This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
No rest for the ECB
The European Central Bank hiked interest rates by 25 basis points to 3.5%, the highest in 22 years, and emphasized it's "not thinking about pausing." There's more pain to come: The ECB raised inflation expectations and lowered economic growth estimates for this year and the next.
Steady rates, steady markets
U.S. markets rallied Thursday as traders cheered the Federal Reserve's rate pause. Likewise, Asia-Pacific markets climbed Friday. Japan's Nikkei 225 pared earlier losses to inch up 0.1% after the Bank of Japan announced it would keep its loose monetary policy intact.
Journeys to the east
With U.S.-China ties growing rocky, venture capitalists in China are turning to Middle East investors to raise capital. But there's hope that bilateral ties might improve soon: U.S. Secretary of State Antony Blinken will travel to Beijing this weekend. Separately, Bill Gates is set to meet Chinese President Xi Jinping Friday.
A.I.-generated revenue
Microsoft's shares popped 3.2% Thursday to close at an all-time high of $348.10. Artificial intelligence will contribute $10 billion to Microsoft's revenue annually, predicted Microsoft technology chief Kevin Scott, and investors want a piece of that.
[PRO] Who's lying?
The Federal Reserve said it's likely to raise rates further at its later meetings — and then keep them high for longer. Yet the stock market shrugged it off. There are two reasons for that, CNBC's Bob Pisani writes. Either the Fed's lying about rates or economic data's lying about a recession.
The bottom line
Markets don't seem to be fighting the Fed anymore. They're downright ignoring the central bank.
The S&P 500 rose 1.22% yesterday, closing at 4,425.84 — a level higher than where it was on March 16, 2022, when the Fed approved its first rate increase since 2018.
It's as if markets are thumbing a nose at the Fed: Highest interest rates since 2007? Fastest hiking cycle in four decades? A skip, but followed by two more increases? Doesn't matter.
Other major indexes rallied too. The Dow Jones Industrial Average added 1.26% and the Nasdaq Composite climbed 1.15%
It's not just the pressure of interest rates that markets are defying. According to data from the Stock Trader's Almanac, June's historically a bad month for stocks, during which the Dow typically loses 0.2% and the S&P gains just 0.1%. We're only halfway through June, but the Dow is already up 4.4% and the S&P 5.5%.
We have tech to thank for this year's seemingly tireless stock rally, and on Thursday, the trend continued.
Microsoft, Oracle and Alibaba jumped at least 3%. In extended trading, Virgin Galactic — not to be confused with Virgin Orbit, which recently filed for bankruptcy — soared more than 40% after announcing its inaugural commercial space tourism flight will blast off later this month.
Everywhere, gravity is being defied. In spaceflight, that's because of precise engineering. But in markets, rational explanations can be lacking, and that can be scary when you're 10 feet off the ground.
