Broad Rally On Wall Street Lifts U.S. and European Indexes 1%

Alexander Garcia
09 Sep, 2024
Miami

U.S. stocks rebounded in Monday's trading as investors returned to hunt for bargains following sharp losses in the previous. 

Tech stocks led today's upswing as investors thought market sell-off last week was excessive, and artificial intelligence-linked semiconductor stocks led the gainers. 

The S&P 500 index and the Nasdaq Composite edged up over 1% in early trading as investors reassessed the labor market update released last week. 

In a rocky start to September trading, the S&P 500 index decreased 4.3% and the Nasdaq Composite declined 5.8% in the first week of trading. 

Investors are on edge after the economy added weaker than expected jobs for the second month in a row in August, stoking fears of an economic slowdown. 

U.S. nonfarm payrolls expanded 142,000 in August, faster than the downwardly revised 89,000 additions in July but fewer-than-expected 155,000. 

Despite the current market jitters, the U.S. economy has been adding more than 200,000 a month over the last three years, far above the long-term average monthly increase of 160,000. 

This week, investors are also looking forward to the release of consumer price inflation data on Wednesday and producer price inflation data on Thursday. 

Moreover, the European Central Bank is scheduled to announce its monetary policy decisions on Thursday, and investors are anticipating a rate cut of 25 basis points. 

The U.S. Federal Reserve is scheduled to announce its interest rate policy at the end of its two-day policy meeting on September 18. 

Investors are pinning their hopes on a rate cut of at least 25 basis points, despite the slow progress in core inflation in recent months. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 1.4% to 5,482.52, the Nasdaq Composite rose 1.3% to 16,907.23, and the Russell 2000 index added 1.1% to 2,113.97. 

The yield on 2-year Treasury notes edged lower to 3.69%, 10-year Treasury notes inched up to 3.73%, and 30-year Treasury bonds inched lower to 4.04%.

WTI crude oil increased $1.20 to $68.85 a barrel, and natural gas prices edged down 10 cents to $2.17 a thermal unit.

Gold rose by $15.90 to $2,504.28 an ounce, and silver increased by $0.41 to $28.34.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 101.50.

 

U.S. Stock Movers

Boeing increased 3.3% to $162.86, and the company and the factory workers union agreed on wage and work rules revisions, potentially avoiding a future strike. 

Dell Technologies rose 5.4% to $107.50 and Palantir Technologies advanced 8% to $32.81 after the two companies were selected to be included in the benchmark index S&P 500 index. 

The benchmark index revision index was announced at the end of the market close on Friday. 

Big Lots declined 0.3% to $0.30, and the company agreed to sell its business to an affiliate of Nexus Capital and plans to file for bankruptcy. 

Dollar stores have been under pressure as low-income families have cut down their purchases on non-essential items, and high-income and middle-income households have increased their spending on basic items at stores owned by Walmart and Target. 

 

European Markets Rebounded Ahead of Monetary Policy Decisions

European markets rebounded amid widespread expectations of a rate cut later in the week.

Benchmark indexes in Paris, London, and Frankfurt advanced 0.6% in active trading, and investors awaited the release of final updates on inflation in Germany, France, and Spain later in the week. 

The European Central Bank is expected to lower rates by 25 basis points at the end of its policy meeting on Thursday, and investors are looking ahead to revised economic projects for the year. 

Consumer price inflation in the eurozone is on a downward slide, but that decline in inflation is largely driven by the fall in energy prices. 

Core inflation, which strips out volatile food and energy price inflation, is still hovering above 3%, indicating that it is well-anchored in the economy and prices are still rising at a faster rate than the 2% target rate set by the European Central Bank. 

The Eurozone’s trade balance is also on tap this week. 

Investors in the U.K. are awaiting the updates on unemployment rate, trade balance, and industrial production. 

 

Europe Indexes and Yields

The DAX index increased by 0.8% to 18,443.56; the CAC-40 index rose by 0.9% to 7,425.26; and the FTSE 100 index advanced by 1.1% to 8,270.84. 

The yield on 10-year German bonds edged higher to 2.22%, French bonds inched up to 2.93%, the UK gilts edged down to 3.87%, and Italian bonds decreased to 3.51%.

The euro edged down to $1.10; the British pound inched higher to $1.30; and the U.S. dollar strengthened to 84.89 Swiss cents.

Brent crude increased $0.94 to $72.01 a barrel, and the Dutch TTF natural gas rose by €0.86 to €37.24 per MWh. 

 

Europe Stock Movers

Banks in the eurozone rebounded ahead of the expected interest rate cut later in the week. 

Deutsche Bank gained 2.9% to €15.09, UniCredit jumped 2.2% to €37.04, Societe Generale advanced 2.1% to €22.29, and BNP Paribas increased 1.2% to €62.91. 

Oil explorers rebounded in Monday's trading, tracking a technical rebound in crude oil prices after falling 8% in the previous week. 

Shell PLC gained 1% to 2,542.0 pence, and BP plc edged up 0.5% to 407.65 pence. 

Mining companies edged higher after copper edged up 2% and iron ore stabilized around a four-year low. 

Glencore Plc jumped 1.3% to 371.75 pence, Anglo American Plc advanced 0.7% to 2,040.50 pence, and Antofagasta gained 1.9% to 1,669.50 pence.

