London (AFP) – Stock markets diverged Monday at the start of a week filled with economic data and central bank decisions, following a tech sell-off on Wall Street. London, Frankfurt, and Paris rose solidly around midday after major Asian indices slid. Gold climbed closer to its all-time high as the dollar dropped, as traders bet on further cuts to US interest rates by the Federal Reserve next year.
“The coming week is shaping up to be a significant one for global markets, with a dense calendar of economic releases and major central bank decisions,” said Jim Reid, managing director at Deutsche Bank. The European Central Bank is expected to hold interest rates on Thursday, when the Bank of England is forecast to trim borrowing costs, as policymakers react to cooler inflation in the eurozone and UK. However, the Bank of Japan is expected to hike its main rate on Friday amid a weak yen. Attention turns also to key US data, including reports on jobs for October and November, which were delayed by the government shutdown. Investors will also study a US inflation reading this week. The data will be pored over for an idea about the Fed’s plans for next month’s rate decision, even if traders have pared back their expectations for cuts next year.
The US central bank has lowered borrowing costs at the past three meetings, citing concerns about a struggling American labor market, though there has been some dissent among policymakers who are concerned about persistently high inflation. Also in view is the race to take the helm at the Fed after boss Jerome Powell steps down in May, with US President Donald Trump’s top economic aide Kevin Hassett and Fed governor Kevin Warsh said to be the front-runners.
Concerns about the AI-fuelled tech rally have meanwhile returned to the spotlight after last week’s poorly received earnings from US giants Oracle and Broadcom revived questions about the wisdom of the vast sums invested in the sector. After hefty losses on Wall Street on Friday, where the S&P 500 and Nasdaq indices both shed more than one percent, Asia suffered a tech-led retreat Monday. Tokyo and Seoul, which have chalked up multiple record highs this year on the back of the tech surge, were among the biggest losers along with Taipei and Hong Kong. Shanghai was also down as another round of weak data showed Chinese retail sales rose at the slowest pace since December 2022. Among the biggest losers were South Korean chip giants Samsung and SK Hynix, while Japanese tech investment titan SoftBank tanked more than seven percent.
Tech firms have been at the forefront of a global surge in equity markets for the past two years as they pumped cash into all things linked to artificial intelligence, with chip giant Nvidia becoming the first to top $5 trillion in market valuation in October. But they have hit a sticky patch in recent weeks amid worries that their valuations have gone too far and the AI investments will take some time to make returns, if at all.
Key figures at around 1115 GMT:
London – FTSE 100: UP 0.9 percent at 9,734.14 points
Paris – CAC 40: UP 1.1 percent at 8,155.43
Frankfurt – DAX: UP 0.5 percent at 24,303.89
Tokyo – Nikkei 225: DOWN 1.3 percent at 50,168.11 (close)
Hong Kong – Hang Seng Index: DOWN 1.3 percent at 25,628.88 (close)
Shanghai – Composite: DOWN 0.6 percent at 3,867.92 (close)
New York – Dow: DOWN 0.5 percent at 48,458.05 (close)
Euro/dollar: UP at $1.1747 from $1.1742 on Friday
Dollar/yen: DOWN at 155.03 yen from 155.83
Pound/dollar: UP at $1.3386 from $1.3368
Euro/pound: DOWN at 87.76 pence from 87.83
West Texas Intermediate: DOWN 0.2 percent at $57.35 per barrel
Brent North Sea Crude: DOWN 0.2 percent at $61.04 per barrel.
© 2024 AFP
