Microsoft, Apple cross US$4 trn threshold as Wall St climbs

Microsoft and Apple were the latest of the Magnificent 7 to cross the US$4 trillion market capitalisation threshold, with both among the five megacap stocks reporting this week, helping Wall Street indices to test new heights.

Meanwhile, new details emerged about a potential US-China trade deal when presidents Donald Trump and Xi Jinping meet on Thursday, with tariff relief said to be on the table from Washington if Beijing cracks down on the export of chemicals that produce fentanyl.

Meanwhile, Nokia surged after chipmaker Nvidia said it will inject US$1 billion for a small stake in the Finnish electronics group, with the pair partnering on artificial intelligence network solutions.

And as Fonterra Cooperative Group farmers prepare to vote on selling the New Zealand dairy processor’s Mainland consumer business to France’s Lactalis at a special meeting on Thursday, Danone beat analysts’ expectations on accelerating sales growth in China.

Opening up AI

Stocks on Wall Street scaled to new heights with the Nasdaq Composite up 0.8% in late trading and the Dow Jones Industrial Average rising 0.7%, while the benchmark S&P 500 rose a more muted 0.3%.

“The S&P has registered a fresh intra-day record high,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “Equities are supported by solid corporate earnings and a new deal from OpenAI and Microsoft which saw the latter company’s valuation reach US$4 trillion.”

Five of the Magnificent 7 megacap stocks are poised to report in the coming days, with Alphabet, Amazon, Apple, Meta Platforms and Microsoft all in the calendar, following on from Tesla’s result last week showing increased spending on research and development as the AI arms race continues.

Microsoft and Apple both crossed the US$ 4 trillion market capitalisation mark in the latest trading session, with the former buoyed by artificial intelligence startup OpenAI converting its for-profit subsidiary into a public-benefit corporation, of which Microsoft will own 27%.

Meanwhile, Nvidia nudged higher after saying it will invest US$1 billion for a 2.9% stake in Nokia, partnering with the Finnish electronics group on AI network solutions. Nokia surged 21% on the Helsinki exchange.

Sunnier dispositions

Markets have been more buoyant this week as investors grow increasingly optimistic about a trade deal being cut between the US and China when presidents Donald Trump and Xi Jinping meet on Thursday, with the latest details indicating Washington will offer tariff relief for a crackdown on the export of chemicals used in fentanyl production by Beijing.

And while the US federal government shutdown stymies official data releases in the world’s biggest economy, ADP Research has started releasing a weekly private payrolls report. The Federal Reserve is expected to deliver a rate cut this week.

Still, the CBOE’s volatility index climbed 2.5% and gold prices declined, with futures down 1.2% at US$3,974 at 7am in Auckland.

Across the Atlantic, stock markets were mixed as the UK’s FTSE 100 index rose 0.4%, with HSBC among the leaders in London as the bank raised its income outlook.

Germany’s DAX 30 dipped 0.1% while France’s CAC 40 decreased 0.3%, dragged down by lender BNP Paribas missing expectations.

Danone was among the highlights as the French dairy company's shares advanced after beating earnings expectations, with sales growth accelerating in China and more than offsetting tepid gains in North America.

Wall Street’s positivity is set to spillover to the antipodes, with Australian futures pointing to a 0.2% gain for the S&P/ASX 200 index when trading opens across the Tasman. The kiwi dollar traded at 57.86 US cents at 7am in Auckland from 57.78 cents yesterday, and fell to 87.82 Australian cents from 88.08 cents.

No major local data are scheduled today, while Southport New Zealand and Ebos Group are holding their annual meetings in Bluff and Auckland, respectively.

And the Reserve Bank will be a hive of activity today, with governor Christian Hawkesby speaking about the importance of operational independence for central banks, and director of capital markets Adam Richardson discussion the transmission of interest rate cuts to domestic financial conditions at the Commonwealth Bank Global Markets Conference in Sydney. Richardson's speech won't have any new information on monetary policy and decision-making.

Reporting by Paul McBeth. Image from Valent Lau on Unsplash.