Equity markets rose again Thursday after soft US and European economic data soothed recent fears that central banks will hike rates further, while tech firms were given a boost by forecast-busting earnings from AI chip titan Nvidia.
Traders have spent most of August fretting that the Federal Reserve will be forced to tighten monetary policy further owing to a string of reports pointing to a resilient US economy and jobs market.
But news that US factory activity continued to shrink in August while the key services sector was weaker than predicted was seen as allowing policymakers to take a step back, with borrowing costs already at a two-decade high.
Expectations for jobs growth in August were also scaled back, providing some much-needed relief to investors, while US Treasury yields retreated from around 15-year highs.
The picture in the eurozone was equally poor, with the purchasing managers' indexes for manufacturing and services both contracting.
"In terms of PMIs in the US and Europe, it's good news for the market because they are now expecting no more rate hikes in the future," Grace Tam, at BNP Paribas Wealth Management, said on Bloomberg Television.
The figures come as Fed chief Jerome Powell and European Central Bank head Christine Lagarde prepare to make speeches at a keenly followed annual gathering of central bankers and business leaders at Jackson Hole, Wyoming, on Friday.
Redmond Wong, at Saxo, said: "This may be another reason for Powell to stay away from committing to further rate hikes but continue to highlight a data-dependent approach."
- Food for thought -
And Krishna Guha of Evercore ISI added: "The recent surge in bond yields has pushed up mortgage and corporate borrowing rates, contributed to the fall in stock prices, and generated upward pressures on the dollar.
"The Fed will have to consider the tightening in financial conditions when setting rates in coming months, including the decision on whether to hike in September."
Some pointed out that while the weakness in factory activity could be attributed to August being a time when many are on holiday, the services sector numbers would usually have been expected to be healthier.
Wall Street's three main indexes soared, with the S&P 500 and Nasdaq up more than one percent.
The gains were supported by a rally across big-name tech firms including Amazon and Apple, which came ahead of the release of earnings from Nvidia that were tipped to beat the firm's forecasts.
And the Silicon Valley giant did not disappoint after the US close, reporting a mind-boggling 843 percent jump in net profit to $6.2 billion thanks to the growing demand for all things AI.
Shares of Nvidia surged more than eight percent in after-hours trading.
And the positive vibes filtered through to Asia, where Hong Kong led gainers by rising more than two percent, while Shanghai, Tokyo, Sydney, Seoul, Singapore, Mumbai, Bangkok and Manila also rose.
London, Paris and Frankfurt rallied, while Nasdaq futures put on more than one percent.
- Key figures around 0810 GMT -
Tokyo - Nikkei 225: UP 0.9 percent at 32,287.21 (close)
Hong Kong - Hang Seng Index: UP 2.1 percent at 18,212.17 (close)
Shanghai - Composite: UP 0.1 percent at 3,082.24 (close)
London - FTSE 100: UP 0.5 percent at 7,358.13
Dollar/yen: UP at 145.34 from 144.80 yen on Wednesday
Euro/dollar: DOWN at $1.0857 from $1.0868
Pound/dollar: DOWN at $1.2705 from
$1.2727
Euro/pound: UP at 85.45 pence from 85.40 pence
West Texas Intermediate: DOWN 0.7 percent at $78.35 per barrel
Brent North Sea crude: DOWN 0.6 percent at $82.70 per barrel
New York - Dow: UP 0.5 percent at 34,472.98 (close)
dan/qan
BNP Paribas
Artificial Intelligence Analysis
Defense Industry Analyst: 8Stock Market Analyst: 9/10General Industry Analyst: 8Analyst Summary
:
US and European economic data released on Thursday provided relief to investors, as it allayed fears of further rate hikes from the Federal Reserve and European Central Bank. The US factory activity continued to shrink in August while the key services sector was weaker than predicted, and expectations for jobs growth in August were scaled back. The purchasing managers indexes for manufacturing and services in the eurozone also contracted. This news was seen as allowing policymakers to take a step back with borrowing costs already at a two-decade high. Market analysts speculated that this could be a reason for Fed Chief Jerome Powell and European Central Bank Head Christine Lagarde to stay away from committing to further rate hikes at the upcoming annual gathering of central bankers and business leaders in Jackson Hole, Wyoming.This development in the US and European economic data reflects the significant events and trends in the space and defense industry over the past 25 years. The market has seen a significant increase in borrowing costs, with a rise in bond yields and mortgage and corporate borrowing rates. This has contributed to a fall in stock prices and an upward pressure on the dollar.The following investigative questions could be posed to further understand the implications of this article:
- 1. What are the implications of US and European economic data for the defense industry?
- 2. What potential impacts could further rate hikes have on the stock market?
- 3.
How could the rise in bond yields and mortgage and corporate borrowing rates affect the space and defense industry?4. How could further rate hikes be avoided, and what other measures could be taken to alleviate market worries?
5. What could be the potential consequences of the Jackson Hole meeting of central bankers and business leaders?
This AI report is generated by a sophisticated prompt to a ChatGPT API. Our editors clean text for presentation, but preserve AI thought for our collective observation. Please comment and ask questions about AI use by Spacedaily. We appreciate your support and contribution to better trade news.
