Tech shares lead Nasdaq to record as markets await Fed decision

Resurgent tech shares outperformed industrial names ahead of key economic releases.
Resurgent tech shares outperformed industrial names ahead of key economic releases.PHOTO: REUTERS

NEW YORK (AFP) - Major US indices finished at fresh records Monday (June 14) as global equity markets began the week cautiously ahead of a much-anticipated Federal Reserve meeting.

Both the S&P 500 and Nasdaq ended at all-time highs, benefiting from a resurgence in technology shares.

The first session of the week reflected the latest pivot after a stretch earlier in the year when tech shares lagged other sectors such as financial companies and manufacturers.

Investors now appear to be taking profits on some of those bets, and steering funds back into large tech names, which outperformed other sectors earlier in the pandemic. Apple, Facebook and Netflix all gained at least one per cent.

This week’s calendar is dominated by the Federal Reserve’s two-day policy meeting, which is expected to show central bankers raising their inflation forecasts.

The Fed is expected to maintain its current easy money policy, but central bank chief Jerome Powell will face myriad questions about rising prices during the news conference following the meeting’s conclusion on Wednesday.

While no change in the bank’s lending rate is expected, Powell could offer more assurances that the Fed will be vigilant about price pressures, and stress that the bank has the means to combat inflation.

“The Fed is largely expected to maintain its current level of monetary assistance and is again expected to reiterate its view that the current inflationary spike is a passing phase,” noted Richard Hunter, head of markets at Interactive Investor.

“Even so, there have more recently been suggestions that discussions on tapering relief are likely to be nearing the top of the agenda, even if this does not lead to imminent action.” Other key reports this week include May data on retail sales, housing starts and producer prices.

Bitcoin climbs

Earlier, London investors pushed the blue-chip FTSE 100 to its highest level this year, brushing off the expected announcement later in the day from the UK government that it will delay the lifting of its remaining lockdown restrictions.

Frankfurt’s DAX 30 hit a new record high, but ended trading slightly lower.

Bitcoin bounced back above US$40,000 for the first time in more than two weeks after Tesla boss Elon Musk said over the weekend that his electric car firm would accept payments in the digital asset again when it is mined using cleaner energy.

Musk in February said that customers could use cryptocurrency, sending bitcoin surging, before he changed his mind, citing bitcoin’s energy usage, particularly from polluting power sources.

Bitcoins are produced by powerful computers that have to solve equations and consume huge amounts of electricity in the process.