At Monday’s close, the Dow Jones (US30) was up 0.15%, while the S&P 500 (US500) added 0.28%. The NASDAQ Technology Index (US100) closed positive 0.14%. Optimism that the Fed will be able to achieve a soft landing for the economy is supporting stock prices. Minneapolis Fed President Kashkari and Chicago Fed President Goolsbee said yesterday that they support additional Fed rate cuts this year.
Intel (INTC) closed higher by more than 3% following a Bloomberg report that Apollo Global Management has offered to make a multi-billion dollar investment in Intel. Tesla (TSLA) rose more than 4% after Barclays said it expects the company’s third-quarter deliveries to exceed consensus estimates, which could further boost the stock.
Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.68%, France’s CAC 40 (FR40) closed 0.10% higher, Spain’s IBEX 35 (ES35) Index gained 0.38%, and the UK’s FTSE 100 (UK100) closed up 0.36%. The S&P Eurozone Manufacturing PMI for September fell by 1.0 to 44.8, weaker than expectations of 45.7 and the sharpest rate of contraction in 9 months. The Eurozone Composite PMI for September fell by 2.1 to 48.9, weaker than expectations of 50.5 and the sharpest rate of contraction in 8 months. Investors are now betting on an additional ECB rate cut of around 44 basis points this year, with a 40% chance of a rate cut in October.
WTI crude oil prices climbed above $71 a barrel on Tuesday, rebounding from the previous session’s losses as the prospect of supply disruptions outweighed concerns about sluggish demand. Rising tensions in the Middle East have heightened fears of a wider conflict in the key oil-producing region after Israeli strikes on Lebanon on Monday. Investors are also watching the risk of a possible hurricane on the US Gulf Coast, which could impact oil production later this week. In addition, China announced a series of stimulus measures to support its economy, easing some concerns about sluggish demand from the world’s top oil consumer.
Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was up 1.53%, China’s FTSE China A50 (CHA50) added 0.57%, Hong Kong’s Hang Seng (HK50) was down 0.06%, and Australia’s ASX 200 (AU200) was negative 0.69%.
The ASX 200 Index (AU200) fell by 0.13%, extending the previous session’s losses after the Reserve Bank of Australia (RBA) expectedly left the cash rate unchanged at 4.35% amid continued high core inflation and lingering uncertainty over the overall outlook. The RBA also stated that the latest projections suggest that inflation will take some time to steadily return to the target range, indicating that it may need to keep higher rates for longer.
The offshore yuan strengthened to 7.03 per dollar, hitting a new sixteen-month high after a brief decline earlier in the session, helped by significant stimulus measures announced by the People’s Bank of China (PBoC). The Central Bank unveiled a number of initiatives, including a 50bp cut in the reserve requirement ratio, a 20bp cut in the seven-day reverse repo rate and a 30bp cut in the medium-term lending rate. In addition, the benchmark lending rates are expected to be cut by 20–25 bps after holding them at the September fixing level. The PBOC also plans to cut existing mortgage rates by about 50 basis points, potentially reducing households’ interest payments by about ¥150 billion.
S&P 500 (US500) 5,718.57 +16.02 (+0.28%)
Dow Jones (US30) 42,124.65 +61.29 (+0.15%)
DAX (DE40) 18,846.79 +61.29 (+0.15%)
FTSE 100 (UK100) 8,259.71 +29.72 (+0.36%)
USD Index 100.90 +0.05 (+0.05%)
