Commentary
The US market experienced a notable rebound after a period of volatility, particularly driven by growth in the tech sector. In the US, stocks recovered from their worst weekly loss since March 2023, with technology stocks, led by NVIDIA, propelling much of the gains. The chipmaker’s optimistic outlook on AI helped stabilize investor sentiment after initial concerns about core inflation, which rose slightly above expectations in August. However, the U.S. economy showed some positive signs, with declining mortgage rates offering a glimmer of hope for the housing sector and lower Treasury yields reflecting investor expectations for future rate cuts by the Federal Reserve. These developments signal a cautious optimism for U.S. markets, despite the ongoing inflationary pressures.
In Europe, markets also saw gains, buoyed by a rate cut from the European Central Bank (ECB). The European STOXX 600 index rose as Germany, France, and the UK posted gains, with the ECB’s quarter-point rate cut aimed at addressing slowing economic growth and easing inflation. While the ECB is being careful not to commit to a specific future rate path, core inflation remains a concern, especially in the services sector, which is likely to keep the central bank cautious. The European labor market remains tight, and wage growth is expected to remain elevated, adding to inflationary pressures.