Morning Wrap (25.05.2023)

Nvidia may be ahead of the significant surge in its market value as the company showed an optimistic outlook driven by the high demand for chips used in artificial intelligence applications. The semiconductor giant, with the largest market capitalization globally, saw its stock soar by up to 29% in after-market trading on Wednesday. If this gain holds, Nvidia's value would rise by $219 billion, reaching an unprecedented peak of $974 billion.

The US500 futures decreases around 0.3% and US100 gains more than 0.1% in early trading. Yesterday's downturns were significantly reduced after Nvidia's earnings

The Australian market is significantly lower, extending losses from previous sessions. The benchmark S&P/ASX 200 falls below the 7,200 level, with most sectors witnessing losses, particularly in mining and energy stocks due to tumbling commodity prices. 

The Japanese stock market recovers from previous losses, with the Nikkei 225 just below the 30,800 level. Strong gains in the technology sector contribute to the recovery, although other sectors still face losses.

Gold initially gained but after concerns about a weaker Chinese economy later lost its momentum when the US dollar reversed its course and strengthened against the yen.

According to the Fitch Ratings from yesterday, greater chances that the debt ceiling will not be raised or suspended. As a result, the nation's AAA credit rating may be downgraded to reflect the deepening political impasse impeding a compromise to resolve the country's debt-ceiling situation. Fed's Bostic said that failing to achieve 2% inflation is more problematic for the economy and the Fed does not want to be trapped into a specific rate path. He expects to see labor-market stress when inflation eases to target. According to him, the best-case scenario is that the Fed will not consider a rate cut until well into '24.

Bank of Korea Governor Rhee said that a fast rate cut could cause financial instability. Concern has grown about whether inflation would achieve the 2% target before the end of the year. According to him 6 members are willing to accept 3.75% as a terminal rate.In the UK, there have been three consecutive instances of unexpectedly high inflation data, which may provide a compelling case for the Bank of England (BoE) to consider a 50 basis point hike next month. Now, the forecast for the June meeting maintains a 25 basis point hike.

The cryptocurrency market experienced another downturn, with BTC dropping to 26.2K and ETH falling below the psychological level of 1,800.

Bitcoin is currently trading at 26.2 dollars, and the price is approaching a critical level. If it breaks below this level, it may face additional downside pressure. Traders should closely monitor the price action for a potential continuation of the downward trend. On the other hand, if Bitcoin manages to hold above 26.2 dollars, there is a possibility of a rebound, potentially targeting the 26.8k level.