The Stoxx 600 index in Europe climbed by 1%, and Nasdaq 100 futures increased after Micron Technology Inc. issued a strong revenue forecast, igniting a late rally for its stock. Asian equities also saw a significant rise of around 2%. Meanwhile, U.S. Treasuries and the dollar remained stable.
Although specific details regarding China’s planned fiscal spending were not disclosed, the announcement sparked increased risk appetite and improved prospects for European industries closely tied to the Chinese economy. Some analysts had expressed skepticism about whether the monetary stimulus announced earlier in the week would be adequate given concerns about deflation and weak consumer spending.
“Does it change the global narrative? We are uncertain, but for now, it’s definitely positive for the rest of the world,” stated Kenneth Broux, a strategist at Societe Generale SA. “Individual stocks in Europe are rising as investors anticipate that the Chinese consumer will start spending, particularly on luxury goods.”
According to Bloomberg, China is contemplating injecting up to 1 trillion yuan ($142 billion) into its largest state banks to enhance their ability to support the faltering economy. This would mark the first capital injection into these banks since the 2008 global financial crisis.
Powell’s Address
In the U.S., S&P 500 futures rose by 0.7% as traders awaited a pre-recorded speech from Federal Reserve Chair Jerome Powell at the 10th Annual U.S. Treasury Market Conference.
On Wednesday, Federal Reserve Governor Adriana Kugler expressed strong support for last week’s rate cut, suggesting that further cuts may be warranted if inflation continues to decline as anticipated.
At the week’s end, the Fed’s preferred inflation metric and a report on consumer demand are expected to validate last week’s aggressive interest rate cut and Powell’s assertion that the economy remains robust.
In commodities, oil prices dropped for a second consecutive day as reports emerged that Saudi Arabia is considering increasing output, and factions in Libya reached an agreement that could allow for the resumption of some crude production.
In related news, the U.S., European Union, and major Middle Eastern powers, including Saudi Arabia and Qatar, have proposed a three-week ceasefire between Israel and Hezbollah in Lebanon to facilitate negotiations and prevent a wider conflict in the region.
Upcoming Key Events:
ECB President Christine Lagarde’s speech on Thursday
U.S. jobless claims, durable goods, and revised GDP on Thursday
Fed Chair Jerome Powell’s pre-recorded remarks at the U.S. Treasury Market Conference on Thursday
China’s industrial profits on Friday
Eurozone consumer confidence on Friday
U.S. PCE and University of Michigan consumer sentiment on Friday
Market Movements:
Stocks
Stoxx Europe 600: +1.1% (as of 8:20 a.m. London time)
S&P 500 futures: +0.8%
Nasdaq 100 futures: +1.4%
Dow Jones Industrial Average futures: +0.4%
MSCI Asia Pacific Index: +2.1%
MSCI Emerging Markets Index: +1.8%
Currencies
Bloomberg Dollar Spot Index: -0.2%
Euro: +0.2% to $1.1156
Japanese Yen: -0.2% to 144.97 per dollar
Offshore Yuan: +0.3% to 7.0112 per dollar
British Pound: +0.2% to $1.3356
Cryptocurrencies
Bitcoin: +0.5% to $63,810.38
Ether: +1.5% to $2,619.81
Bonds
10-year Treasuries yield: -1 basis point to 3.78%
Germany’s 10-year yield: little changed at 2.17%
Britain’s 10-year yield: little changed at 3.98%
Commodities
Brent crude: -2.4% to $71.67 per barrel
Spot gold: +0.1% to $2,660.44 per ounce