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Highlights
- US tech stocks surge as political uncertainty temporarily eases
- Tesla and Boeing lift market sentiment despite earnings concerns
- Eurozone equities rally as trade tension softens
A wave of optimism swept through global markets as comments from former U.S. President Donald Trump sparked a strong rally in U.S. equities, especially within the technology sector. After days of investor anxiety surrounding Federal Reserve independence and U.S.-China trade tensions, a sudden change in tone helped steady market nerves, even if just temporarily.
U.S. indices posted robust gains overnight, with the Dow Jones Industrial Average up 1.1%, the S&P 500 climbing 1.7%, and the Nasdaq Composite soaring 2.5% or 408 points. The rebound was largely driven by Trump clarifying he does not intend to remove Federal Reserve Chair Jerome Powell, easing fears over the Fed's autonomy.
Additionally, market participants regained some hope for improved U.S.-China trade relations, despite U.S. Treasury Secretary Scott Bessent dampening expectations by ruling out an immediate rollback of tariffs. Nonetheless, the easing rhetoric helped ignite a strong bounce in the highly sensitive tech and consumer discretionary sectors, both of which jumped between 2.8% and 2.9%.
Electric vehicle giant Tesla (NASDAQ:TSLA) surged 5.4%, bolstered by CEO Elon Musk’s announcement that he would scale back political commentary to concentrate on corporate leadership. This came despite a significant 71% drop in Tesla’s quarterly net income, suggesting investors were more encouraged by Musk’s redirection of focus than deterred by financials.
Aviation heavyweight Boeing (NYSE:BA) also contributed to positive market momentum, gaining between 2.4% and 3.9% after reporting a smaller-than-expected quarterly loss.
The bullish sentiment extended to European markets as well. The FTSEurofirst 300 index rose 1.8%, with the basic resources sector up 3.4%. Notably, software major SAP (ETR:SAP) surged 10.6% after exceeding earnings expectations, pushing the broader European tech space up by 4.0%. Meanwhile, the FTSE 100 edged up 0.9%.
Back in the U.S., economic indicators delivered mixed signals. The S&P Global manufacturing PMI edged up to 50.7, indicating modest expansion, while the services PMI dipped to 51.4. New home sales surprised to the upside, climbing 7.4% to an annualized rate of 724,000.
Bond markets showed divergent movements. The yield on 10-year Treasuries hovered near 4.39%, while the 2-year yield rose to 3.88%. A US$70 billion auction of 5-year notes was well received, clearing at 3.995%.
Currency markets saw weakness against the U.S. dollar, while commodities offered a mixed picture. Gold prices dropped sharply by 3.7% to US$3,294.10 per ounce, and Brent crude declined 2.0% to US$66.12 per barrel amid chatter of increased OPEC+ supply. On the other hand, iron ore futures ticked up 0.2% to US$100.09 per tonne.
Today, attention will turn to Australian payroll and labour force data, along with upcoming U.S. economic reports including jobless claims, durable goods orders, and the Chicago Fed index. Earnings from Alphabet (NASDAQ:GOOGL), Intel (NASDAQ:INTC), Merck (NYSE:MRK), and PepsiCo (NASDAQ:PEP) are also on the radar.
