- US indices rally driven by mega-cap tech gains
- All eyes turn to Friday’s inflation read-out
- FTSE 100 expected to open marginally up
- Asia Pacific markets mixed amidst rising political tensions
- Brent crude back under $78
- Petrofac and Hitachi land €13bn offshore wind framework
Strong Performance In Mega-Cap Tech Stocks
All of the major US indices closed up on Wednesday, including the S&P 500 which breached 4,000 points, closing at 4027.81. That’s a gain of 1.4% and a three-week high. The NASDAQ composite had an even better day, up 1.8% to 11,926.24.
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The rally was driven by a strong performance in mega-cap tech stocks with strong rises from Tesla Inc (NASDAQ:TSLA) (2.5%), NVIDIA Corporation (NASDAQ:NVDA) (2.2%), Apple Inc (NASDAQ:AAPL) (2%), Microsoft Corp (NASDAQ:MSFT) (1.9%) and Amazon.com, Inc. (NASDAQ:AMZN) (3.1%). Two-year treasury yields were broadly unchanged after the recent fall in bond prices and remain over 4%.
All eyes are now on tomorrow’s core Personal Consumption Expenditure (PCE) Price Index read-out which could derail hopes of a pause in rate rises by the fed.
Trading in Asia Pacific markets has been mixed overnight. In Australia the S&P/ASX 200 hit a two-week high up 0.85%, helped by gains of 2.4% and 1.6% respectively in mining giants BHP Group Ltd (NYSE:BHP) and Rio Tinto plc (NYSE:RIO). The island nation’s four biggest banking stocks, which have been impacted by the recent turmoil in the US and Europe, were also all up on the day.
The FTSE 100 Is Expected To Tick Up
Chinese indices came under pressure with tensions mounting over diplomatic ties with the west. China has threatened retaliation if Taiwan President Tsai Ing-wen meets US House Speaker Kevin McCarthy as part of an American visit this week.
In Hong Kong, despite a positive market reaction to Alibaba Group Holding Ltd (NYSE:BABA)’s restructuring, the Hang Seng was down 0.5%. In Japan the Nikkei was down 0.8% following a good run earlier in the week.
Korea’s tech dominated KOSPI index fared better, up 0.5% enjoying the tailwinds from Wall Street’s rally. In London the FTSE 100 is expected to tick up about 16 points when the opening bell rings.
Brent crude prices have pulled back by 0.4% to under $78 per barrel, reflecting weak demand for diesel in the US.
Petrofac's Largest Ever Framework Agreement
On a quiet day for corporate news, Petrofac Limited (LON:PFC) has announced its largest ever framework agreement. Its partnership with Hitachi, has been awarded €13bn of contracts by TenneT as it works to expand offshore wind capacity in the Dutch-German North Sea.
We are impressed by Petrofac’s continuing move into New Energy with oil-field services having underperformed of late. How the financial spoils are divided remain to be seen, and we would like to see more details on contract margin which has been an issue in recent times.
Nonetheless today’s news should bring some cheer to shareholders who have seen the share price halve over the last six months.
Article by Derren Nathan, head of equity research, Hargreaves Lansdown
