Global Stock Futures Extend Gains Following S&P 500 Record Surge: Market Overview

Stock futures in Europe and the US have experienced an upward trend, building on the momentum from last week’s record-high achievement by the S&P 500 Index. This surge follows a rally in tech shares, propelling the S&P 500 beyond 4,800, fueled by optimism surrounding anticipated Federal Reserve interest-rate cuts and the ongoing boom in artificial intelligence. Despite this positive trend, Chinese stocks faced losses due to concerns over the nation’s economic recovery.

Market sentiment is influenced by the perception of a soft landing in the economic slowdown coupled with discussions about potential rate cuts, creating a favorable environment for equity markets, according to Jun Bei Liu, a fund manager at Tribeca Investment Partners in Sydney.

While Asia’s benchmark stock index initially advanced, the Hang Seng Index and mainland Chinese benchmark indexes experienced a decline. Chinese commercial lenders maintained their benchmark lending rates, aligning with the central bank’s decision to refrain from cutting borrowing costs.

Vasu Menon, Investment Strategy Managing Director at Oversea-Chinese Banking Corp. in Singapore, noted that the current low valuations in Chinese stocks might not be sufficient to attract investors back into the markets. He expressed skepticism about whether potential stimulus measures from Chinese policymakers would be significant enough to satisfy market expectations.

Oil prices declined as OPEC member Libya resumed output at its largest field, contributing to global supply levels. This development temporarily overshadowed concerns about ongoing tensions in the Red Sea disrupting shipping.

The dollar exhibited weakness against most Group-of-10 peers, partially retracing gains made earlier in the month. Treasury yields edged higher, with the benchmark 10-year yields dropping slightly. Investors are turning their attention to the Bank of Japan’s two-day policy meeting, starting Monday, with expectations that the central bank will maintain its existing settings when announcing the results on Tuesday.

This week’s focus includes Thursday’s first estimate of US fourth-quarter GDP, central bank meetings for Canada and Europe, South Korean economic output data, and initial readings of European purchasing managers’ surveys for 2024. Additionally, attention is drawn to political developments, such as Ron DeSantis withdrawing from the US presidential race to endorse Republican front-runner Donald Trump ahead of the New Hampshire primary on Tuesday.

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