Market Update: Global Shares Rise, Gold Hits Record High
LONDON/SYDNEY (Reuters) – On Tuesday, global shares experienced an uptick, pushing investments into tech sectors, while gold prices soared to an all-time high, driven by expectations of US interest rate cuts.
The Euro STOXX 600 is typically slower to respond to the tech frenzy, but it still climbed by 0.4%, notably bolstered by German and French markets, which saw increases of 0.5% and 0.7%, respectively.
Gold Investments on the Rise
Meanwhile, Dutch semiconductor equipment firm ASML saw a decrease of 1.2%, yet it managed to hold onto its leading position in the market.
On Wall Street, records were achieved once again on Monday. Nvidia’s announcement of a $100 billion investment in OpenAI led to excitement, with data center gear anticipated to be out by late 2026.
This surge in high-tech stocks has attracted capital from momentum funds and options traders, enhancing the broader markets’ performance. The big names in tech are, well, driving profits and, in turn, lifting wider indexes.
A Deutsche Bank analyst noted, “It’s been a stunning performance by seven key players who are steering profit growth,” referencing the seven tech giants that have notably influenced the US market. “The profit outlook in the US seems really promising for 2023 and 2024, although it hinges on just a small selection of stocks.”
Chris Weston, research director at Pepperstone, observed that many investors are now turning to gold as a hedge against stock market exposure. This month, gold reached a remarkable price of $3,759.02 per ounce, marking an increase of nearly 9% so far.
In futures trading, the S&P 500 remained fairly stable, while Nasdaq futures slipped by 0.3%, following a recent peak. Investors were also keenly awaiting comments from US Federal Reserve officials, including Chairman Jerome Powell, to better gauge the future direction of monetary policy after last week’s rate cut.
As economic data emerges, Germany is showing a significant uptick in activity. The losses in Eurozone bonds disappeared following the release of regional business activity data. The benchmark 10-year German bond yield remained flat at 2.75% as growth indicators improved for the country’s largest economy in September.
In Asia, the chip sector was buoyed by strong demand for tech, with Korean stocks rising 0.5%, part of a 9% increase this month. The Nikkei in Japan, despite being closed for holidays, has seen a 6.5% increase in September, while Taiwan has jumped nearly 7%.
China’s Blue Chip market recently faced challenges but has stabilized, maintaining liquidity. The MSCI Index tracking Asia-Pacific stocks outside Japan has recorded modest gains, rising by 5.5% this month.
Mixed Signals from the Fed, Dollar Shows Volatility
The stock market remains buoyed by anticipation of additional interest rate cuts from the Fed, following last week’s easing. Current futures imply a roughly 90% likelihood of a rate cut in October and a 75% chance in December.
Despite inconsistent messages from the Fed, the market persists. On Monday, new Fed Governor Stephen Milan advocated for a substantial rate cut, while three colleagues advised caution regarding inflation.
In currency trading, the dollar continued its fluctuating trend, easing overnight after previous sessions of volatility. The euro rebounded from a low of $1.1726 on Monday, stabilizing at $1.179, whereas the dollar fell to 147.72 yen from around 148.37.
The Swedish crown is likely to remain stable for some time at 9.34 per dollar, following the central bank’s rate cut to 1.75%.
Oil prices faced pressure as concerns over oversupply overshadow geopolitical tensions in Russia and the Middle East. Brent crude dipped 0.4% to $66.27 per barrel, with US oil dropping 0.3% to $62.02.
