Stocks rose broadly in Europe and Asia on Monday as investors focused on the latest wave of corporate earnings.
The upbeat start to the week contrasted with gloom on Wall Street after big tech stocks posted their worst week since the COVID crash of 2020. But U.S. futures were higher, with contracts for the S&OP 500 and the Dow Jones Industrial Average rose 0.3%.
A number of companies are expected to release reports on their first-quarter performance this week.
European stocks opened mixed. Germany’s DAX rose 0.2% to 17,780.33 and the FTSE 100 rose 1% to 7,977.83. In Paris, the CAC 40 fell 0.1% to 8,015.27.
In Asian trading, Hong Kong’s Hang Seng led the region, gaining 1.8% to 16,511.69. But the Shanghai Composite Index fell 0.7% to 3,051.76 after the People’s Bank of China left preferential rates on 1-year and 5-year loans unchanged.
China’s central bank is waiting to see whether more stimulus is needed after the economy expanded at a faster-than-expected 5.3% annual rate in the January-March quarter, analysts said.
“The first quarter’s Gross Domestic Product (GDP) reading has been promising, but there remain pockets of weakness in its domestic demand, along with challenges in the real estate sector,” IG’s Yeap Jun Rong said in a commentary. “Any sign of weakening recovery momentum could still prompt calls for further cuts later this year.”
Tokyo’s Nikkei 225 rose 1% to 37,438.61 and the yen weakened further. The US dollar rose to 154.69 yen from 154.59 yen, trading at levels not seen since 1990.
The Kospi in South Korea jumped 1.3% to 2,629.44.
S of Australia&P/ASX 200 rose 1.1% to 7,649.20.
On Friday, S.&OP 500 fell 0.9%, closing its third consecutive week of losses. He finished 5.5% below the record set at the end of last month, the longest losing streak since October, when he began a romp that has led to a series of records this year.
The Dow Jones Industrial Average rose 0.6% and the Nasdaq index fell 2%.
The market’s worst performers included several stocks that were its biggest stars. Super Micro Computer lost more than a fifth of its value, falling 23.1%. The company, which sells servers and storage systems used in AI and other computing, soared nearly 227% in the year ahead.
Technology stocks in S&OP 500 largely lost 7.3% last week, recording its worst performance since March 2020, as some global giants reported discouraging trends. ASML, a Dutch company that is a major supplier to the semiconductor industry, reported weaker than expected orders for early 2024, for example.
Markets have been hit by growing recognition that the Federal Reserve is likely to keep interest rates higher for longer than investors expected. High rates hurt the prices of all types of investments and some of the hardest hit tend to be those seen as the most expensive and making investors wait longer for big growth. This could make technology stocks vulnerable.
Fed officials are adamant they want to see additional evidence that inflation is falling toward the 2% target before cutting the Fed’s key interest rate, which is at its highest level since 2001.
Given that interest rates don’t seem likely to offer much help in the near term, companies are under even more pressure to generate profit growth.
In the oil market, US benchmark crude oil fell 92 cents to $81.30 per barrel in electronic trading on the New York Mercantile Exchange. It gained 12 cents on Friday to $82.22 per barrel.
A barrel of Brent oil lost 95 cents to US$86.35 per barrel. On Friday, it retreated to $87.29 after briefly jumping above $90 overnight on concerns about fighting in the Middle East. Iranian troops fired air defenses at a major air base and a nuclear facility during an apparent Israeli drone attack, raising concerns in the market.
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