Major stock markets are set to end the week on a positive note as the rebound continued amid optimism over rate cuts. Technology shares, in particular, experienced a broad rally driven by dip-buying.
Global stock markets are on track for a positive close this week, buoyed by continued dip-buying following the intense selloffs at the beginning of August.
Risk-on sentiment has resumed amid positive economic data worldwide, easing recessionary concerns.
Cooler-than-expected inflation data from the UK and the US have also reinforced expectations for a lower-rate environment.
Europe
European stock markets experienced a broad rally this week, with the Euro Stoxx 600 up by 2.47%, the CAC 40 rising by 2.11%, the DAX advancing by 2.60%, and the FTSE 100 climbing 2.19% over the past five trading days.
All sectors in the Euro Stoxx 600 ended the week in positive territory, with technology and healthcare stocks leading the gains, up 3.76% and 3.75%, respectively.
Basic materials, mainly mining stocks, underperformed but still rose by nearly 1% over the five-day trading period.
Notably, large-cap stocks saw sharp rebounds, with Novo Nordisk up 11.5%, LVMH rising 4.54%, and ASML jumping 7% from last week.
Conversely, Rio Tinto slid 2.74% due to declining iron ore prices amid the ongoing sluggish Chinese housing market.
UBS reported second-quarter earnings that exceeded expectations, driven by accelerated growth in its wealth management revenue, largely due to the Credit Suisse takeover.
The Swiss banking giant’s shares jumped 5.9% on Wednesday following the results and were up by 7.3% for the week.
On the economic front, the Eurozone’s economy grew by 0.3% in the second quarter, matching the first estimate, according to Eurostat’s second estimate.
France, Spain, Belgium, and Italy all saw positive growth in the second quarter.
Additionally, the Paris Olympics is expected to boost the French economy in the third quarter, according to the Bank of France.
However, the region’s largest economy, Germany, saw its gross domestic product (GDP) unexpectedly contract by 0.1%, a sharp slowdown from the 0.2% growth in the first quarter.
In the UK, the economy reported growth of 0.6% in the second quarter, following a 0.7% expansion in the first quarter, reinforcing the upbeat momentum.
Inflation increased by 2.2% year-on-year in July, lower than the expected 2.3%, further enhancing expectations of a future rate cut by the Bank of England.
The euro surged against the US dollar, rising above 1.1 to reach a new high for the year on Thursday before pulling back. However, the single currency may continue to face upward pressure due to a softening dollar.
Wall Street
The US stock markets continued their rebound as recession fears eased following improving economic data this week.
The recovery was particularly evident in technology shares, as investors flocked to AI-related sectors to seek bargains.
Over the past five trading days, the Dow Jones Industrial Average rose by 2.7%, the S&P 500 gained 3.72%, and the Nasdaq Composite jumped 5.07%.
At the sector level, all eleven sectors ended the week higher, with technology leading the gains, surging by 7.37%, followed by consumer discretionary, which was up 4.8%.
However, the rate-sensitive sectors, real estate and utilities, lost some of their appeal, rising by just 0.87% and 0.81%, respectively.
Most of the Magnificent Seven stocks experienced strong gains, with Nvidia leading the rebound, surging by 17% over the past week.
The semiconductor sector was the best performer on Wall Street as investors continued to chase profits in AI chipmaker stocks.
US consumer prices rose by 2.9% year-on-year in July, cooler than the expected 3%.
Meanwhile, retail sales increased by 1% in July, well above the estimated 0.3%, alongside a drop in jobless claims for the week.
These data suggest that the country’s economy remains resilient, easing concerns about an imminent recession.
Asia Pacific
Asian markets were all in positive territory for the week, following the global trend.
Japan’s benchmark, the Nikkei 225, rose by 8% weekly, continuing its sharp rebound from the crash earlier in August.
The New Zealand stock market gained more than 4% after the country’s central bank unexpectedly cut the interest rate by 0.25%.
The Australian market was also up by more than 2% from last week.
Meanwhile, China’s benchmark, the Hang Seng Index, climbed 1.8% over the five-day trading period.
