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Key takeaways

New record highs for stock markets in the US, Europe and Japan last week, were spurred on by investor enthusiasm for Artificial Intelligence (AI), offsetting concerns around ongoing indications from central banks that they will not be rushing to cut interest rates.

  • The importance of the shares of semiconductor heavyweight Nvidia is evidenced by its weighting in key stock market indices, but also its importance within AI. After the close of stock-market trading last Wednesday, the chipmaker reported strong quarterly revenue and earnings that exceeded expectations, topping Wall Street estimates. The company also increased its full-year guidance based on robust demand for its chips, which are used in artificial intelligence applications. Overall, the technology sector is seeing strong growth in earnings which continues to fuel the share-price rally in the sector.
  • Turning to central bank policy, there were more indications from major central banks that they are not rushing to cut interest rates. The minutes from the last meeting of the US central bank (the Fed) reiterated that it is seeing progress in reducing inflation, but wants more evidence that this will be sustained. Speeches by Fed officials suggest the bank is wary about moving too quickly to cut rates with recently released stronger economic activity data providing the Fed with the flexibility to remain on the sidelines. A similar sentiment was echoed by the European Central Bank, with the minutes from its last meeting indicating a wariness of cutting rates too early while the labour market remains robust. This is a reminder that there is still some way to go in terms of actually seeing rate cuts with market expectations becoming more tempered as a result.
  • Elsewhere, in China the country’s domestic banks cut their mortgage reference rate by a record 0.25% to 3.95%. The cut was aimed as a signal to the market that the country is increasing support for its flailing property sector. With confidence amongst property buyers depressed, though it is unclear whether the support will be enough. Home prices continued to fall in January. Meanwhile, total domestic tourism spending over the Lunar New Year holiday period looks to have surged relative to the 2023 holiday period, however, 2023 was a low base as it was impacted by the COVID lockdowns.

Weekly market moves

  • A better-than-expected earnings report from semiconductor manufacturer Nvidia drove a rally in global shares, with new record highs in the US, Europe and Japan. While the rally was heavily concentrated in the technology sector, its effects were also felt in stock markets more broadly.

  • Bond yields fell marginally (bond prices, which move in the opposite direction to yields, rose), the price of gold increased, and the oil price weakened.

What to look out for this week

  • The focus this week will be on a number of inflation data releases including in the US, Europe and Japan.

  • Otherwise, several economic activity indicators will be released for key economies, including PMI gauges in China, which will be of particular interest since they take into account the impact of the Lunar New Year holiday.

Important Information

Handelsbanken Wealth & Asset Management Limited is authorised and regulated by the Financial Conduct Authority (FCA) in the conduct of investment and protection business, and is a wholly-owned subsidiary of Handelsbanken plc. For further information on our investment services go to wealthandasset.handelsbanken.co.uk/important-information. Tax advice which does not contain any investment element is not regulated by the FCA. Professional advice should be taken before any course of action is pursued.

All commentary and data is valid, to the best of our knowledge, at the time of publication. This document is not intended to be a definitive analysis of financial or other markets and does not constitute any recommendation to buy, sell or otherwise trade in any of the investments mentioned. The value of any investment and income from it is not guaranteed and can fall as well as rise, so your capital is at risk.

We manage our investment strategies in accordance with pre-defined risk objectives, which vary depending on the strategy’s risk profile.

Portfolios may include individual investments in structured products, foreign currencies and funds (including funds not regulated by the FCA) which may individually have a relatively high risk profile. The portfolios may specifically include hedge funds, property funds, private equity funds and other funds which may have limited liquidity. Changes in exchange rates between currencies can cause investments of income to go down or up.

This document has been issued by Handelsbanken Wealth & Asset Management Limited. For Handelsbanken Multi Asset Funds, the Authorised Corporate Director is Handelsbanken ACD Limited, which is a wholly-owned subsidiary of Handelsbanken Wealth & Asset Management, and is authorised and regulated by the Financial Conduct Authority (FCA). The Registrar and Depositary is The Bank of New York Mellon (International) Limited, which is authorised by the Prudential Regulation Authority and regulated by the FCA. The Investment Manager is Handelsbanken Wealth & Asset Management Limited, which is authorised and regulated by
the FCA.

Before investing in a Handelsbanken Multi Asset Fund you should read the Key Investor Information Document (KIID) as it contains important information regarding the fund including charges and specific risk warnings. The Prospectus, Key Investor Information Document, current prices and latest report and accounts are available from the following webpage: wealthandasset.handelsbanken.co.uk/fund-information/fund-information/, or you can request these from Handelsbanken Wealth & Asset Management Limited or Handelsbanken ACD Limited: 77 Mount Ephraim, Tunbridge Wells, Kent, TN4 8BS or by telephone on
+44 01892 701803.

Registered Head Office: No.1 Kingsway, London WC2B 6AN. Registered in England No: 4132340

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