Dow Tops 45,000 While Tech Stocks Fuel Market Rally to All-Time Highs | Daily Market Analysis

Key events:

• USA - Initial Jobless Claims

The S&P 500 and Nasdaq continued their upward momentum on Wednesday, achieving record-high closes for the third consecutive session. Gains in the technology sector primarily drove this rally, as market participants interpreted Federal Reserve Chair Jerome Powell's remarks as signaling a cautious but stable approach to monetary policy. Powell refrained from suggesting any imminent risk to a potential December rate cut, keeping investors optimistic.

By the session's end, the S&P 500 climbed 0.4% to a new record high, while the Nasdaq Composite also gained 1%, setting another all-time high. Meanwhile, the Dow Jones Industrial Average advanced 181 points, or 0.40%, closing above the 45,000 mark for the first time, marking a historic milestone.

In the foreign exchange market, the Japanese Yen retained its strength against the US Dollar during the Asian trading hours on Thursday. However, gains remained capped due to mixed economic signals. While the Bank of Japan maintained a dovish stance, supported by remarks from board member Toyoaki Nakamura, signs of rising inflation in Japan suggested that a December rate hike might still be possible. Additionally, ongoing geopolitical uncertainties and concerns about potential tariffs from the US continued to provide support for the safe-haven JPY.

The USD/JPY pair saw limited movement as traders balanced the Fed's cautious approach with Japan's inflationary signals. The modest rebound in US Treasury yields further restrained the Yen's rally, as higher yields tend to strengthen the Greenback.

The Australian Dollar faced selling pressure, influenced by disappointing domestic economic data and rising expectations for an early interest rate cut by the Reserve Bank of Australia. Australia's GDP grew by 0.3% in the third quarter, falling short of market expectations of 0.4%. Additionally, while the trade surplus expanded more than anticipated, it wasn't enough to offset concerns about sluggish economic growth.

Similarly, the New Zealand Dollar experienced volatility. The NZD/USD pair recovered slightly during the Asian session, trading near 0.5865, as the USD softened marginally. However, expectations for further monetary easing by the Reserve Bank of New Zealand weighed on the Kiwi. RBNZ Governor Adrian Orr hinted at the possibility of additional rate cuts, with traders pricing in a 68% chance of a 25-basis-point reduction in February 2025.

Gold prices remained under pressure during the Asian session on Thursday, constrained within a narrow trading range. The precious metal struggled to gain traction as mixed signals from global central banks left investors uncertain. Hawkish comments from Federal Reserve officials, including Powell, reinforced expectations that the Fed would approach further rate cuts cautiously. This led to a rebound in US Treasury yields, which undermined demand for non-yielding assets like gold.

Despite these headwinds, geopolitical risks and a weaker economic outlook in some regions provided a floor for gold prices, as investors continued to seek safe-haven assets.

Investors are closely monitoring upcoming data releases, including the US ADP Employment Change report, S&P Global Services PMI, and the Fed’s Beige Book. Powell's remarks during the Fed's midweek address further highlighted the resilience of the US economy, which has outperformed expectations in recent months. The Beige Book survey indicated slight economic growth in November, with businesses expressing optimism about future demand.

Overall, Wednesday's trading session reflected a balanced mix of optimism and caution. While equity markets celebrated record highs, currency and commodity markets exhibited more subdued movements as traders weighed economic data, geopolitical developments, and central bank policies.

The Federal Reserve's steady approach and resilient economic indicators in the US have buoyed investor confidence, yet uncertainties surrounding global growth and political tensions keep market participants on edge. As the week progresses, the focus will remain on key data releases and developments, particularly those that could influence central bank decisions moving into 2025.