Europe’s stock markets are experiencing a positive trend, with the DAX, KAC, and POTSI indices all posting gains of 0.5% and 0.2%, respectively. Rafi Gozlan, Chief Economist at IBI Investment House, highlights the return to a horizontal improvement in global activity as a key driver of this positive momentum in risk assets. Gozlan notes that while there was negative growth in the second quarter due to rising bond yields against better-than-expected macro data, there are signs of a transition towards more balanced growth across industries and geographies.
The Global Purchasing Managers’ Index (PMI) has continued to expand, reaching 52.1 in March, with an overall improvement in activity seen across industrial sectors. In the Eurozone, there are indications of ongoing improvement in economic activity as well, with the Aggregate PMI crossing the 50-point mark after a prolonged contraction. The recovery is being driven by service industries supported by low unemployment rates and improving real wages against moderated inflation.
Looking ahead, investors are eagerly anticipating quarterly reports from major companies such as Delta Airlines and banks like Citigroup, Wells Fargo, and JP Morgan. Meanwhile, gold prices have hit record highs due to geopolitical tensions and high US interest rates. In the technology sector, analysts are closely watching companies like Microsoft and Nvidia for future growth prospects. Jefferies predicts that Microsoft will be a significant player in the generic AI market while Nvidia’s future growth is less optimistic due to concerns about inventory levels affecting future developments.
Deutsche Bank advises caution regarding Nvidia’s high valuation as traders navigate a complex landscape looking for opportunities and risks worldwide.
In Asia’s markets trading opened with mixed trends as Japan’s Nikkei index recovered while indices in China and Hong Kong experienced declines. The US futures contracts were trading with minimal changes.
Overall, it appears that Europe’s stock markets are on track for continued growth despite some challenges in other regions around the world. As always, investors will need to remain vigilant and continue monitoring economic indicators and company-specific developments closely to stay ahead of potential opportunities or risks that may arise from these complex global markets.
