Wall Street technology stocks hit a record high for the third consecutive trading day after the U.S. central bank’s tough stance reduced the attractiveness of industries that are more sensitive to economic growth, such as energy and banking.

The Nasdaq Composite Index rose 0.9% in early trading in New York on Thursday, and shares of electric car maker Tesla and home fitness group Peloton rose more than 4%. The broader Standard & Poor’s 500 index rose 0.7% and also hit a record high.

Fed officials last week advanced their forecasts for the first interest rate hike after the pandemic by one year to 2023.Federal Reserve Chairman Jay Powell then eased the initial market turmoil this week Dovish guarantee There are still great obstacles to tightening monetary policy.

Investors also Adjusted their portfolio Since drugmakers announced an effective Covid-19 vaccine in November last year, industries such as energy and banking have become less dependent on economically sensitive “value” stocks, which have been dominating stock market growth.

CPR Asset Management strategist Bastien Drut (Bastien Drut) refers to the length of time between recovery from the shock of the pandemic and the next recession. He said: “The market has digested a relatively A shorter economic cycle.”

The valuations of technology stocks and other so-called growth companies’ stocks are affected by estimates of profits for a long time in the future. They are also flattered by the decline in long-term government bond yields, which determines that investors will pay the company in cash. How much flow.

Fed officials’ forecasts last week pushed down the price of 5-year Treasury bonds and raised the price of 30-year Treasury bonds. The yield on the 30-year U.S. Treasury note, which is inversely proportional to the price, fell to 2.09% from more than 2.2% last Wednesday.

Roger Lee, a strategist at Investec, said: “The magnitude of this particular trend in growth stocks is very large.”

In other aspects of the market, after the Bank of England stated that its monetary policy during the pandemic was “still appropriate”, the pound-euro exchange rate fell from its highest level since early April.

Prior to Thursday’s Bank of England monetary policy meeting, the pound exchange rate was 1.17 euros, which fell 0.4% against the euro to 1.1649 euros. The British pound also fell 0.4% to 1.3896 US dollars against the US dollar.

Some analysts had predicted that the Bank of England would follow the Federal Reserve and signal interest rate hikes after the economic growth rebounded. inflation Exceeded the Bank of England’s target.

However, the Bank of England stated in its statement that the country will “go through a short period of strong GDP growth and CPI inflation above the target, after which growth and inflation will fall back”.

The FTSE 100 index rose 0.6%, with exporters benefiting from a weaker pound.

The yield on 10-year British government bonds, which is inversely proportional to price, fell by 0.03 percentage points to 0.750%.

In Europe, after the Ifo Institute’s business climate index climbed from 99.2 last month to a higher-than-expected 101.8 in June, the Stoxx Europe 600 stock index rose 0.9%, highlighting the optimism of the bosses of companies in the euro zone’s economic powerhouses.

The international oil benchmark Brent crude oil rose 0.3% to US$75.39 per barrel.

Unhedged-markets, finances and strong opinions

Robert Armstrong analyzed the most important market trends and discussed how the best people on Wall Street respond to these trends.registered Here Send the newsletter directly to your inbox every business day

Source link