Technology Fuels Stocks Advance As Dollar Pulls Back: Markets Wrap

Technology firms led equity gains on Monday, lifting stocks further from a year-end rut on renewed confidence in the sustained demand for artificial-intelligence infrastructure. The dollar fell by the most since November.

Nasdaq 100 futures advanced 1%, with chip heavyweights Nvidia Corp. and Advanced Micro Devices Inc. rising more than 2% in premarket trading. In Europe, the Stoxx 600 also rose, fueled by ASML Holding NV’s biggest daily gain since October. S&P 500 contracts were up 0.7%.

US stocks are set to for a second day of gains after ending the longest losing streak since April on Friday. Microsoft Corp.’s plans to spend $80 billion on data centers stoked fresh optimism about the endurance of AI, while Nvidia-partner Hon Hai Precision Industry Co. reported faster-than-expected revenue growth.

Tech’s rebound “is a technical move after the year-end correction,” said Fares Hendi, portfolio manager for global equities at SG Prevoir in Paris. “Microsoft’s decision to raise capex in 2025 is probably helping momentum.”

The dollar slumped by the most in three months following a Washington Post report that US President-elect Donald Trump’s aides are weighing universal tariff plans that would only cover critical imports. If implemented, such a plan is bound to leave a smaller dent in global trade and reduce the inflationary impact of import levies.

US Treasuries erased the session’s losses following the Washington Post report. The 30-year rate climbed as much as four basis points to 4.85% earlier in the day, the most since November 2023, ahead of a $58 billion sale of three-year notes on Monday.

Morgan Stanley strategists warned Monday that rising yields could pose a headwind to US stocks in the first half, and that rates are “the most important variable to watch” in early 2025. Ten-year yields have now surged around 50 basis points since early December to 4.60% as traders price in the possible inflationary effect of Trump’s policies.

Any resurgence of price pressures would likely slow the pace of interest-rate cuts by the Federal Reserve. The US central bank has dialed back its expectations for easing in 2025, and markets now fully price just one reduction this year.

RBC Capital Markets LLC strategist Lori Calvasina expects that markets will soon get better clarity on Trump’s policies.

“One of my core beliefs about politics and markets, whatever it is, you have to go through some temporary pricings, and those can be painful,” Calvasina told Bloomberg TV. “It tends to be rather short-term and then you move on.”

Later today, Federal Reserve Governor Lisa Cook will speak at a conference on law and microeconomics at the University of Michigan. Her colleague Tom Barkin, the Richmond Fed President, suggested on Friday his preference was to keep rates restrictive for longer.

China maintained its support for the yuan with the daily reference rate after the currency slumped past a key level on Friday. Services sector activity in the world’s No. 2 economy expanded at the fastest pace since May, a private survey showed on Monday, signaling improving domestic demand after Beijing’s stimulus blitz.

In commodities, gold slipped as Goldman Sachs Group Inc. said it no longer sees the metal reaching $3,000 an ounce by the end of the year, pushing the forecast to mid-2026 on expectations the Fed will make fewer rate cuts.

Oil steadied near its highest level in almost three months as Saudi Arabia raised its official prices on signs of tightness in Middle Eastern crude markets.

Key events this week:

• US factory orders, S&P Global services and composite PMI, Monday
• Fed Governor Lisa Cook speaks, Monday
• Eurozone CPI, unemployment, Tuesday
• US job openings, trade, ISM services, Tuesday
• Richmond Fed President Thomas Barkin speaks, Tuesday
• Eurozone PPI, consumer confidence, Wednesday
• FOMC minutes, Wednesday
• Fed Governor Christopher Waller speaks, Wednesday
• ECB Governing Council member Francois Villeroy de Galhau speaks, Wednesday
• China CPI, PPI, Thursday
• Eurozone retail sales, Thursday
• BOE Deputy Governor Sarah Breeden speaks, Thursday
• Japan household spending, leading index, Friday
• US nonfarm payrolls, unemployment, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.7% as of 7:11 a.m. New York time
• Nasdaq 100 futures rose 1%
• Futures on the Dow Jones Industrial Average rose 0.4%
• The Stoxx Europe 600 rose 0.8%
• The MSCI World Index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index fell 0.8%
• The euro rose 1% to $1.0414
• The British pound rose 1% to $1.2542
• The Japanese yen rose 0.1% to 157.09 per dollar

Cryptocurrencies

• Bitcoin rose 0.9% to $99,382.28
• Ether rose 0.1% to $3,650.41

Bonds

• The yield on 10-year Treasuries was little changed at 4.60%
• Germany’s 10-year yield advanced two basis points to 2.44%
• Britain’s 10-year yield was little changed at 4.60%

Commodities

• West Texas Intermediate crude rose 0.4% to $74.22 a barrel
• Spot gold rose 0.2% to $2,644.94 an ounce

Source

Advertisement

Click To Join Our Community Telegram Group