It was a quiet day in European markets yesterday due to the UK bank holiday. The Stoxx 600 index was almost flat, and France’s CAC 40 made slight gains, while the German, Spanish, and Italian indices slipped.
A sell-off in chipmakers and Big Tech shares pulled US stocks into negative territory yesterday, despite a buoyant start to the day, nullifying hopes that the S&P 500 would hit another record high; the index closed 0.3% lower. The Nasdaq fell 0.9%, with Micro Computer, a partner of Nvidia, being the worst performer at -8.3%. Despite Big Tech’s strong year-to-date performance, investors have recently shifted focus amid concerns about inflated valuations, along with expectations that other sectors will benefit more from upcoming interest rate cuts. A Nvidia earnings update is due on Wednesday, while US inflation figures are due on Friday; many are expecting the numbers to reinforce long-awaited rate cuts.
Overnight, we saw a similar pattern in Asian markets, as shares broke a three-day winning streak, pulled down by tech stocks as traders await upcoming earnings releases. Benchmarks in Hong Kong, China, and South Korea were all in the red. Chinese consumption stocks also need highlighting, with PDD Holdings falling by a record 29% after a warning of slow sales. Nvidia's financial results will likely materially impact listed companies in the region as investors seek clarity on the demand for AI.
OPEC member Libya announced it would shut down oil production and exports amid a domestic dispute between the eastern and western factions in the country. Brent crude rose as much as 3.2% to hit $81.58 during Monday morning trading in New York, the highest level for the global oil benchmark since August 13th, closing at $81.43, a one-month high. WTI was up at $77.13 a barrel. The dollar index gained 0.2%, while moves in Treasuries were muted.
In terms of data today, we have German GDP imminently and US consumer confidence later this afternoon.
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