NEW YORK: Stock markets advanced on Thursday (Sep 18), as tech shares jumped following AI chips giant Nvidia's announcement of a US$5 billion investment in struggling US rival Intel, and as investors digested the Federal Reserve's first interest rate cut of 2025.

The tech-heavy Nasdaq led gains on Wall Street, with Intel shares soaring nearly 23 per cent and Nvidia gaining more than three per cent.

All three major US indices finished at fresh records.

The dollar gained against other major currencies.

"Even if Intel needs handouts from its peers in Silicon Valley, investors like it," said Kathleen Brooks, research director at trading platform XTB.

Under the Nvidia-Intel deal, the companies will jointly develop chips for PCs and data centers.

The deal comes on the heels of the United States taking a 10-per cent stake in Intel, which has fallen behind in recent years after missing key technology shifts.

The move propelled shares of other tech firms.

In Europe, shares in ASML, a Dutch company that makes the machines used to produce semiconductors, surged more than seven per cent.

Other US semiconductor names were mixed. Micron jumped 5.6 per cent while Advanced Micro Devices dropped 0.8 per cent.

Investors were also reacting to Wednesday's US central bank decision to lower rates by 25 basis points.

US stocks had finished mixed on Wednesday over uncertainty about the path forward following the Fed's announcement.

But the mood changed Thursday, with investors confident that more cuts are coming this year, analysts said.

"Markets are betting policymakers will continue to prioritise jobs over inflation, even with headline prices still running hot," said Fawad Razaqzada, market analyst at City Index and FOREX.com.

The decision to cut came even as US inflation runs well above policymakers' two-per cent target, but analysts said the main focus was on the jobs market.

Fed policymakers are split between those who expect at least two interest rate cuts later this year and those who anticipate one or fewer.

Fed boss Jerome Powell remained cagey, telling reporters decision-makers were approaching it "meeting bay meeting".

Paris and Frankfurt stocks were up around 1 per cent in afternoon deals, with German sentiment buoyed by a central bank statement saying Germany should dodge a technical recession in the immediate future.

London rose less enthusiastically as the Bank of England kept its main interest rate at 4 per cent in the face of the UK's stubbornly high inflation, which stands at 3.8 per cent.

While Britain's interest rate was kept unchanged, Norway's central bank cut borrowing costs on Thursday, after a similar move by Canada on Wednesday.

In Asia, investors were in a cautious mood on Thursday.

Shanghai stocks retreated overall, and Hong Kong's session also ended in the red.

Tokyo closed in the green as the Fed decision boosted the dollar against the yen, helping Japanese exporters.

Stocks rise on Nvidia-Intel deal, Fed rate cut