Global Markets Rally as Chip Sector Stocks Soar
European stocks surged on Monday, driven by a strong performance in the chip sector. The Stoxx 600 index rose 0.2%, with semi-conductor heavyweights such as ASML Holding NV leading the charge. This followed Microsoft Corp.’s announcement to invest $80 billion in data centers, sparking interest in the sector.
Tech Advances in Asia
In Asia, tech stocks in South Korea and Taiwan made gains, offsetting declines in China and Japan. The mood was mirrored in European markets, where investors were buoyed by the positive sentiment.
Inflation Data Takes Center Stage
Investors will be closely watching inflation data for the euro-area and individual member nations, due to be released on Monday and Tuesday. An expected acceleration in price increases is likely to remind policymakers that their 2% goal is still out of reach.
Currency Markets See Shifts
The dollar pulled back for a second day, while the yen led losses among Group-of-10 currencies against the greenback. The Canadian dollar, however, received a boost from a report that Prime Minister Justin Trudeau is likely to announce his resignation as leader of the Liberal Party this week.
China’s Services Sector Expands
A private survey showed that China’s services sector activity expanded at the fastest pace since May, signaling improving domestic demand after Beijing’s stimulus efforts.
US Interest Rates in Focus
Federal Reserve Governor Lisa Cook is set to speak at a conference on law and microeconomics at the University of Michigan, while her colleague Tom Barkin suggested keeping rates restrictive for longer. The comments, combined with strong US economic data, underscore the challenge investors face in deciphering the path ahead for US interest rates.
Bond Yields Rise
Treasury yields rose for a second session on Monday, remaining near the highest levels since May. Bond traders are entering the new year with diminished expectations as the resilient US economy and President-elect Trump’s tax-cut and tariff policies threaten to keep the fixed income market under pressure.
Oil and Gold Prices Steady
Oil prices steadied near their highest level in almost three months, while gold slipped. Goldman Sachs Group Inc. revised its forecast for gold prices, pushing the target to mid-2026 on expectations of fewer rate cuts by the Federal Reserve.
Key Events This Week
- Eurozone HCOB services and composite PMI
- US factory orders, S&P Global services and composite PMI
- Fed Governor Lisa Cook speaks
- Eurozone CPI, unemployment
- US job openings, trade, ISM services
- Richmond Fed President Thomas Barkin speaks
- Eurozone PPI, consumer confidence
- FOMC minutes
- Fed Governor Christopher Waller speaks
- ECB Governing Council member Francois Villeroy de Galhau speaks
- China CPI, PPI
- Eurozone retail sales
- BOE Deputy Governor Sarah Breeden speaks
- Japan household spending, leading index
- US nonfarm payrolls, unemployment, University of Michigan consumer sentiment
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