Key Points
- Nasdaq 100 futures is up 0.8%, and Broadcom gained 17.46% in premarket trading, nearing a $1 trillion valuation.
- Semiconductor peers, including Marvell Technology, Micron Technology, Nvidia, and AMD, also saw gains.
- The Federal Reserve will announce a 0.25% rate cut next week.
- The British pound weakened while the euro gained on economic and policy news.
US equity futures signaled a robust end to the trading week as Broadcom Inc.’s premarket rally fueled widespread gains in the chip technology sector. Nasdaq 100 futures rose by 0.85% or 184.50 to 21,835.75, driven by Broadcom’s near surge by 17.46% or 31.54 to 212.20, following its prediction of a significant increase in demand for artificial intelligence chips.
Should these gains persist, Broadcom is poised to reach a record high and edge closer to a $1 trillion market capitalization. Other semiconductor companies, including Marvell Technology (7.27%), Micron Technology (2.58%), Nvidia (1.70%), and AMD (1.36%), also saw premarket increases.
Investor sentiment was further boosted by expectations of an interest rate cut, with the Federal Reserve likely to implement a quarter-point reduction next week. Timothy Graf of State Street Global Markets highlighted the strength of the US economy and a pro-corporate incoming administration as driving factors behind the rally, suggesting it has room to extend further.
Currency markets saw mixed movement. The British pound weakened after data revealed an unexpected contraction in the UK economy for the second consecutive month in October. Conversely, the euro gained strength as the European Central Bank adopted a less dovish stance on interest rates, causing traders to scale back expectations of policy easing next year. The US dollar remained steady, poised for a second week of gains. Analysts predicted further strength due to a potentially shallow Federal Reserve easing cycle compared to Europe’s weaker economic growth.
Asian markets faced challenges after China’s key economic meeting, which offered vague pledges to boost consumption without detailing fiscal stimulus. Investor disappointment contributed to the global stock index’s worst week in a month, while European shares were mixed.
Chinese 10-year government bond yields fell below 1.8% for the first time, following promises to cut policy rates and reserve ratios. Despite underwhelming news, Chinese stock funds attracted $5.6 billion in inflows over the past week, reflecting optimism about future policy support.