The S&P 500 Index reached a new all-time high on Friday, capping off a global stock rally that also lifted European and US futures. The Stoxx 600 index in Europe rose 0.8% on Monday morning, driven by gains in banking, real estate and tech sectors. Tech stocks also boosted US futures, as investors anticipated lower interest rates from the Federal Reserve and a surge in artificial intelligence. However, Chinese stocks lagged behind, as the country’s economic recovery showed signs of weakness.
The S&P 500 has rebounded strongly from its low point in October 2022, increasing by about 35% and breaking its previous record of 4,796.56 on Friday. It was the last of the three main US stock indexes to achieve this feat.
Jun Bei Liu, a fund manager at Tribeca Investment Partners in Sydney, said: “We are entering a situation where the economic slowdown is more mild, and we are also expecting rate cuts. This combination is very favorable for the stock market.”
The online gambling industry in Europe will become more concentrated after La Francaise des Jeux SA proposed to acquire the Swedish firm Kindred Group Plc for 27.95 billion kronor ($2.7 billion), sending its shares up 19% on Monday. The dollar and US Treasuries were stable. Benchmark notes rose on Friday as a survey from the University of Michigan indicated high consumer confidence and low inflation expectations, which is favorable for the Federal Reserve.
Later this week, investors will focus on the Bank of Japan, which is expected to keep its policy unchanged on Tuesday when it reveals the outcome of its meeting. On Thursday, the US will release its preliminary estimate of fourth-quarter GDP and the European Central Bank will make its rates decision.
On Monday, Asian stocks gave up their earlier gains as the Hang Seng Index plunged 3% and the main indexes in China also declined. China’s commercial banks maintained their benchmark lending rates on Monday, following the central bank’s choice last week to avoid lowering interest rates.
Vasu Menon, investment strategy managing director at Oversea-Chinese Banking Corp. in Singapore, said that the current cheap prices of Chinese stocks are not enough to attract investors back to the markets. He said that he thinks that Chinese policymakers will offer more stimulus, but he wonders if it will be big enough to satisfy the markets.
Oil prices dropped as Libya, an OPEC member, resumed production at its biggest field, increasing global supplies and temporarily easing worries about the Red Sea tensions that are likely to keep affecting shipping.
