By Mike Dolan
LONDON (Reuters) -What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
With the U.S. government still shut down and China on holiday, world markets lapped up Federal Reserve easing speculation and European stocks hit record highs – riffing off the available U.S. labor market data as well as AI and trade-related themes.
Wall Street stocks shook off news of a surprising drop in private sector payrolls last month and the first day of the U.S. government shutdown on Wednesday. All three major indexes finished higher again and interest rate markets priced in a 95% chance of 50 basis points of more Fed rate cuts by yearend. Stock index futures were higher again before Thursday’s bell, with short-dated Treasury yields at two-week lows, the dollar softer and crude oil prices at their lowest in four months.
Wednesday’s stocks bid was led by healthcare after Tuesday’s Pfizer-Trump pricing deal set off sector rotation, while chips extended gains. Gold hovered near record highs and Bitcoin hit its best level in almost two months.
Helped by the pharma rally and this quarter’s start of Germany’s fiscal boost, euro zone stock indexes – whose 33% gains this year in dollar terms are more than twice that of the S&P500 – hit new record highs. And with China on its Golden Week break, other Asian markets took the tech cue overnight, with South Korea’s Kospi index up almost 3% after Samsung and SK Hynix signed letters to supply memory chips for OpenAI’s data centers. Japan’s Nikkei was also up almost 1% on a chip-driven rally after four down days.
In today’s column, I look at the Swiss National Bank’s intervention to buy euros to weaken the franc in the second quarter may mean for global reserve management and markets.
Today’s Market Minute
* President Trump’s administration on Wednesday froze $26 billion for Democratic-leaning states, following through on a threat to use the government shutdown to target Democratic priorities.
* OpenAI, the company behind ChatGPT, has reached a valuation of $500 billion, following a deal in which current and former employees sold roughly $6.6 billion worth of shares, a source familiar with the matter told Reuters on Thursday.
* Tesla CEO Elon Musk on Wednesday became the first person ever to achieve a net worth of nearly $500 billion, propelled by a rebound in the EV company’s shares and surging valuations of the tech entrepreneur’s other startups this year.
* The European Union is currently debating how and when to halt its significant energy imports from Russia. One potentially easier option, writes ROI energy columnist Ron Bousso, would be closing loopholes that currently facilitate substantial imports of niche fuels from Moscow.
* As China faces a growth slowdown, the technology-driven “intelligent economy” and emerging consumption trends offer protection against slackening economic activity, but more targeted government policies will still likely be needed to sustain momentum. Read the latest from Emmer Capital Partners Ltd founder Manishi Raychaudhuri.
Chart of the day
The absence of official U.S. payroll statistics due to this week’s government shutdown has put the focus on other cuts of the jobs market – with the Bureau of Labor Statistics showing in its Job Openings and Labor Turnover Survey that hiring declined in August and there are now more people looking for work than there are available jobs. The Conference Board’s September consumer confidence survey showed the gap between respondents’ views on whether jobs are plentiful or hard to get narrowed to a more than 4-1/2-year low of 7.8 from 11.1 last month.
Today’s events to watch
* U.S. September layoffs from Challenger (7:30 AM EDT), US August factory goods orders (10:00 AM EDT)
* Dallas Federal Reserve President Lorie Logan speaks; European Central Bank Vice-President Luis De Guindos, French central bank chief Francois Villeroy de Galhau and Ireland’s central bank boss Gabriel Makhlouf all speak
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan; Editing by Mark Heinrich)
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