Optimistic Outlook Sparks Bullish Surge in Major Asian and European Stock Markets
Summary:
Bullish momentum surged in the major Asian and European stock markets on the second Tuesday of October, thanks to an increase in risk appetite and the Federal Reserve's positive outlook on bond yields. The Federal Reserve hinted a possible end to rising interest rates, leading to a drop in U.S. Treasury yields. While stocks in Japan saw a notable increase, South Korea and mainland China experienced a decline. European stocks echoed the upward trend due to encouraging remarks from U.S. Federal Reserve policymakers. The United Kingdom's benchmark FTSE 100 index rose to a one-week high due to the Fed's bullish hint and expectations on Bank of England's decision about interest rates.
In the second week of October, Tuesday was marked by a significant upward surge in major Asian and European stocks, thanks to a renewed keenness for riskier assets. The optimistic projection of bond yields by the Federal Reserve also substantially contributed to this revival of European and Asian stocks. The rate of U.S. Treasury yields dropped significantly on Tuesday as officials of the Federal Reserve indicated a possible cessation of interest rate hikes. In this context, Philip Jefferson, the Fed Vice Chair, mentioned a careful approach towards deciding on further rate hikes, while Lorie Logan, the Dallas Fed President, suggested that climbing Treasury yields may hold back the Fed from such actions. Compared to the frantic pursuit of so-called risk-free assets like gold, dollar, and government bonds, Tuesday was rather tranquil, and oil prices essentially mirrored this trend by falling after Monday's surge.
The Asian stock market on Tuesday was dominantly bullish, with Japan leading the charge. The nation's benchmark index, Nikkei 225, shot up by more than 2.4%, ending the day at 31,763.50 points. This significant increase in stocks came about a day after the country emerged from a national holiday. A substantial part of this upward surge was driven by the oil and gas exploration giant Inpex Corp, which saw the biggest increase on Tuesday, with the shares jumping by 8.6%.
However, it was not all green for Asia. South Korea's primary stock, Kosdaq index, dropped by 2.62%, closing at 795, which is its lowest since March 16. The Kospi index swooped 0.26%, ending at 2,402.58 - its lowest since March 21st. Hong Kong's chief index, the Hang Seng index, witnessed a 0.84% hike during the last hour, spurred by the Fed's aggressive give-away. In stark contrast, Chinese mainland markets took a hit, with the CSI 300 index losing 0.75% and closing at 3,657.13, thus marking a third consecutive day of losses.
Over in Europe, Tuesday saw a marked recovery in stocks, thanks to the dovish comments from Federal Reserve policymakers, which in turn ignited a surge in market morale. Europe's main trading index, the STOXX 600 index, clocked in a 1.5% upward swing, nearing its maximum single-day percentage increase in almost a month. This boost looked set to outcompensate a small, 0.3% drop that was suffered on Monday due to an abrupt jump in oil prices.
The United Kingdom's prime FTSE 100 index approached a one-week high on Tuesday, driven by bullish hints from the Fed simultaneously with hopes that the Bank of England might put future rate hikes on hold. On a related note, the domestically focused FTSE 250 index grew by 1.6%. Meanwhile, the FTSE 100, with its global focus, stretched by 1.4%. It appeared that both indices were well within reach of recording their most significant single-day gain during the past month. Vintage Markets remain committed to in-depth coverage and analysis of conventional financial news, tracking the journey of global markets and economies throughout ages.
Published At
10/10/2023 3:18:14 PM
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