Wall Street climbs on tech rally and hopes of Fed rate cut

Wall Street opened the week mostly higher, with the S&P 500 moving 0.45% higher and the Nasdaq rising more than 0.80% to fresh record levels, while the Dow Jones Industrial advanced slightly by 0.09%. Investors focused on Wednesday’s Federal Reserve meeting, with markets largely pricing in a 25-basis-point cut to the federal funds rate, though a slim possibility of a 50-point move remains.

On the corporate front, Tesla surged 3.70% after CEO Elon Musk disclosed a nearly $1 billion stock purchase, marking his largest open market buy to date. Alphabet gained 3.90%, lifting its valuation to $3 trillion and bolstering the communication services sector. Nvidia pared losses after Chinese regulators ruled the company breached anti-monopoly laws, while Texas Instruments fell 3.10% amid a Chinese anti-dumping investigation into US analogue chipmakers. Trade tensions remained in the background, with progress reported in US-China talks, including a potential TikTok-related agreement.

European stocks opened the week on a firmer footing, with the STOXX 50 up 0.90% and the STOXX 600 advancing 0.40%. Focus also remained on France after Fitch downgraded the country’s credit rating on Friday, citing rising debt, political strains and a weaker fiscal outlook. The euro remained resilient despite the downgrade, rising 1.24% to trade at 1.17 against the dollar.

Luxury shares bucked the trend, supported by JPMorgan’s positive sector outlook and speculation over a potential Armani sale. In London, the FTSE 100 lagged its European peers, weighed down by pharmaceuticals and biotech losses. AstraZeneca fell 3.40% after pausing a £200m Cambridge expansion, GlaxoSmithKline slipped 1.50%, and BT shed more than 2%. Sainsbury’s provided relief, rallying 3.50% to a four-year high after walking away from talks to sell Argos. UK inflation figures, due Wednesday, are forecast to remain at 3.80% year-on-year, the highest in 18 months.

Asian markets were mixed as investors also await the Fed’s decision. Japan’s Nikkei 225 rose 0.89% to 44 768.12, while Hong Kong’s Hang Seng added 0.24% to 26 451.21, boosted by renewed interest in technology stocks. China’s Shanghai Composite slipped 0.32% to 3 858.37, weighed down by disappointing retail sales and property data, though optimism around US rate cuts lent support.

In South Africa, the 10-year government bond yield fell to around 9.20%, its lowest since January, as expectations of US rate cuts increased demand for emerging-market assets. Local bonds remain attractive due to credible monetary policy, a fairly valued rand and high real yields, with inflation anchored near the lower end of the SARB’s target range. The SARB is widely expected to keep its benchmark rate at 7% on 18 September, aiming to manage price pressures and gradually guide expectations towards a 3% target. The rand firmed to 17.35 against the dollar, supported by stronger precious metals prices and a softer greenback. The JSE All-Share Index closed 0.72% higher at 104 675.38, with the Top 40 advancing 0.79%. 

Gold climbed to a record high of USD 3 679.62 per ounce, extending its rally with a 10.26% gain over the past four weeks and a 42.21% increase over the past year. Futures hit an all-time peak of USD 3 680 on Monday, supported by a weaker US dollar and declining treasury yields. Brent crude oil rose 0.69% to $67.45 per barrel.