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Global market update: APAC shares mixed, Dow resets records as tech dips

Published 17/07/2024, 11:13 am
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Investing.com - Shares across the Asian-Pacific were mixed on Wednesday, with the Dow climbing to new peaks overnight, while technology stocks lagged behind.

By 11:10 am AEST (1:10 am GMT) the S&P/ASX 200 added 0.7%, the KOSPI 200 fell 0.4% and the Nikkei 225 gained 0.5%.

Key US stock indexes hit new highs on Tuesday, with smaller companies continuing to outshine the large tech firms.

The S&P 500 experienced a 0.6% rise, marking its 38th record close this year. The Dow Jones Industrial Average also reached an all-time high, posting a 1.8% increase, its largest single-day percentage gain since June 2023. Meanwhile, the NASDAQ Composite saw a modest 0.2% rise.

Investors have recently shifted their focus from AI-centric tech giants, which dominated the first half of the year, to sectors that had been underperforming, such as industrials and smaller companies.

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The Russell 2000, an index of small-cap stocks, rose 3.5% on Tuesday, marking its fifth consecutive day of gains. The index has outperformed the Nasdaq Composite by roughly 11 percentage points over the last five trading days, the most significant degree of outperformance since December 2020.

This movement towards previously underperforming market segments reflects growing confidence that the Federal Reserve may begin reducing interest rates in September as inflation slows. Traders are forecasting an almost guaranteed rate cut in September, a significant increase from the 73% probability estimated a week ago.

Investors are also adjusting their expectations for the 2024 election following an assassination attempt on Republican presidential nominee Donald Trump. As the former president favors policies like tax cuts, which could stimulate spending and boost the economy, bets on his election victory have increased.

The benchmark 10-year US Treasury yield dropped to 4.168% on Tuesday from 4.231% on Monday in response to growing expectations of a Trump election victory.

In economic news, June retail sales data indicated resilience among American consumers, with spending remaining unchanged from the previous month, contrary to economists' expectations of a 0.4% decline.

Several strong earnings reports also helped boost stocks. Unitedhealth Group (NYSE:UNH) rose 6.5% after reporting better-than-expected earnings and revenue.

Bank of America Corp (NYSE:BAC) jumped 5.3% after exceeding Wall Street estimates and predicting an improvement in lending income in the second half of the year.

However, Charles Schwab Corp (NYSE:SCHW) shares declined by 10% as the company reported a decrease in bank deposits and net interest revenue.

In commodities, Brent crude oil fell by 1.2% to US$83.85 a barrel, and gold dropped by 0.1% to US$2,467.24.

Chinese shares ended the day higher, led by semiconductor and software stocks, while Hong Kong shares closed lower. Japanese stocks rose, driven by gains in defense and financial stocks, and Indian shares edged higher as tech sector gains offset power stocks' weakness.

In Europe, UK stocks slipped with the FTSE 100 Index falling by 0.2% to 8164.90. Other European markets also closed lower, with the STOXX Europe 600 Index down by 0.3% to 517.30, Germany's DAX slipping by 0.4% to 18,518.03, and France's CAC 40 falling by 0.7%.

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