Nvidia rose 5.2% Wednesday and is now up more than 150% this year. It trades at about 45 times the per-share earnings it is expected to produce over the next year. Strong demand for its graphics-processing units, used in the artificial-intelligence systems that have captivated Wall Street, has led to robust gains in sales and earnings and a buying frenzy for the stock. The Nvidia rally has picked up steam in recent weeks because the company’s stock is set to split 10 for one at the end of this week. That means one Nvidia share, now trading at a record high around $1,225, would be above $120 on Monday morning after the split, based on Wednesday’s closing price. Although splits don’t change companies’ market value, they can make a stock more accessible to retail investors by reducing the price. In Nvidia’s case, it simply increases the number of shares outstanding by a factor of 10 and lowers the stock price to a tenth of its pre-split level. Even Microsoft and Apple, which have lagged behind Nvidia’s gains by a wide margin this year, aren’t exactly cheap. Microsoft sports a forward P/E of more than 35 while Apple is valued at nearly 30 times earnings forecasts. The S&P 500, by way of comparison, trades at 22 times 2024 earnings projections. Microsoft, like Nvidia, has been perceived as an AI play thanks to its investment in OpenAI, the creator of ChatGPT. Apple has rallied recently on hopes that it too will finally unveil an AI strategy, perhaps at its Worldwide Developers Conference beginning on June 10.

Prices rose across the board at the Zurich stock exchange on Wednesday. The SMI gained 1.2 per cent to 12,150 points, putting it well ahead of its European peers. All 20 SMI stocks closed with gains. A total of 16.59 million shares were traded (Tuesday: 23.67 million). Among individual stocks, Kühne + Nagel was the day's winner with a gain of 3.4 per cent. The share had already risen the previous day, supported by a raised annual outlook from competitor Moeller Maersk. Richemont climbed 2.1 per cent, supported by encouraging economic figures from China, an important customer country. ABB (+2.2 per cent) was also well ahead. The industrial goods manufacturer announced the receipt of four orders to stabilise the power grid on Spanish islands without providing any financial details. Nestle shares, which had been conspicuously firm on the two previous days without any new news, brought up the rear in the SMI this time: however, even Nestle closed up 0.1 per cent. UBS ranked second last with an increase of 0.5 per cent. The prospect of falling interest rates is likely to have slowed things down slightly in this respect, with the Stoxx bank index in Europe dropping by 0.3 per cent.

The European stock markets rose on Wednesday, on the eve of a highly anticipated decision by the European Central Bank (ECB) and following a series of encouraging business indicators in Europe and the United States. The Stoxx Europe 600 index gained 0.8% to 521.2 points. In Paris, the CAC 40 and SBF 120 climbed by 0.9% and 0.8% respectively. The DAX 40 added 0.9% in Frankfurt and the FTSE 100 gained 0.2% in London. Lectra lost 4.5%. US investment firm American Industrial Partner (AIP) sold its remaining stake in the flexible materials cutting specialist. Industrial gas specialist Air Liquide (+1.3%) announced that it would invest more than $250 million to build an industrial gas production site in the United States to supply the new plant of US semiconductor manufacturer Micron Technology. The Spanish group Inditex (+3.7% in Madrid), owner of the ready-to-wear chain Zara, reported a good start to the second quarter on Wednesday, with the favorable reception received by its spring-summer collections underpinning sales growth. The group also confirmed its gross margin forecast for the financial year to the end of January 2025 and published robust results for the first quarter.

Nvidia and its fellow tech giants pushed major stock indexes to records Wednesday as investors stuck with a favorite trade. The S&P 500 and the tech-heavy Nasdaq Composite closed at all-time highs, their 25th and 13th closing records of 2024. The Dow Jones Industrial Average, which includes Apple and Microsoft but not Nvidia, also rose for the day. Nvidia’s 5.2% advance Wednesday lifted it to a market value of more than $3 trillion, according to Dow Jones Market Data. The chip maker, whose stock became the darling of the artificial-intelligence boom, was the third U.S. company to cross the $3 trillion threshold, after Apple and Microsoft. Apple has also helped power major indexes lately. Shares of the iPhone maker gained 0.8%, their eighth straight day of gains, to close with a market value higher than $3 trillion for the first time since January. The S&P 500 rose 1.2% on Wednesday, while the Nasdaq gained 2%, bringing its 2024 advance to more than 14%. The Dow industrials added 0.2%, or about 96 points. Shares of Hewlett Packard Enterprise climbed 11% after the server and cloud-software company beat analysts’ expectations and lifted its full-year guidance. CrowdStrike shares rallied 12% after the cybersecurity company reported a jump in quarterly revenue and raised its guidance. Brown-Forman shares dropped 5.9% after the maker of Jack Daniel’s posted a bigger-than-expected drop in quarterly sales. Dollar Tree shares fell 4.9% after news that the discount retailer is exploring a potential sale or spinoff of Family Dollar. Next up, investors are looking ahead to the monthly jobs report on Friday. The data could provide clues about the strength of the economy and the chances that the Federal Reserve will begin to cut interest rates soon.

In Asia, major indexes broadly closed with gains on Thursday. There is no trading on the South Korean stock exchange due to a public holiday. In Tokyo, the Nikkei index rises by 0.7 per cent, supported by technology and electronics stocks. Shares in semiconductor supplier Advantest rise by 4.4 per cent. Tokyo Electron gained 3.7 per cent. In Hong Kong, the Hang Seng Index advances by 0.6 per cent, while on the Chinese mainland the Shanghai Composite falls slightly by 0.1 per cent. In India, the BSE Sensex recovered slightly from gains of 0.9 per cent at the start of trading and is currently up around 0.5 per cent. The parliamentary elections had caused strong volatility on the country's stock exchange over the past few days. After massive losses on Tuesday, the Sensex recovered in the middle of the week.

U.S. government debt yields slipped on Wednesday as traders weighed data that showed the U.S. services sector bouncing back in May while private sector hiring slowed. The 10-year Treasury note yield fell by 5 basis points to 4.284%. The 2-year Treasury note yield also declined by 5 basis points to 4.733%. For the time being, the market estimates that there is a 59% chance of a first Fed rate cut in September of 25 basis points, according to CME Group's FedWatch tool. The probability of this scenario has increased by more than 16 percentage points since last Wednesday.

DZ Bank upgrades ABB target to CHF 57 (50) - Buy
Target price Glencore: Deutsche Bank raises to GBP 5.50 (5.40) - Buy
Price target Richemont: RBC raises to CHF 160 (130) - Sector Perform

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