Wall Street shares advance as tech stocks rally

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Wall Street shares gained on Tuesday, driven by a rally in big technology stocks, while the prospect of further interest rate rises dented markets in Europe.

The tech-focused Nasdaq Composite had gained 1.1 per cent by early-afternoon in New York, rebounding from two successive days of declines. The benchmark S&P 500 added 0.8 per cent.

The indices were lifted by gains in large tech stocks, with heavyweights Tesla and Nvidia both adding 1.7 per cent, while Amazon rose 1.3 per cent. The NYSE Fang+ index, which tracks some of the biggest tech companies, gained 1.2 per cent.

The moves echoed those in Europe. The region-wide Stoxx 600 ended the day flat but was supported by a 0.2 per cent gain for the Stoxx 600 technology index. France’s Cac 40 added 0.4 per cent.

“The outperformance of the tech sector mirrors the market’s continued interest in AI and machine learning opportunities, which seem to be overshadowing the concerns over a more clouded growth outlook,” said Francesco Pesole, a strategist at ING.

The moves came as traders received fresh signals that the European Central Bank was ready to lift interest rates again this year to combat inflation. Christine Lagarde, ECB president, said its “job is not done”, and indicated there would be another rate rise in the eurozone in July. The ECB in June raised its benchmark deposit rate by a quarter point to 3.5 per cent, its highest level in 22 years.

Eurozone inflation figures due on Friday are expected to show that price growth slowed to 5.6 per cent in the year to June, down from 6.1 per cent a month earlier, according to economists polled by Reuters.

The yield on the two-year UK government bond, which is sensitive to interest rates changes, rose 0.11 percentage points to a 15-year high of 5.27 per cent.

Oil prices fell, further puncturing a shortlived rally after the weekend’s armed mutiny in Russia raised serious questions about the outlook for President Vladimir Putin’s regime and doubts over crude output from one of the world’s top suppliers.

International benchmark Brent crude traded 2 per cent lower at $72.72 a barrel while US marker West Texas Intermediate was down 1.9 per cent at $68.04.

In China, equity markets were up, with Hong Kong’s Hang Seng index rising 1.9 per cent and China’s CSI 300 gaining 0.9 per cent.

Investors welcomed the assurance that China’s officials intended to support growth in the world’s second-largest economy, which has struggled to pick up steam this year since reopening after the pandemic.

China’s premier Li Qiang gave a speech at the World Economic Forum’s Annual Meeting of the New Champions, known as the “Summer Davos”, relaying Beijing’s intentions to enact more effective policies to bolster domestic demand.

Policymakers this month cut benchmark interest rates in an attempt to stimulate growth, but economists anticipate a range of further support measures over the coming months.