All-time highs everywhere (or almost)

• Nvidia's earnings forecast surpassed expectations, driving a significant rally in its stock and boosting global markets.
• Major policy shifts anticipated in Japan with the end of negative interest rates and yield curve control.
• Canadian inflation data suggested potential for early interest rate cuts by the Bank of Canada, contrasting with the U.S. Fed's cautious stance.

U.S. equity markets saw a sharp rise on Thursday after a softer start to the week. Everyone was worried about the Nvidia results on Wednesday after close, and the suspense was killing the mood, until the numbers finally came out for the most important stock in the market right now. And it was party time. Especially impressive was the earnings forecast, which was $2 billion higher than expected, aiming for $24 billion in revenue for the next quarter. This boost didn't just propel Nvidia's stock but also sparked a broader rally across tech stocks and global markets, making Nvidia the world's most valuable chipmaker. Its market value shot up by more than $250 billion in one day of trading, setting a new record that eclipsed Meta's $197 billion one-day increase a few weeks earlier.

While the tech sector was having fun, bond yields climbed unnoticed: the 10-year yield hit a new high for 2024. Global stock markets, like Japan's Nikkei and Europe's Stoxx 600, hit new highs, showing they could withstand the pressure from rising yields.

In Japan, a significant monetary policy change is on the horizon. Over 80% of economists believe the Bank of Japan will end its negative interest rate policy in April and do away with yield curve control. This marks a major shift from the extended period of very loose monetary conditions, happening as other major central banks plan to cut rates.

Nvidia's earnings news overshadowed other developments, including the U.S. Federal Reserve's recent meeting minutes, which revealed a cautious approach to cutting interest rates too soon. This is nothing we haven’t been hearing from them for weeks now. This side of the border, after the U.S. reported higher than expected inflation rates, Canada's latest CPI data came as a pleasant surprise. Could the Bank of Canada end up having an easier time cutting interest rates than the U.S. Federal Reserve? With the Canadian headline CPI at 2.9% and core metrics coming in lower than anticipated, it looks like the Bank of Canada is right on track with its targets. This could mean rate cuts happening sooner than many previously thought. It's good news for Canada, because a slow economy and high inflation are a bad mix nobody wants. This situation really shows how differently the Bank of Canada and the U.S. Federal Reserve could eventually end up handling their monetary policies. So far, the market still mostly treats these two as a single unit.

Finally, news out of China. As its annual parliamentary meeting nears, leaders face significant pressure to adopt bold policies to ensure long-term economic growth amid slowing growth and deepening deflation concerns. In response, Chinese authorities have tightened market regulations to stabilize the market (especially against short selling), a move reminiscent of the 2015 financial crisis efforts to control market turmoil.

Listen to this week’s podcast for further insights.