At the end of trading on Friday, the financial landscape reflected significant shifts, particularly influenced by advancements in artificial intelligence and varied economic indicators. The Dow Jones Index (US30) experienced a decrease of 0.20%, closing the week down by 1.83%. In contrast, the S&P 500 Index (US500) remained unchanged for the day and recorded a weekly decline of 0.52%. However, the Nasdaq Technology Index (US100) stood out with a 0.76% rise on the day, culminating in a notable weekly increase of 0.96%, reaching a new record high.

This surge in the Nasdaq was largely propelled by investor excitement surrounding the technology sector, particularly artificial intelligence. Shares of Broadcom (AVGO) soared by an impressive 19% after the company reported earnings that surpassed expectations, as well as a striking 220% increase in AI-related annual revenue. This strong performance highlights the escalating demand for artificial intelligence chips amid increasing capabilities and applications in various sectors. Broadcom's results had a positive ripple effect, boosting other semiconductor stocks such as Nvidia, which rose by 1.2%, and Micron Technology, which saw a 2.7% increase.

In the currency markets, the Canadian dollar fell to 1.42 per USD, marking its lowest point since March 2020. This decline followed a dovish stance from the Bank of Canada (BoC), which recently cut its key benchmark interest rate by 50 basis points to 3.25%. This decision came in response to rising unemployment rates and slower-than-expected economic growth, aiming to bolster the Canadian economy by making borrowing cheaper.

Meanwhile, European financial markets reflected a predominantly negative sentiment on Friday. Germany's DAX (DE40) dipped slightly by 0.01%, with a weekly decline of 0.27%. France's CAC 40 (FR40) fell by 0.15% (weekly -1.00%), Spain's IBEX 35 (ES35) decreased by 0.11% (weekly -2.82%), and the UK's FTSE 100 (UK100) registered a 0.14% drop (weekly -0.10%). Compounding these market pressures, Moody's downgraded France's credit rating from 'Aa2' to 'Aa3', pointing to concerns that political fragmentation could critically weaken the country’s public finances. Following this rating adjustment, French President Emmanuel Macron nominated Francois Bayrou as the new Prime Minister, which may help alleviate some of the political risks affecting French assets.

In the UK, economic data indicated a contraction of 0.1% in October's GDP, contrary to expectations of a 0.1% increase. This marked the second consecutive monthly decline, disappointing moderate growth forecasts and potentially fuelling speculations around an earlier rate cut by the Bank of England next year.

Global commodities also witnessed activity, with WTI crude oil prices climbing by 1.8% to settle at $71.30 per barrel — the highest price point since November 7. This rise can be attributed to tightening global supplies and increasing fuel demands, buoyed by expectations of sanctions against Russia and Iran, as well as more lenient interest rates anticipated in both the US and Europe. In addition, supportive measures for the Chinese economy are contributing to overall market strength.

On the energy front, US natural gas prices fell to $3.30 per million British thermal units (MMBtu), cooling off from a 13-month high as producers increased supply in anticipation of greater winter demand and increased exports from liquefied natural gas plants.

Asian markets exhibited mixed results last week. The Nikkei 225 index in Japan recorded a modest increase of 0.35%, while the FTSE China A50 index declined by 0.79%. Hong Kong’s Hang Seng index noted a gain of 1.21%, nevertheless, Australia’s ASX 200 fell by 1.48%.

Economic indicators from China suggest impending monetary easing, as the director of the People’s Bank of China's (PBoC) research bureau indicated that the country would implement interest rate cuts and lower reserve requirements next year. In November, Chinese banks issued only 580 billion yuan in new loans, significantly below the expected 950 billion yuan and less than half compared to the same period last year. This decline signals weak credit demand within the country, leading authorities to widen the budget deficit, increase debt issuance, and adopt looser monetary policies to stabilise economic growth.

Overall, these developments across various markets indicate a complex interplay of factors influencing both equity and commodity investments while also highlighting the growing significance of artificial intelligence in driving technological advancements.

Source: Noah Wire Services