Global equities surged as optimism about robust U.S. economic growth and strong corporate earnings hinted at another potential record peak for Wall Street.
Nasdaq 100 Index futures gained 0.6%, and S&P 500 contracts rose by 0.4%. In U.S. pre-market trading, tech giants Micron Technology Inc. and PayPal Holdings Inc. led the advance. Italy’s yield premium over Germany in bond markets tightened to the narrowest point in nearly two years.
Despite a turbulent start to the year, U.S. equity markets are rebounding, fueled by confidence in an imminent interest rate cut by the Federal Reserve and speculation that the artificial intelligence sector will continue its upward trajectory. Earnings season is underway, with companies like Netflix Inc., Tesla, and Intel Corp. set to release results this week.
Charles Diebel, Head of Fixed Income at Mediolanum International Funds Ltd, remarked, “The equity rally we are seeing is based on the soft-landing scenario that’s being priced,” suggesting that positive economic performance would discourage selling equities, and any market weakness would prompt rate cuts.
While only 11% of the S&P 500’s market value has reported earnings this season, positive signs abound. According to data compiled by Bloomberg, about 85% of reporting companies have surpassed profit estimates.
In contrast, Chinese stocks faced intensified selling pressure, with the Hang Seng China Enterprises Index falling 2.4%, nearing a 2005 low. Chinese commercial lenders maintained their benchmark lending rates on Monday, disappointing investors anticipating more aggressive stimulus measures.
In Europe, Swedish online gambling firm Kindred Group Plc experienced a 19% surge in shares following a $2.7 billion offer from La Francaise des Jeux SA. Meanwhile, Worldline SA saw an increase after Credit Agricole acquired a 7% stake to stabilize its struggling payments partner.
Investor focus now shifts to meetings at the Bank of Japan on Tuesday and the European Central Bank on Thursday, with both expected to keep their policy settings unchanged. The U.S. fourth-quarter GDP report on Thursday may provide insights into the timing of the Fed’s inaugural rate cut.
Oil prices remained stable as OPEC member Libya resumed output at its largest field, easing global supply concerns and counteracting fears of disruptions in energy supply due to tensions in the Red Sea shipping routes.
