A stimulus-fueled stock market rally in Asia and Europe lifted Thursday, September 26. European stocks followed the Asian stock market rally, boosted by news of aggressive economic stimulus from China and a drop in oil prices following a report that Saudi Arabia is preparing to abandon its unofficial target of $100 a barrel.
Europe’s Stoxx 600 index rose 1%, approaching August’s record high, while China’s onshore blue chips and Hong Kong’s Hang Seng index both rose more than 4%.
Meanwhile, Brent and US crude futures fell more than 2% after the Financial Times reported that Saudi Arabia is preparing to increase output, abandoning its unofficial target of $100 a barrel. Energy stocks in Europe fell nearly 3%, the only sector deeply in the red.
The combined impact of these news items boosted sectors such as technology stocks in Europe and Asia, European luxury stocks and national stock markets from Spain to South Korea.r. S&P futures rose 0.8% and Nasdaq futures rose 1.4%boosted by an after-hours surge in Micron Technology after it forecast higher-than-expected revenue on artificial intelligence-driven chip demand.
Elsewhere, the banking drama in Europe continued, with Commerzbank’s CEO-designate saying the lender will hold a first round of talks with UniCredit on Friday over a possible merger. Commerzbank shares hit their highest level since 2011 and rose 5.5%. UniCredit also rallied 4%.
Doubts about China
Pledges by China’s top leaders on Thursday to support fiscal spending and revive growth added to a series of measures by Beijing this week that have boosted local assets and raised global risk appetite.
Money markets now favor a half-point cut by the Federal Reserve in November, with traders pricing in nearly 39 basis points of reductions after disappointing U.S. consumer data earlier in the week. The U.S. central bank’s preferred price gauge and a snapshot of consumer demand will provide further clues on economic health on Friday.
“The Fed is more concerned about growth than they admit,” Joe Davis, chief economist at Vanguard, said on Bloomberg TV. “Our view is that they will be more aggressive in the near term.”
In China, the CSI 300 index was on track for its biggest weekly gain in almost a decade following the stimulus pledge. However, doubts remain over the long-term impact of these measures.
“I wouldn’t be surprised if we see a bit of a pullback tomorrow,” Helen Jewell, chief investment officer at BlackRock Fundamental Equities EMEA, said on Bloomberg TV. “This is what’s happening in the markets right now: one day you take on more risk, the next you reduce it. The Chinese economy remains very fragile.”
Source: Ambito
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