Stocks edge downwards after rallying on US rate hopes

AFP | Paris

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Stocks edged downwards on Monday after earlier rallies in Europe and Asia, a surge fuelled by comments from the US central bank chief last week indicating a shift toward lower rates.

Investors were also keenly awaiting an earnings report from dominant AI chip company Nvidia due on Wednesday -- the firm's stock fell sharply last week as investors worried that enthusiasm for AI may be overcooked, which helped drag down the buoyant tech industry.

"AI has been the primary driver of the market this year," said Christopher Low of FHN Financial, adding that Nvidia stock is particularly important as investors have used it to wager on the AI industry more broadly.

Fed chief Jerome Powell told central bankers at their annual conference in Wyoming last Friday that "the balance of risks appears to be shifting" toward signs of weakness in the world's largest economy.

Investors interpreted that as a sure signal of a rate cut at the Fed's meeting next month, as inflation has not shown signs of soaring in the wake of President Donald Trump's tariffs blitz.

"Powell basically delivered the 25 basis points before the September meeting," said Ipek Ozkardeskaya, an analyst at Swissquote Bank. While global markets soared initially and Asian markets kept their gains.