Bank of Canada cuts interest rates for the first time, Nvidia and TSMC stocks hit new highs

The Bank of Canada announced a 1 basis point interest rate cut yesterday, lowering the overnight rate to 4.75%, becoming the first central bank among the Group of Seven (G7) to initiate a loose monetary policy cycle. Market expectations are also widespread that the European Central Bank (ECB), which is scheduled to hold a meeting today, will follow suit with a 1 basis point rate cut. The rate cut is aimed at boosting market sentiment, with both Nvidia and TSMC reaching new highs in stock prices, driving the overall market trend.

Is the Cooling U.S. Job Market Following a Rate Cut Path?

The U.S. ADP Employment Report released yesterday showed an increase of 152,000 in private sector employment for May, lower than the expected 175,000 and the smallest gain since January this year. The signs of a cooling job market have raised the possibility of a rate cut by the Federal Reserve.

The Fed is set to announce its rate decision on June 12th. While the market generally expects rates to remain unchanged, according to the CME FedWatch Index, the probability of a rate cut in September has increased to 68.4%, up from around 50% previously.

Investors will be awaiting the U.S. non-farm payroll data on Friday to understand the actions the Fed may take in the latter half of this year.

Nvidia Stock Reaches New High, Surpasses Apple as Second Largest Company by Market Cap

Hopes for a rate cut have boosted market sentiment, with major U.S. stock indices hitting new highs yesterday, and today the Asia-Pacific stock markets are also showing gains.

AI leader Nvidia saw its stock price rise over 5% yesterday, surpassing the milestone of a $3 trillion market cap. It has overtaken Apple to become the world's second-largest publicly traded company, trailing only Microsoft by $139 billion.

TSMC Announces Stock Repurchase

Taiwan Semiconductor Manufacturing Company (TSMC) announced last night that it will implement stock repurchase with a price range of NT$598 to NT$1,281. If the stock price falls below the lower limit of the range, repurchases will continue. The company plans to repurchase 0.01% of the issued shares and the repurchase period is set from June 6th to August 5th.

Positive news boosted TSMC's ADR by 6.95% yesterday, and in the Taiwan stock market, stock 2330 hit a new high in the morning, surging nearly 5% to a peak of NT$898.