US stocks saw gains midweek while there was heavy demand at the largest auction ever for ten-year US Treasuries on Wednesday. The positive sentiment for equity markets spilled over to Asian stocks on Thursday. Chinese stocks were mixed after the country exchanged its top securities regulator, a move seen as another attempt to prop up its ailing equity market.
In New York, stock indices were all trading around all-time highs again. The Dow Jones Industrial gained 0.4% while the S&P 500 finished the session just shy of the 5000-mark, up 0.8% at 4995 points. The Nasdaq-100 gained more than 1%.
The high closes on Wall Street come after investors showed strong demand for ten-year notes from the US Treasury on Wednesday. At the record-setting auction with a volume of USD 42 billion, ten-year Treasuries sold at a high yield of 4.093%. Ten-year notes gained 2 basis points during the day to trade at 4.108%. Bond investors face an unclear monetary policy outlook for 2024 with opinions shifting quickly on when and how quickly the Federal Reserve (Fed) will begin cutting interest rates. At the same time, the US Treasury Department has said it plans to continue selling large volumes of debt to cover the governments expanding funding needs.
In the Asia-Pacific region, stock markets followed Wall Street higher. In Tokyo, the Nikkei 225 reached a 34-year high, closing up 2.1%. South Korea’s Kospi gained 0.3% and Australia’s S&P/ASX 200 was up 0.3%.
Stock markets in China were mixed on Thursday after the government replaced the head of its securities regulation body. The move was interpreted as a further attempt by the government to prop up stock markets, which are trading around five-year lows due to last year’s lacklustre post-lockdown performance and problems in the real estate sector. Historically, replacing the top securities regulator has been positive for Chinese equities with strong rallies following previous personnel changes. However, inflation data released on Thursday showed just how difficult it has been to boost the Chinese economy. Consumer price declined for a fourth month in a row in January, with the Consumer Price Index falling 0.8% on the year. Hong Kong's Hang Seng Index was trading down 1.6%, while the Shanghai Composite gained 0.8%.
Macroeconomic data out of Europe continued to paint a rather gloomy picture for the continent. Industrial production in Germany slumped again in December and remains about 10% below the level it was at prior to the outbreak of Covid. Industrial production fell 1.6% when compared with November, making it the seventh monthly decline in a row. High energy costs continue to be a drag on Europe’s largest economy with production in the energy-intensive chemicals industry falling by 7.6% on the month.
Elsewhere in Europe, the Swiss unemployment rate increased in January to 2.5% from 2.3% in December. The unemployment rate also increased when compared to January 2023, when it was 2.2%. Compared to its European neighbours, Switzerland still enjoys relatively low unemployment levels: unemployment in the euro area was 6.4% in December.
Corporate news in focus: Quarterly figures from Adyen, ArcelorMittal, AstraZeneca, ConocoPhillips, Kering, L'Oreal, Philip Morris, Siemens, Société Générale, SoftBank, Swisscom, Take-Two, Unilever.
Economic data in focus: European Central Bank’s economic bulletin, US weekly initial jobless claims.
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.