Strong investor interest in AI-related stocks
BY Janne Muta, M.Sc in Finance|May 29, 2023
The US equities gained on Friday as investors kept on pouring money into the big tech names with the hope of those stocks gaining on AI-frenzy. The DJIA (Dow Jones Industrial Average) increased by 1.00%, and the S&P 500 by 1.30%. The best performer though was Nasdaq Composite which rallied 2.19%. The UK's FTSE 100 experienced a more modest increase of 0.65% while the German DAX climbed 0.98%. In commodities trading, USOIL saw a gain of 1.49%, while XAUUSD showed a smaller increase of 0.33%. In the FX market, the JPY weakened by 0.41% against the US dollar, and the Euro started to stabilise against the US dollar after a tree week downtrend. The EURUSD pair finished the day unchanged.
Nvidia's impressive rally last week has brought its market capitalization close to $1 trillion. The surge in the stock reflects the unusually strong investor interest and confidence in AI-related stocks. While valuations of AI-related companies like Nvidia, Microsoft, and Meta are relatively high compared to the S&P 500's average multiple, the US stock market isn’t yet in a bubble stage. Instead, it suggests that we may be witnessing the early stages of a major rally in AI-related stocks.
Accordion to WSJ, one factor contributing to the ongoing rally in blue-chip stocks is the limited supply of initial public offerings (IPOs). With a scarcity of opportunities in the IPO market, investors are increasingly drawn to established blue-chip companies that are leading in the AI field. This demand for AI investments has outpaced the available market cap, fueling the upward momentum in these stocks.
Dax is bullish above 15 976 and as such likely to trade up to 16 170. Below 15 976, look for a move to 15 860.
Silver is bullish above 23.00 and probably trades to 23.53 if the upside momentum is sustained. Below 23.00, a move to 22.60 looks likely.
USDJPY is bullish above 139.50 and could trade to 141.50. Below 139.50, the market probably trades down to 138.80.
NZDJPY could be turning bullish. If there’s a decisive break above 85.25, look for a move to 86.80. Otherwise, the market probably trades down to 84.20.
The Next Main Risk Events
- CHF GDP
- EUR Spanish Flash CPI
- USD CB Consumer Confidence
- AUD RBA Gov Lowe Speaks
- AUD CPI
- CNY Manufacturing PMI
- CNY Non-Manufacturing PMI
- EUR German Prelim CPI
- EUR ECB Financial Stability Review
- CAD GDP
- USD JOLTS Job Openings
- CHF SNB Chairman Jordan Speaks
- USD FOMC Member Harker Speaks
- EUR CPI Flash Estimate
- EUR Core CPI Flash Estimate
- EUR ECB President Lagarde Speaks
- USD ADP Non-Farm Employment Change
- USD Unemployment Claims
- USD ISM Manufacturing PMI
- USD ISM Manufacturing Prices
- USD FOMC Member Harker Speaks
- USD Average Hourly Earnings
- USD Non-Farm Employment Change
- USD Unemployment Rate
For more information and details see the TIOmarkets economic calendar.
Chief Market Analyst
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Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.
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