This week witnessed significant movements in global markets, driven by robust stimulus measures announced in China. Major stock indexes reached record highs, fueled by optimism in the technology sector and positive economic data. Meanwhile, Europe saw gains amid hopes for interest rate cuts, Japan's stock markets surged on dovish central bank commentary, and China experienced a substantial rally due to its new economic measures. Other key markets, including Hungary and the Czech Republic, also saw noteworthy central bank actions.
United States
U.S. stocks reached record highs this week, buoyed by new stimulus measures in China and optimism surrounding artificial intelligence. Key highlights include:
- The Dow Jones Industrial Average and the S&P 500 Index moved to record highs, driven by strong performance in chemicals, materials, and technology stocks.
- Technology stocks outperformed, with notable gains in Intel and NVIDIA, along with a surge in Micron Technology.
- Mixed economic data, including a sharp drop in consumer confidence and mixed signals from the housing sector.
- Benign inflation data, with the core PCE price index rising only 0.1% in August, near the Fed’s target.
- Little change in the yield on the benchmark 10-year U.S. Treasury note.
Market Indexes Changes
- DJIA: 42,313.00 (+249.64, 12.27% YTD)
- S&P 500: 5,738.17 (+35.62, 20.30% YTD)
- Nasdaq Composite: 18,119.59 (+171.27, 20.71% YTD)
- S&P MidCap 400: 3,119.24 (+15.92, 12.14% YTD)
- Russell 2000: 2,224.70 (-3.18, 9.75% YTD)
Europe
European markets rebounded this week, driven by hopes for interest rate cuts and China's stimulus measures. Key points include:
- The STOXX Europe 600 Index ended 2.69% higher.
- Major stock indexes in Germany, France, Italy, and the UK saw significant gains.
- Eurozone business activity shrank, while UK private sector activity remained in expansionary territory.
- German business and consumer confidence fell, signaling potential economic challenges.
- Sweden and Switzerland's central banks cut interest rates.
Japan
Japan's stock markets experienced significant gains this week, driven by dovish commentary from the Bank of Japan and China's stimulus announcements. Highlights include:
- The Nikkei 225 Index rose 5.6%, and the TOPIX Index increased by 3.7%.
- Shigeru Ishiba was chosen as the next prime minister, with expectations of a slightly hawkish monetary policy stance.
- BoJ Governor Kazuo Ueda indicated a patient approach to raising rates.
- Economic data showed a slowdown in consumer inflation and continued expansion in the private sector.
China
Chinese stocks surged following the announcement of a comprehensive stimulus package. Key measures and outcomes include:
- The Shanghai Composite Index climbed 12.8%, and the CSI 300 soared 15.7%.
- The PBOC cut its reserve requirement ratio and several key policy rates.
- Additional measures included rate cuts for existing home mortgages and reduced down payment ratios for second home purchases.
- China's top leaders vowed to stabilize the property market and meet the 2024 growth target of around 5%.
Other Key Markets
Hungary
Hungary's central bank implemented a careful reduction in interest rates:
- Main policy rate reduced from 6.75% to 6.50%.
- Overnight collateralized lending rate lowered from 7.75% to 7.50%.
- Overnight deposit rate cut from 5.75% to 5.50%.
- Economic recovery stalled in Q2, with a 0.2% decline in domestic economic performance.
- Inflation eased to 3.4% in August, with expectations of continued disinflation.
Czech Republic
The Czech National Bank reduced its main policy rate amid sub-par economic growth and price stability:
- Two-week repo rate cut from 4.50% to 4.25%.
- Economy growing below potential, with slow recovery in domestic demand.
- Inflation close to the 2% target since early 2024, but policymakers remain cautious about potential inflationary pressures.
