European and Asian stocks rose across the board on Monday as investors took note of a recent flurry of corporate earnings.
The upbeat start to the week contrasted with the gloom on Wall Street after big tech stocks had their worst week since the coronavirus crash of 2020. But U.S. futures rose, with the S&P 500 and Dow Jones Industrial Average both up 0.3%. .
A number of companies are scheduled to release their first quarter earnings reports this week.
European stocks started mixed. Germany’s DAX rose 0.2% to 17,780.33 and the FTSE 100 rose 1% to 7,977.83. In Paris, the CAC40 index fell 0.1% to 8,015.27.
In Asian trading, Hong Kong’s Hang Seng rose 1.8% to 16,511.69, leading the region. However, the Shanghai Composite Index fell 0.7% to 3,051.76 after the People’s Bank of China left the one-year and five-year loan prime rates unchanged.
The People’s Bank of China is trying to assess whether more stimulus is needed after the economy expanded at a faster-than-expected annual rate of 5.3% in the January-March period, analysts said.
“Although the outlook for gross domestic product (GDP) in the first quarter is positive, there are still weaknesses in domestic demand along with challenges in the real estate sector,” IG’s Yep Jun Long said in a commentary. “Any signs that the economic recovery is losing momentum could lead to calls for further rate cuts later this year.”
Tokyo’s Nikkei Stock Average rose 1% to 37,438.61 yen, with the yen depreciating further. The dollar rose to 154.69 yen from 154.59 yen, trading at a level not seen since 1990.
South Korea’s Kospi rose 1.3% to 2,629.44.
Australia’s S&P/ASX 200 index rose 1.1% to 7,649.20.
On Friday, the S&P 500 fell 0.9%, ending a three-week losing streak. The loss was 5.5% lower than the record set late last month, making it the longest losing streak since October, when the team went on a record-breaking rampage earlier this year.
The Dow Jones Industrial Average rose 0.6%, while the Nasdaq Composite Index fell 2%.
The market’s worst-performing stocks included some of the biggest stars of the past. Supermicrocomputers lost more than a fifth of their value, falling 23.1%. The company, which sells servers and storage systems used in AI and other computing, had soared nearly 227% in the year to date.
The S&P 500 tech stocks collectively fell 7.3% last week, its worst performance since March 2020, as some of the world’s biggest companies reported disappointing trends. For example, Dutch company ASML, a major supplier to the semiconductor industry, reported lower than expected orders for early 2024.
Markets have been hurt by growing recognition that the Federal Reserve is likely to keep interest rates high for longer than investors expected. Rising interest rates have a negative impact on the prices of all types of investments, but those that are hit hardest are those that are considered the most expensive and tend to cause investors to wait the longest for significant growth. That could leave tech stocks vulnerable.
Fed officials have insisted they want more confirmation that inflation is falling toward their 2% target before lowering the central bank’s key interest rate, which is at its highest level since 2001.
Companies are under additional pressure to deliver profit growth, as interest rates are unlikely to be very helpful in the short term.
In the oil market, benchmark US crude oil fell 92 cents to $81.30 per barrel in electronic trading on the New York Mercantile Exchange. It rose 12 cents on Friday to $82.22 a barrel.
A barrel of Brent crude oil fell 95 cents to $86.35 per barrel. Concerns about fighting in the Middle East briefly caused the price to rise above $90 overnight, but the price had returned to $87.29 on Friday. Iran’s military fired air defenses at key air bases and nuclear facilities in response to drone attacks believed to be carried out by Israel, raising concerns in the market.
