LGT Navigator

Nvidia causes rally on Nasdaq and stock markets still hope for settlement in US debt dispute

Editorial note: Due to a holiday, the next edition of the LGT Navigator will be published on Tuesday May 30.

On capital markets, investors are still nervously waiting for progress in the dispute over raising the debt ceiling in the US. While the blue chips on Wall Street moved more or less sideways, the Nasdaq technology exchange posted solid gains, driven by a strong quarterly result and outlook from Nvidia. Meanwhile, the International Monetary Fund (IMF) expressed concerns about the ongoing dispute over raising the US debt ceiling and warned of the consequences for the world economy and global financial system in the event of a US default. 

Alessandro Fezzi, LGT
Tempo di lettura
5 minuto
© Shutterstock

The Dow Jones Industrial closed 0.11% lower than the previous day at 32'764.65 points. The S&P 500, on the other hand, rose 0.88% to 4'151.28 points. On the Nasdaq, solid quarterly earnings and a strong outlook from semiconductor company Nvidia provided tailwind. The share closed almost 30% higher. The Nasdaq 100 gained almost 2.5% and at times reached its highest level in over a year. Meanwhile, in the bond market, the yield on ten-year Treasuries rose further to 3.82%.

Meanwhile, the political wrangling in Washington over the US debt ceiling continues to weigh on investor sentiment. According to the US Treasury, there is a threat of a US default as early as the beginning of June. Most recently, the rating agency Fitch also warned that without an agreement, the US could lose its top credit rating. According to a report in the New York Times, however, progress is being made. The drafting of a bill is said to have begun. It would raise the debt ceiling for two years and limit spending in all areas except defense during that period.

According to revised data, the US economy grew slightly faster in the first quarter than previously expected. The annualised GDP growth rate was 1.3% (preliminary calculation 1.1%). However, the pace of growth slowed from 2.6% in the final quarter of 2022.

Stock exchanges in the Asia-Pacific region trended inconsistently at the end of the week. In Tokyo, the Nikkei 225 index gained just under 1% and passed the 31'000-mark, driven by the rally in the technology sector on Wall Street. On the other hand, core inflation in Tokyo rose by 3.9% in April, the highest since 1982. Mainland Chinese markets bucked the trend and slipped: The Shanghai Composite fell by 0.3% and the Shenzhen Component by 0.5%. In Hong Kong, the stock exchange remained closed for a public holiday.

Corporate news in focus: Glencore and Total Energies Annual General Meeting.

Economic data in focus: UK Retail Sales April (08:00 CET), France and Italy Consumer Confidence May (08:45 and 10:00 respectively), US Income and Expenditure April (14:30), Durable Goods Orders April (14:30) and University of Michigan Consumer Confidence May (16:00).


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.