Global equity markets surged on renewed confidence in the resilience of the U.S. economy and anticipation of Chinese economic stimulus measures. Asian markets saw widespread gains, while European futures pointed to a strong open following a robust U.S. jobs report. U.S. Treasury 10-year yields rose near the key 4% mark as traders scaled back expectations of aggressive Federal Reserve rate cuts.
The optimism stems from the U.S. labor market, which added the most jobs in six months, fueling speculation of a “no-landing” scenario where U.S. economic growth remains strong without a recession, though inflation could reemerge. This outlook boosted the dollar while pressuring haven assets like bonds.
Chinese stocks also surged, with a key Hong Kong index hitting a two-year high ahead of mainland markets reopening after a week-long holiday. China’s recent stimulus measures have sparked renewed hope, with Goldman Sachs upgrading Chinese stocks on the potential for further gains. However, skepticism remains, with firms like JPMorgan and HSBC cautioning against over-optimism amid China’s ongoing housing market challenges and uncertain consumer confidence.
Looking ahead, markets will focus on the Fed’s September meeting minutes and upcoming U.S. inflation data, which may signal smaller interest rate cuts at the November meeting. Meanwhile, oil prices dipped as traders weighed potential geopolitical risks tied to Israel and Iran.
