In premarket trade, Netflix Inc. surged 10% as membership levels exceeded forecasts. The Nasdaq 100 futures saw a 0.7% increase. In the US, where Tesla Inc. and International Business Machines Corp. are scheduled to report later today, technology is a dominant investing story.
The most valuable technological business in Europe, ASML Holding NV, had a spike in its stock as orders more than quadrupled, which helped the Stoxx 600 index rise 0.8%. SAP SE surged upon revealing a reorganisation strategy aimed at increasing profitability and sharpening its focus on artificial intelligence.
Francois Rimeu, a strategist with La Francaise Asset Management in Paris, stated that stocks are now in a bit of a sweet place. “European growth is flat, while US economic newsflow is strong,”
“Earnings in US tech and AI are also holding up, which is supporting the broader market,” he continued.
China’s intention to strengthen its economy by lowering the reserve requirement ratio for banks, however, has improved sentiment. Chinese banks should be able to increase lending and government bond purchases as a result of the shift. Commodity equities in Europe saw a surge, with the Hang Seng Index rising 3.6%.
Investors concluded that monetary authorities are likely to abandon negative interest rates in the near future, leading to a more than 0.5% increase in the value of the yen against the dollar in currency markets. After the Bank of Japan’s meeting on Tuesday, swaps markets have increased their bets on a 25 basis-point rate hike in April.
The focus now shifts to other monetary policy meetings, including those at the Bank of Canada later in the day and the European Central Bank on Thursday. Both are likely to leave policy rates unchanged, but they may give an indication of when the first rate decrease will occur.
Bond rates in the eurozone fell after data indicated that economic activity fell for the eighth consecutive month in January. While prospects of a March ECB rate decrease have receded, traders have increased the amount of monetary easing they anticipate this year, with 136 basis points priced by year end.
The pound rose as UK statistics raised concerns about inflation, with private sector employers reporting the steepest increase in prices in five months.
A dollar index fell after rising for two days. Ten-year Treasury rates fell 3 basis points, to 4.1%.
Meanwhile, former President Donald Trump won the New Hampshire primary, establishing himself as the Republican Party’s likely nominee. Goldman Sachs Group Inc. predicts that a Trump administration would lead to greater trade tariffs. According to bank strategists, German industrials, chemicals, and automakers are among the most susceptible firms in that scenario.