Nikkei Tops 40,000; Tokyo Electron Surges Amid AI Boom

Equities

In the UK, the FTSE 100 index closed 0.7% higher on Friday, reflecting positive momentum across global markets, buoyed by easing inflation concerns in the United States.

ITV stood out with a notable jump of 14.3% after it announced the sale of its entire 50% stake in BritBox International to BBC Studios for £255 million. This move signals ITV's strategic shift and capital realisation from its investment in streaming services. Pearson also saw its shares rise by 5.6% following the company meeting its operating profit expectations for 2023.

Across the pond in the US, the S&P 500 index hit a record high, up 7.7% for the year, amid the AI-driven enthusiasm boosting tech and growth stocks. However, it's the value stocks in sectors like industrials, materials, and consumer discretionary that caught investors' eyes with notable gains. General Electric and Howmet Aerospace led the industrials with a 7.1% rise last month, while Vulcan Materials and Ecolab spearheaded the materials sector's 6.7% increase. Consumer favourites like Chipotle Mexican Grill and Ralph Lauren contributed to the consumer discretionary sector's nearly 9% surge.

Forex & Commodities

The US dollar saw limited movement, staying within a tight range due to lower Treasury yields as the market awaits further economic data and Federal Reserve's indications on interest rate cuts. The British pound made slight gains, rising 0.08% to $1.2663. In the cryptocurrency space, Bitcoin reached a two-year high, driven by significant inflows into exchange-traded funds.

Gold prices hovered close to a two-month peak, with investors anticipating a potential interest rate cut by the Federal Reserve in June, following softer US economic data. The price of gold was close to its highest since late December, with a notable increase last week spurred by expectations of easing monetary policy.

Oil prices edged up after OPEC+ agreed to extend voluntary output cuts into the second quarter, aiming to support the market amidst global economic uncertainties and rising output from non-member countries. Brent futures and West Texas Intermediate both saw modest increases following the announcement. This move by OPEC+ aims to maintain oil prices above $80 per barrel in the face of geopolitical tensions and the ongoing conflict between Israel and Hamas, which have added support to oil prices this year.

Central banks are also in focus this week, with the European Central Bank's upcoming policy decision and comments from its head, Christine Lagarde, eagerly awaited for clues on future rate cuts. Meanwhile, the market is evaluating the Bank of Japan's stance on ending its negative interest rate policy, with key economic data and wage growth figures from Japan's major firms due soon.