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The week in the markets –
September 13, 2024
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Weaker inflation stats likely to mean smaller rate cuts
- Nvidia’s CEO, Jensen Huang sparked an impressive turnaround in the NASDAQ by addressing microchip supply issues at the Goldman Sachs Tech Conference.
- The European Central Bank cut rates by 25 basis points, with minimal market reaction.
- Mixed U.S. inflation results led to initial market volatility: a 25-basis-point cut now appears more likely.
On Wednesday of this week, we saw a good example of Nvidia’s influence on the market. As the NASDAQ fell by over 1%, Jensen Huang, Nvidia’s CEO, took to the stage at the Goldman Sachs Tech Conference. He said his customers were growing angry at the lack of availability of his latest microchips, the inference being that the company couldn’t meet the huge demand for its products. This triggered a wave of optimism within the tech sector, which sent the index swinging 3% upwards. Hundreds of billions of dollars were traded on optimistic (though benign) CEO statements; quite incredible. Speaking of microchips and AI, OpenAI is looking to raise US$6.5 billion, which would value the private company at US$150 billion.
The European Central Bank cut rates by 25 basis points (0.25 percentage points) this week (as expected), noting however that its growth expectations were slightly lower, while its inflation expectations were slightly higher. This is something we expect to see from many central banks over the next few months. The bank’s official statement was barely changed from its previous one, and the euro didn’t move much, as this was an expected rate cut.
The primary potential risk event of the week was the U.S. Consumer Price Index (CPI, a measure of inflation), which delivered mixed results. The core CPI month-over-month data was higher than anticipated, primarily due to unexpected increases in shelter and transport services. These factors, however, are not expected to be persistent issues. Following the data release (which strongly supported a likely 25-basis-point cut by the U.S. Federal Reserve), the dollar and treasury yields strengthened, while stocks weakened, leading to a clear flight-to-quality trade. Nonetheless, by the afternoon, these movements reversed in a clear risk-on fashion. It seems that, while some people are getting worried about the economy, others are still willing to buy the dips in quality growth stocks.
Listen to this week’s podcast for further insights.
This week's market closing value - week ending September 13, 2024
(As of 4:00 PM ET.*)
| EQUITY INDICES | Level | Change | WTD | YTD | 1-year | 5-year |
| CAD | CAD | CAD | CAD | |||
| S&P/TSX | 23,582.43 | 792.94 | 3.48% | 12.51% | 16.29% | 7.17% |
| S&P 500 | 5,625.12 | 211.59 | 4.10% | 20.87% | 26.29% | 13.85% |
| DJIA | 41,393.78 | 1,048.37 | 2.79% | 12.61% | 20.08% | 9.24% |
| FTSE 100 | 8,273.09 | 91.62 | 1.25% | 12.96% | 15.86% | 3.81% |
| CAC 40 | 7,465.25 | 112.95 | 1.64% | 1.83% | 7.03% | 6.19% |
| DAX | 18,699.40 | 397.50 | 2.27% | 14.86% | 23.70% | 8.94% |
| Nikkei | 36,581.76 | 190.29 | 1.77% | 12.17% | 17.38% | 5.47% |
| Hang Seng | 17,369.09 | -75.21 | -0.31% | 4.59% | -2.94% | -8.22% |
| CURRENCY RETURNS |
CAD | Change | WTD | YTD | 1-year | 5-year |
| US$ | 1.3590 | 0.0025 | 0.18% | 2.54% | 0.30% | 0.45% |
| Euro | 1.5054 | 0.0015 | 0.10% | 2.90% | 3.55% | 0.46% |
| Yen | 0.0096 | 0.0001 | 1.24% | 2.61% | 4.94% | -4.74% |
| CANADIAN TREASURIES | Yield | Change | COMMODITIES | USD | Change |
|---|---|---|---|---|---|
| 3-month | 4.05 | -0.02 | Oil | $69.22 | $1.12 |
| 5-year | 2.73 | -0.08 | Gold | $2,581.93 | $85.89 |
| 10-year | 2.91 | -0.06 | Natural Gas | $2.30 | $0.02 |
| CANADIAN PRIME RATE |
|---|
| 6.45% |
*The data contained in the charts above is provided by Bloomberg as of 4:00 PM ET. Please note that the final closing market values may vary due to data delays and market settlement.
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