Global stock markets rose early in the week on optimism surrounding potential ceasefire talks in the Middle East. However, the rally lost momentum after the US reported higher-than-expected inflation data, tempering expectations for significant interest rate cuts by the Federal Reserve. Despite this, the semiconductor sector saw notable gains due to strong demand forecasts for AI chips.
Global Markets
Optimism over the possibility of a ceasefire in the Middle East lifted global markets. The technology sector, particularly the semiconductor industry, benefited from strong demand forecasts for AI chips. However, sentiment was dampened by the release of hotter-than-expected US inflation data by the end of the week, leading to reduced expectations of a large Federal Reserve rate cut. This caused European and US markets to pare their gains.
The CBOE Volatility Index (VIX) remained above 20, indicating that investors are still cautious about geopolitical developments in the Middle East.
Europe
European stock markets delivered mixed results. The Euro Stoxx 600 rose by 0.48%, while Germany’s DAX gained 0.47%, and France’s CAC 40 remained flat. The British FTSE 100 fell 0.52%, driven by significant declines in mining stocks.
Sectors that typically benefit from Chinese stimulus measures, such as mining and luxury goods, underperformed. Mining giants like Rio Tinto and Glencore saw weekly declines of 4.63% and 2.38%, respectively. Luxury brands like LVMHand Hermès also struggled, with LVMH down 1.68% and Hermès down 1.43%.
However, the technology sector provided some bright spots. Shares of ASML, Europe’s largest tech firm, rose by 1.14%, and SAP gained 3.32%, buoyed by strong AI demand. The energy sector also saw gains due to rising oil prices, with Shellup 1.91% and TotalEnergies rising 1.98%.
Wall Street
In the US, the stock market managed to end the week on a positive note despite the inflation concerns. The Dow Jones Industrial Average rose by 0.24%, the S&P 500 climbed 0.50%, and the Nasdaq Composite gained 0.81%. The technology sector led the charge, up 2.21%, with AI-driven stocks such as Nvidia and Broadcom seeing substantial gains.
Despite higher-than-expected inflation, resilient economic data and easing geopolitical tensions supported overall market sentiment. However, interest rate-sensitive sectors like utilities and real estate struggled, with utilities falling 2.78% for the week.
Asia-Pacific
In the Asia-Pacific region, the Reserve Bank of New Zealand delivered a 0.5% rate cut, boosting local stock markets. The NZ50 rose by 1.5%, while Japan's Nikkei 225 gained 2.02%, and South Korea’s Kospi climbed 1.66%.
In contrast, Chinese equities struggled as investors were disappointed with the limited stimulus measures from the Chinese government. The Hang Seng Index dropped by more than 6%, while the China A50 Index declined by 0.96%. However, despite this week’s losses, major Chinese indices remain up between 20% and 30% on a monthly basis.
Global stock markets had a mixed week, with initial optimism surrounding Middle East ceasefire talks giving way to concerns over higher-than-expected US inflation data. While sectors like technology and energy posted gains, interest rate-sensitive industries and Chinese equities faced challenges. Investors remain cautious as they navigate evolving geopolitical tensions and economic data.
Source: Euronews
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