Tech Surge, AI Boost, and Global Currency Trends Drive Sentiment | Daily Market Analysis

Key events:

• USA - Initial Jobless Claims
• USA - US President Trump Speaks
• USA - Crude Oil Inventories

The S&P 500 inched closer to its all-time high on Wednesday, buoyed by a tech-driven surge led by Netflix and a rally in AI stocks following US President Donald Trump’s announcement of a $500 billion initiative to bolster domestic AI development.

The S&P 500 rose 0.6%, ending just shy of its previous record close of 6,090.27, while reaching an intraday high of 6,100.81. The NASDAQ Composite gained 1.3%, fueled by tech momentum, and the Dow Jones Industrial Average added 0.3%, or 130 points.

Netflix (NASDAQ: NFLX) led the tech rally, surging nearly 10% after the streaming giant reported a record-breaking addition of 19 million subscribers in the fourth quarter of 2024. This figure significantly exceeded analysts’ forecasts, driven by blockbuster content releases and the introduction of regionally customized programming that resonated with a global audience.

The company also announced price increases for most subscription tiers in markets including the US, Canada, Portugal, and Argentina, citing ongoing investment in high-quality programming. This strategic move is expected to bolster revenue growth despite potential concerns over subscriber churn.

The Japanese Yen continued to weaken against the US Dollar for the second consecutive day, hitting a one-week low during Asian trading hours. While stronger-than-expected Japanese trade balance data initially supported the Yen, a broadly bullish sentiment in global markets and a modest uptick in US Treasury yields weighed on the currency.

Despite this downward pressure, the Yen’s losses remain limited as markets brace for the Bank of Japan’s anticipated interest rate hike at the conclusion of its two-day policy meeting on Friday. Meanwhile, expectations for the Federal Reserve to lower interest rates twice this year could cap further USD gains, creating a tug-of-war between these major central bank policies.

The Australian Dollar held steady against the USD on Thursday, benefiting from news that US President Donald Trump’s revised China-specific tariff plan would be less severe than previously feared. This eased concerns in Australia, given its strong trade ties with China, and helped offset declines in domestic mining stocks caused by falling commodity prices.

In China, government measures to stabilize equity markets - including enabling pension funds and insurers to increase equity investments - further calmed investor nerves. The People’s Bank of China also pledged to expand liquidity tools to support share purchases, signaling a commitment to bolstering market confidence.

Despite positive developments from Wall Street, the S&P/ASX 200 Index fell to 8,400 on Thursday, weighed down by weaker commodity prices. Investors remained cautious as they analyzed the broader implications of Trump’s revised trade policies.

The GBP/USD pair remained subdued during Asian trading on Thursday, hovering around 1.2320. Sterling faced ongoing pressure from weaker-than-expected UK inflation and retail sales data, as well as lackluster labor demand and GDP growth figures.

The data reinforced market expectations of a 25 basis-point interest rate cut by the Bank of England in February, with the likelihood of rates being reduced to 4.5%. The dovish outlook for the BoE continues to weigh on the Pound, limiting its potential for recovery in the near term.

The EUR/USD pair also faced mild losses, trading near 1.0410 as markets reacted to President Trump’s threat to impose 25% tariffs on the European Union, Canada, Mexico, and China. Concerns over a potential Eurozone economic slowdown and the uncertainty surrounding tariff negotiations added downward pressure on the shared currency.

The European Central Bank is widely expected to deliver further monetary easing, with analysts predicting 25 basis-point rate cuts in the coming months. ECB policymakers, including President Christine Lagarde, have signaled support for additional stimulus measures to counter economic headwinds. These dovish expectations could further undermine the Euro against the US Dollar.

As markets digest President Trump’s aggressive trade policies and their global implications, central bank decisions remain a focal point for investors. The interplay of easing measures in Europe, potential rate hikes in Japan, and the Fed’s projected cuts will continue to shape currency dynamics in the months ahead.