Yesterday was a muted session in European equities, but they fared far better than their US counterparts. The MIB 40 was up by 0.7%, the CAC 40 and IBEX 35 were up by 0.5%, and though the Euro Stoxx 50 struggled to find and maintain momentum, it finished up 0.2% on the day. By contrast, the Nasdaq 100 fell by 1.2%, the S&P 500 by 1.0% and the Dow Jones by 0.9%.
There was also some ugly price action at the sector level. Communications services fell by 1.97%, just finishing above the session’s lows. Communications services were only eclipsed by utilities, which have been solid lately but shed 2.32% in yesterday’s session. Only the energy sector finished up on the day, by just 0.35%.
There were sharp falls in tech names such as Amazon, which dropped by 3.06%, Adobe Systems, which lost 3.93%, and Tesla, which fell 3.7% ahead of its much-anticipated Robotaxi event on Thursday. Google parent Alphabet fell by 2.47% after a US court ruled it would have to open the Android Play Store to third-party rivals, a decision that Alphabet has appealed. One bright spot among tech names was Super Micro Computer, which rallied by 15.79%. The price spike came as management confirmed that sales at the company remain robust in its 10-K annual report filing. This move felt like a classic short squeeze and comes a week after a 10-for-one stock split in the shares of the AI server-maker, which were down by more than 43% over the last three months and almost 50% over the last six.
Chinese markets reopened after their recent holiday as authorities in Beijing announced another round of economic stimulus for the country’s troubled economy. While mainland Chinese indices responded positively, Hong Kong’s Hang Seng 50 index took fright, selling off by as much as 8% at one point, suggesting that the latest stimulus measures fell short of market expectations.
Oil prices have weakened this morning in Europe, with Brent crude off by 1.47% at $79.74 per barrel and WTI lower by 1.63% at $75.875. Silver has fallen by 1.17%, gold is flat this morning and copper has lost 2.33%, reflecting the disappointment with the latest stimulus in China. US 10-year treasury bond yields remain above 4% having broken that level yesterday.
The dollar index is flat in Europe at 102.416. However, the greenback has made gains against the Aussie dollar this morning; AUD/USD is trading at $0.67279, down by 0.4%. Australia is a major trading partner of China’s, so any delay in rekindling the fortunes of the Chinese economy could have a knock-on effect.
There was unexpectedly good news for the German economy this morning as industrial production data showed signs of life, expanding by 2.9% month-over-month in August, well above the market’s estimate of 0.8%. The data showed the fastest growth rate since the spring of 2021 and though the annual figure remains negative, it’s now well above the low point posted in July this year.
It’s a quiet day on the macroeconomic calendar, though there are plenty of central bank speakers from the European Central Bank and the US Federal Reserve to look out for, alongside US and Canadian balance of trade data. Traders will also turn their attention to the earnings calendar as JPMorgan, Wells Fargo and the Bank of New York Mellon report their Q3 earnings on Friday.
