and Stellantis (NYSE:STLA).
The dollar was holding around its highest in three months, buoyed by the fact that investors are banking on far fewer rate cuts this year than they were just weeks ago.
«The market is assessing the probabilities here around the rate outlook — probably a soft landing where growth is acceptable and inflation continues to converge towards 2%, I think, remains the market's base-case scenario, and our base case too,» Samy Chaar, chief economist at Lombard Odier, said.
«What has totally shifted is the fact that the inflation risk has collapsed, but the risk
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