Micron in the Spotlight: Markets Come Back to Life
After weeks of AI silence, with attention focused on the Fed's sharp interest rate cuts, Micron has made an unexpected splash in the market.
The move was the catalyst for a rally in Wall Street futures overnight on Thursday, especially Nasdaq futures, which gained more than 1% at the start of trading despite a decline on Wednesday.
Volatility at the End of the Quarter
Ahead of the end of the third quarter, global markets are in turmoil, with capital flows uneven. However, the key themes remain unchanged: global interest rate cuts, a soft landing for the US economy, disinflationary processes amplified by falling oil prices, new economic impetus from China and the upcoming elections in America.
Switzerland is going down
The Swiss National Bank has become the latest major regulator to continue its cycle of monetary easing. It has already cut interest rates three times this year, dropping them to 1%. Despite this, the Swiss franc held its ground amid a strengthening dollar, which continues to rise on the global market.
Deflationary pressure in the energy sector
Oil prices are under pressure again. The Financial Times reported that Saudi Arabia is preparing to revise its unofficial target of $100 per barrel, planning to increase oil production. This led to another decline in oil prices in the US, which fell below $70 per barrel. The decline is already 25% for the year, which could significantly affect the weakening of inflation in September.
Thus, the dynamics in the markets remain complex, with an emphasis on the decline in inflation and expectations of upcoming political events.
Fed: new decisions ahead
Federal Reserve Chair Adriana Kugler added fuel to the fire of expectations amid disinflation in the United States. In her statement, she emphasized that inflation has not yet reached its target values, and the Fed's future steps will be based on incoming economic data. However, she added that the rapid decline in inflation is forcing the regulator to revise its rate in order to maintain the balance of restrictive monetary policy.
China increases stimulus
China continues to take active steps to support its economy, which has led to a significant jump in stock indices both on the mainland and in Hong Kong, where shares rose by 4%. Particular attention is paid to the real estate market, which has been going through difficult times in recent months. The new round of growth came after the Chinese government promised further measures to stimulate economic activity, following rate cuts and the provision of additional funds to the market.
China's Politburo: Focus on Economic Growth
China's official media, citing a Politburo meeting, reported that the authorities will strengthen countercyclical measures in the framework of fiscal and monetary policies. The main goal is to achieve the established annual indicators of economic and social development. One of the key measures will be the issuance of special sovereign bonds worth about 2 trillion yuan (approximately $ 284.43 billion), which will be a major step towards a new round of fiscal stimulus.
Market expectations on Wall Street
On Wall Street, sentiment remains moderately positive, despite a slight correction on Wednesday, when indices lingered near their record highs. The tech sector added to the optimism on positive news, including an increase in new home sales. All of this reinforces the belief in a possible soft landing of the US economy, which is a key guide for investors in the near future.
Labor Market Back in Focus
Investors are keeping a close eye on unemployment data on Thursday, which traditionally has an impact on the market. Importantly, the August PCE report, which Fed spokesman Christopher Waller has argued will be a key factor in lowering interest rates, is due out on Friday.
Bond Yields Remain Steady
Treasury yields are showing stability amid a series of auctions taking place this week. The two-year yield remains at around 3.55%, while the 10-year note is trading at 3.77%. Importantly, the gap between the two- and 10-year yields has widened to just over 20 basis points.
A Stopgap for the US Congress
The US Congress on Wednesday passed a stopgap bill designed to prevent a government shutdown that could begin as early as next week. Despite a significant number of Republicans rebelling against the House leadership over the lack of cuts to federal spending, the bill was approved.
The stopgap bill would maintain the current funding level of about $1.2 trillion through December 20, avoiding layoffs of thousands of federal employees and the shutdown of numerous government programs just weeks before the November elections.
Kamala Harris' Economic Plan
US Vice President Kamala Harris announced her economic stimulus plan on Wednesday. In particular, she proposed tax breaks for American manufacturers, as well as significant investments in key industries that she believes will shape the future of the United States in the coming decades. The plan is aimed at supporting the middle class and strengthening the country's economy.
Wall Street Rises on AI Optimism
U.S. stock index futures rose strongly on Thursday as a new wave of interest in artificial intelligence technology was fueled by a positive outlook from Micron, which breathed new life into investor sentiment. Market attention was also focused on upcoming economic data and comments from Federal Reserve Chairman Jerome Powell.
Micron Outlook Generates Excitement
Micron Technology shares soared 15.8% in premarket trading after the company reported better-than-expected first-quarter revenue guidance, underscoring robust demand for memory for AI-related computing and confirming the continued strong demand for chips.
Gains Among Chipmakers
Micron wasn't the only one in the spotlight; other key semiconductor players also posted gains. Nvidia gained 1.2%, Advanced Micro Devices rose 2.2% and Broadcom rose 1.7%, reflecting broad investor interest in the tech sector.
Tech giants continue to rise
Other big tech names led the way with Meta jumping 1.7% after unveiling a new version of its Quest mixed reality headset. Alphabet rose 1%, Tesla rose 1.3% and Microsoft gained 0.7%, reflecting continued optimism about the future of tech. Futures for Growth
As of 5:21 a.m. ET Thursday morning, Dow E-minis futures were up 197 points (0.47%), S&P 500 E-minis futures were up 43.5 points (0.76%), and Nasdaq 100 futures were up 268.25 points (1.33%).
Small-Cap Gains Continue to Impress
Futures linked to the Russell 2000 index, which tracks small-cap stocks, jumped 0.83%, showing continued investor interest in the small-cap space. Meanwhile, the S&P 500 and Dow Jones have both hit new highs, strengthening the market's top names. The tech-heavy Nasdaq remains just 3% off its all-time high as investors continue to pile into companies that could benefit from the rise of artificial intelligence.
Rate Cuts Boost Market
Expectations for further rate cuts remain a major factor in the ongoing rally in the stock market. Market participants are now focusing on the latest jobless claims data for the week ending September 21 and the revised GDP figure for the second quarter. Those reports are scheduled to be released at 8:30 a.m. ET.
Fed Continues to Ease Policy
The big news was a statement by Fed Chair Adriana Kugler late Wednesday. She expressed full support for the Federal Reserve's recent decision to cut interest rates by half a percentage point, citing a focus on the labor market. The move signals the start of accommodative monetary policy.
Market Awaits Powell
Investors are eagerly awaiting Fed Chair Jerome Powell's speech at a conference in New York before the opening bell. His comments could provide clearer clues about the economic outlook and the pace of future monetary policy changes. The chance of another 50 basis point rate cut in November has already risen to 60.8%, up from 38.8% just a week ago, according to CME Group's FedWatch tool.
Traders will also be closely watching speeches from a number of other Fed officials, including John Williams, Michael Barr, Michelle Bowman and Neel Kashkari, for additional signals about the future direction of policy.
Commodity Companies Gain on Chinese Bond News
Copper miners such as Freeport-McMoRan posted a robust 3.5% gain on Thursday. Lithium miners also rose, with Albemarle up 3.8% and Arcadium up 2.3%. A major catalyst was news that China plans to issue about 2 trillion yuan in special sovereign bonds as part of a massive fiscal stimulus package to support the economy.
Chinese Companies on the Rise
Optimism also spread to Chinese companies listed on U.S. exchanges. Leading names such as Li Auto jumped 6.7%, PDD Holdings rose 7% and Alibaba added 5.3%. The moves underscore the impact of expectations for China's fiscal stimulus, which could significantly support domestic companies and spur economic growth.
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