A look at the day ahead in European and global markets from Ankur Banerjee
A tech-fuelled rally in Asia, powered by the world's largest contract chipmaker TSMC has equities perking up, while Japan's sudden dip into recession put a question mark on the timing of the Bank of Japan's exit from ultra-loose policy.
Taiwan stocks rocketed to a record high on Thursday after the Lunar New Year holiday break, with chip shares catching up with their global peers.
Also boosting sentiment in the tech space was Nvidia (NASDAQ:NVDA), surging past Google-parent Alphabet (NASDAQ:GOOGL) to become the third-most valuable U.S. company on Wednesday, after just overtaking Amazon (NASDAQ:AMZN) ahead of the chipmaker's earnings next week.
TSMC, which is a major Nvidia supplier, soared 8% to a new high and is on track to clock its biggest one-day percentage gain since November 2022. MSCI's index of IT stocks in Asia-Pacific outside Japan jumped 3%.
The Nikkei also got a boost from chip stocks, notching yet another 34-year high and remains on the charge to eclipse its record peak last seen in December 1989.
Traders shrugged off data from Japan which showed the country losing its title as the world's third-biggest economy to Germany after unexpectedly slipping into recession at the end of last year.
That has raised doubts about when the central bank will phase out its massive monetary stimulus, with many analysts expecting the Bank of Japan to move sometime this year.
The fragile yen strengthened a tad on the day but remains in the 150 per dollar region, with traders on the watch for any intervention related chatter.
The afterglow of Nvidia's meteoric rise might give European bourses a lift too, with futures indicating a higher open.
UK data are also on the radar, headlined by preliminary Q4 GDP as well as trade figures. The reports will be influential in determining the Bank of England's policy outlook, especially after British inflation unexpectedly held steady in January.
Interest rate futures are now pricing in a roughly 50% chance the BoE will cut the Bank Rate to 5.0% from a 16 year-high of 5.25% in June, according to LSE Group data. Markets are pricing in 70 basis points of cuts in the year.
Key developments that could influence markets on Thursday:
Economic events: UK prelim GDP for Q4, UK business investment for Q4
Earnings: Airbus, Stellantis (NYSE:STLA), Euronext