Stocks surged, following the upward trend in Asian markets as a tech-driven recovery spread worldwide. Europe’s Stoxx 600 index saw a significant 1.2% increase, marking its most substantial gain since mid-August, with the technology sector leading the way. Meanwhile, futures for the S&P 500 were up by 0.2%. Treasuries remained stable, and the dollar held steady. The MSCI Asia Pacific Index experienced its most significant climb in nearly a month, driven by the tech-heavy markets of Japan, South Korea, and Taiwan.
Investor sentiment has improved following the recent bounce in the stock market on Wall Street, driven by major technology companies. Attention is also focused on the direction of interest rates, with the European Central Bank expected to announce a rate cut on Thursday. US inflation data for August has reinforced expectations for a Federal Reserve rate cut next week, although there is speculation that officials may proceed cautiously.
Market participants have oscillated between optimism regarding the Fed’s ability to steer the US economy towards a soft landing and concerns that the central bank may have delayed rate cuts for too long. While markets have now priced in a 25 basis point rate reduction next week, there is ongoing debate about the path for further cuts, with some investors believing that expectations have been overly inflated.
According to Timothy Moe, Chief Asia Pacific Equity Strategist at Goldman Sachs Group Inc., “Stocks will likely rally more with a 25 bps cut than 50,” as the latter would signal weaker growth. In corporate news, OpenAI is reportedly in discussions to raise $6.5 billion from investors at a valuation of $150 billion, while Nvidia Corp. Chief Executive Officer Jensen Huang highlighted supply constraints that have frustrated customers.
Elsewhere, Alimentation Couche-Tard Inc. is said to be in talks to enhance its takeover proposal for Seven & i Holdings Co. in an effort to initiate negotiations with the Japanese convenience store operator. In Japan, the Nikkei index halted a seven-day losing streak following the US inflation data, which pushed the yen lower against the dollar. Tech stocks across the region saw a more than 3% increase, with Nvidia and Taiwan Semiconductor Manufacturing Co. among the top gainers.
Oil prices continued to rise as Hurricane Francine impacted key oil-producing regions in the Gulf of Mexico, prompting traders to cover bearish positions. Gold traded above $2,515 per ounce.
Key events to watch this week include the ECB rate decision on Thursday, US initial jobless claims and PPI data on Thursday, Eurozone industrial production data on Friday, Japan industrial production figures on Friday, and U. Michigan consumer sentiment data on Friday.
Overall market movements as of 8:11 a.m. London time include:
– Stoxx Europe 600: +1.2%
– S&P 500 futures: +0.1%
– Nasdaq 100 futures: +0.2%
– Dow Jones Industrial Average futures: +0.1%
– MSCI Asia Pacific Index: +1.5%
– MSCI Emerging Markets Index: +1.3%
In the currency market:
– Bloomberg Dollar Spot Index: stable
– Euro: stable at $1.1010
– Japanese yen: -0.3% to 142.79 per dollar
– Offshore yuan: stable at 7.1282 per dollar
– British pound: stable at $1.3045
Cryptocurrency movements:
– Bitcoin: +0.8% to $57,932.51
– Ether: +0.5% to $2,359.36
Bond yields:
– 10-year Treasuries: +2 basis points to 3.67%
– Germany’s 10-year yield: +2 basis points to 2.13%
– Britain’s 10-year yield: +2 basis points to 3.78%
Commodity prices:
– Brent crude: +1.4% to $71.59 a barrel
– Spot gold: +0.1% to $2,515.43 an ounce
This article was created with the help of Bloomberg Automation.