Luxury stocks were under pressure after China reported weak consumer price inflation and producer price inflation, confirming ongoing economic growth slowdown. 

Kering SA dropped 3.5% to €228.0, Hermes International increased 0.4% to €1,916.50, and LNMH Moet Hennessey inched up 0.3% to €1,916.50. 

Barratt Developments increased 0.7% to 496.23 pence, and the homebuilder and Lloyds Banking Group, along with the UK government agency Homes England, launched a £165 million joint venture. 

Entain PLC soared 8.3% to 692.20 pence, and the online gambling platform operator said its businesses in the U.K. and Ireland rebounded faster than previously estimated. 

 

Japan's Nikkei 225 Drops to One-Month Low, Second Quarter GDP Revised Lower 

Weak market indexes persisted for the fifth session in a row, following the sharp sell-off in Friday's trading in New York. 

The Nikkei 225 and the Topix indexes closed down 0.9% and recovered from morning losses of 3%. 

Investors sold stocks on the growing concerns about the health of the U.S. economy and rising domestic inflation and wages, supporting the case for the Bank of Japan to lift rates later in the month. 

Japan's second quarter GDP growth was revised down to an annual rate of 2.9% from the preliminary estimate of 3.1%, the Cabinet Office reported Friday. 

In addition, overall bank lending in Japan increased 3% from a year ago, slightly lower than 3.2% advance in July, the Bank of Japan reported on Monday. 

Bank lending increased to 624.24 trillion yen, and excluding trusts, lending increased 3.6% to 547.3 trillion yen.

Japan's current account surplus also increased 15.1% to 3.19 trillion yen, the Ministry of Finance reported Monday. 

The surplus shot up from 1.53 trillion yen in June, and the trade deficit stood in the month at 4.48 trillion yen after exports increased 9.4% to 9.4 trillion yen and imports soared 16.8% to 9.9 trillion yen. 

Financial account surplus was 2.3 trillion yen, and capital account surplus stood at 20 billion yen. 

 

Japan Stock Movers 

The Nikkei 225 stock average declined 0.9% to 36,105.29, and the Topix index dropped 0.9% to 2,575.82. 

Tech stocks led the decliners in Tokyo after another down day in New York in Friday's trading. 

Tokyo Electron declined 2.2% to ¥21,500.0, Advantest Corp. dropped 0.6% to ¥5,830.0, and Screen Holdings fell 1.4% to ¥9,569.0. 

Fast Retailing declined 0.5% to ¥43,900.0, Isetan Mitsukoshi fell 2.4% to ¥2,169.0, and Seven & I gained 2.1% to ¥2,185.0. 

Mitsubishi UFJ Financial dropped 2.3% to ¥1,443.00, Sumitomo Mitsui Financial declined 2% to ¥8,990.0, and Mizuho Financial dropped 2.9% to ¥2,838.50. 

 

Hang Seng Index Plunged 2% as China Inflation Data Confirmed Slowdown Trend 

Stocks in Hong Kong and mainland China faced renewed selling pressure in Monday's trading after investors reviewed the latest inflation reports.

The Hang Seng index dropped nearly 2% and the mainland-focused CSI 300 index dropped more than 1% after deflation worries were compounded by weak global market sentiment. 

China's consumer price inflation rose to 0.6% in August from a year earlier, accelerating from 0.5% in July, the National Bureau of Statistics reported Monday. 

Core inflation, which excludes food and energy prices, increased 0.3% from a year ago as consumers spending retrenched amid falling property prices and a weak job market outlook. 

Producer price index, a measure of wholesale prices, declined 1.8% in August, confirming weakening price trend. according to a separate report by the statistical agency. 

The wholesale inflation measure deepened its slide from 0.8% in July, and the index dropped for the 23rd month in a row, suggesting weak demand conditions. 

Market sentiment was further weakened in Hong Kong amid U.S. rate path uncertainty after the U.S. labor market expanded at a slower pace than in the previous-year pace. 

Market sentiment was weak across Asia after the U.S. economy added about 142,000 net new jobs in August, higher than the revised 89,000 jobs in July but below the market's expectations. 

The moderating labor market conditions supported the case for a rate cut at the policy meeting next week, but policymakers have been sending mixed signals over the last four weeks. 

Investors have been hypersensitive to the U.S. interest rate direction, and the world market indexes plunged between 2% and 6% last week amid rate path uncertainty. 

Global market indexes are likely to tread water with a downward bias until the U.S. monetary policy announcement at the end of a two-day meeting on September 18. 

 

China Stock Movers 

The Hang Seng index decreased 1.9% to 17,119.54, and the mainland-focused CSI 300 index dropped 1.1% to 3,197.53. 

Tech stocks plunged more than 2% following the market weakness in Hong Kong trading. 

Alibaba Group declined 1.9% to HK $78.25, Tencent Holdings dropped 1.5% to HK $368.0, and JD.com dropped 2.9% to HK $101.30. 

Property developers accelerated the previous week's decline amid rate path uncertainty and weak interim results released last week. 

Longfor Group declined 3.7% to HK $8.27, China Resources Land dropped 4.2% to HK $19.90, China Vanke fell 3.7% to HK $3.92, and Henderson Land Development eased 1.9% to HK $23.40. 

China Renaissance Holdings plunged 66% to HK $2.48, and the boutique investment bank's stock resumed trading after more than one year of trading suspension following the arrest of its founder, Bao Fan.