New Zealand dollar continues to trade above 62 US cents 

Key Movers

Market sentiment is buoyed by the anticipation that the US Federal Reserve will begin easing monetary policy at its September meeting. Debates about whether the rate cut will be 25 or 50 basis points are ongoing. The decision is seen as imminent given the current inflationary environment in the US and the need to support the employment market. Economists expect the PCE, which is the Fed’s preferred measure of inflation, to show that inflation edged up to 2.6% in July from 2.5% in June. It was as high as 7.1% in the middle of 2022. The rate of inflation has been easing steadily back toward the central bank’s target of 2% since then, following the Fed’s aggressive interest rate hikes.

The S&P 500 fell 1% overnight with more than 70% of the stocks in the benchmark index in the red. The Dow Jones fell 351 points, or 0.9%. The index is coming off two consecutive all-time highs. The Nasdaq composite fell 1.6%. Software company, Nvidia, reported its latest financial results on Wednesday, recording $30.04bn in revenue over the past three months, a 122% jump from the year prior, and showing that artificial intelligence investment mania shows no signs of cooling. The importance of Nvidia’s earnings results to Wall Street can hardly be overestimated, the company represents 6% of the total value of the S&P 500, currently the third most valuable company in the world by market capitalisation at $3.1tn. The company’s last earnings, released in May, showed quarterly growth of 18% and annual revenue growth of 262%.