The ECB will meet today and will certainly vehicle that policy tightening is over [Video]

The stock rally continued on both sides of the Atlantic on Wednesday; the technology and chip stocks remained in the driver seat. Sentiment in Europe was bolstered by an almost 9% rally in ASML on news that their orders more than tripled last quarter. Nvidia hit a fresh record, Microsoft was worth $3 trillion for some time. The S&P 500 and Nasdaq 100 hit a fresh record, and Netflix – which has nothing to do with AI, but which was just cheering its 13-mio new subscribers for the latest quarter - jumped 10%. Tesla fell in extended trading after earnings miss.

But except for Tesla, all goes well for those who are in the technology boat sailing north. For the rest, skepticism best describes how they feel about an unsustainable rise in valuations.

Elsewhere, the Chinese are serious about bolstering their economy and they look like they are getting to a place where they are ready to do whatever it takes to reverse the slowing trend. But note that China’s supportive policies may not echo well across the developed markets’ central banks, because the Chinese stimulus – if successful – should boost global inflation and interfere with DM central banks’ plans to loosen policies.

Still, until we see concrete results, softer policies remain the base-case scenario for the Federal Reserve (Fed) and the other major central banks (except Japan). In this context, the Bank of Canada (BoC) kept its rates unchanged at yesterday’s meeting and called the end of rate hikes. The European Central Bank (ECB) will meet today and will certainly vehicle the same message - that policy tightening is over. But that’s not enough.