U.S. Markets See Record Closes
On Monday, U.S. equities surged to new highs, buoyed by remarks from Federal Reserve Chair Jerome Powell that reassured investors of potential rate cuts. The S&P 500 rose by 0.42%, and the Dow Jones inched up 0.04%. Powell emphasized that future rate decisions will be data-driven, not predetermined, leading to growing expectations of a 25-basis-point cut in November. This optimism helped fuel the record close for U.S. markets.
European Markets and Auto Sector Struggles
In contrast, European markets experienced a downturn, with the EURO STOXX 50 dropping 1.1%. The decline was primarily driven by significant losses in the auto sector, where Stellantis faced a 14% plunge after reducing its financial forecasts. Despite this drop, the index gained 1.8% for the month of September, as inflation data spurred expectations of possible European Central Bank (ECB) rate cuts.
Global Market Performance on October 1, 2024
Asian markets showed mixed results on Tuesday. The MSCI Asia-Pacific index, excluding Japan, dipped 0.13%, closing at 620.05, slightly below its recent highs. Japan’s Nikkei, however, surged 1.5% due to a weakening yen, bouncing back from earlier losses. Meanwhile, trading volumes remained light in mainland China due to market closures, as global investors awaited U.S. labour market data for further direction.
European Futures and U.S. Economic Data
European stock futures displayed positive momentum, while U.S. futures remained flat to slightly negative. Investors are closely watching upcoming economic indicators, including the U.S. jobs report, which could shape future rate cut decisions. Current market sentiment suggests a 65% likelihood of a modest interest rate reduction in November.
Oil Market Remains Steady
Oil prices held steady on Tuesday as geopolitical tensions in the Middle East were offset by concerns over weak demand. China’s slowing manufacturing sector, alongside OPEC+ plans to raise oil output by 180,000 barrels per day in December, kept price gains in check.
Federal Reserve Signals Further Rate Adjustments
Federal Reserve Chair Jerome Powell indicated that interest rates could continue to decline toward a more neutral level, though future cuts would be decided based on ongoing economic data. Supporting this view, Atlanta Fed President Raphael Bostic expressed openness to a potential 50-basis-point reduction if U.S. labour markets weaken unexpectedly.
Key Takeaways:
- U.S. stock markets reached record highs, driven by optimism around possible Fed rate cuts.
- European markets struggled, particularly in the auto sector, as companies like Stellantis, Volkswagen, and Aston Martin issued earnings warnings.
- The oil market remained stable, with OPEC+ planning a production increase amidst lower-than-expected demand.
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