Overview of Market Movements
On Wednesday, US and European equities stabilized amid escalating Middle East tensions and a U.S. port workers’ strike. The S&P 500 was flat, with slight gains in the Dow Jones and Nasdaq, while the Euro Stoxx 50 held steady at 4,959 points. Oil prices surged after missile attacks on Israel, boosting TotalEnergies and Eni, though higher energy costs pressured utilities and financials. Tech performed well on both sides of the Atlantic, with ASML and Prosus posting notable gains.
Asian Markets’ Mixed Performance
Thursday’s Asian markets experienced mixed results, with the MSCI ex-Japan index declining 1.4% after hitting a 32-month high, largely due to a 3.5% drop in Hong Kong’s Hang Seng following a rapid 30% gain. Meanwhile, Japan’s Nikkei rose 2.3%, supported by statements from newly appointed Prime Minister Shigeru Ishiba, who reaffirmed the continuation of loose monetary policy, causing the yen to fall to its lowest level in a month.
European and U.S. Market Outlook
European equity markets are anticipated to open lower amid concerns over inflation and interest rate hikes. In the U.S., futures dipped slightly following Richmond Fed President Barkin’s remarks that it is too early for the central bank to declare victory over inflation, reflecting ongoing uncertainty in global markets. Investors are focused on upcoming services PMI in Europe and U.S. jobless claims data.
Oil Prices Surge Amid Geopolitical Tensions
Oil prices rose this morning as tensions in the Middle East escalated, with Iranian missile attacks on Israel raising concerns over potential supply disruptions. However, swelling U.S. crude inventories helped ease some pressure. Analysts noted that global oil supplies remain ample, with OPEC’s spare capacity tempering worries about the market’s ability to withstand disruptions.
U.S. Job Growth and Wage Data
U.S. private businesses added 143,000 jobs in September, surpassing forecasts of 120,000. The service sector led with 101,000 new jobs, particularly in leisure/hospitality and education/health services, while the goods-producing sector added 42,000 positions, including 26,000 in construction. Year-over-year wage growth for job-stayers fell to 4.7%, and for job-changers to 6.6%.
Eurozone Employment Stability
The Euro Area’s unemployment rate remained stable at 6.4% in August, matching record lows and market expectations. The number of unemployed fell by 94,000 to 10.925 million, while youth unemployment decreased to 14.1%. Spain (11.3%) and Greece (9.5%) reported the highest rates, while Poland (2.9%) and Malta (3%) had the lowest.
Tech and Company-Specific Updates
NVIDIA shares rose 1.5% after hours on Wednesday after CEO Jensen Huang described demand for its Blackwell product as “insane,” with production proceeding as planned. Huang stated that “everyone wants the most, and everyone wants to be first” during an interview on CNBC. This followed the announcement of an expanded partnership with Accenture to help businesses scale AI adoption through the Accenture AI Refinery.
Additionally, OpenAI has raised $6.6 billion from investors, including Microsoft, Nvidia, and Khosla Ventures, potentially valuing the company at $157 billion. This funding follows OpenAI’s shift toward a for-profit model and projected revenue growth to $11.6 billion in 2024.
Market Analyst Insights and Stock Movements
Analysts provided updates on several key stocks:
- Tesla: Bernstein analysts warned that Tesla Inc. might miss its annual sales growth targets for 2024, predicting 1.8 million deliveries, below the company’s 2 million target.
- Salesforce: Northland Capital Markets upgraded Salesforce to “Outperform” after the launch of Agentforce, an AI platform that significantly expands its market from $0.8 trillion to $3.2 trillion.
- LVMH: HSBC maintained a cautious “hold” rating on LVMH, citing short-term uncertainties, especially weaker demand in Asia.
- Mercado Libre: JP Morgan downgraded Mercado Libre from “overweight” to “neutral,” citing limited upside potential following a strong 62% rally in the past year.
Conclusion
Global markets remain cautious amid geopolitical tensions and economic uncertainty. Investors are focusing on key data releases and central bank updates as they navigate market volatility.
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