Global Stocks Experience Jitters, Wall Street Shares Rally

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Principal Points

• Global equities experience jittery trading, while stocks on Wall Street rally
• Investors continue to assess the economic outlook as the final quarter of the year approaches

Stocks Across the Globe Trade Mixed

World shares wavered on Wednesday while early Thursday has seen major markets around the world trade mixed as investors rotate and adjust in efforts to find value.

Asian stocks fell Thursday, continuing a Wednesday drop after a range of economic data in China showed a downturn in economic growth. Increasing cases of the Delta variant of coronavirus and tighter government regulations have hit consumer spending and the housing market in China.

Retail sales, a key gauge of China’s consumption, increased 2.5% in August, compared with the same time a year ago. The figure was significantly below July’s 8.5% expansion. Home sales by value fell 19.7% in August from a year ago. The drop was the biggest since April 2020 when the Covid-19 was sweeping across China.

Wall Street Equities Push Higher

Wall Street stocks reversed early-week losses on Wednesday as traders and investors increased their risk appetite and bargain hunting after several days of defensive trading. The S&P500 index closed 0.9% higher with the energy sector as the best performer.

Value stocks such as financials and industrials also rose in the broad-based rally. The Dow Jones Industrial Average added 0.7%, or more than 230 points. The tech-heavy Nasdaq Composite gained 0.8% with Microsoft, Tesla and Google’s Alphabet up 1.3% to 1.7%.

Fresh economic data in the US and rising oil prices contributed to the positive day for the three major stock benchmarks. The Federal Reserve reported US industrial production continued to rise in August after steep declines in the wake of Hurricane Ida.

European Shares Fall on Wednesday but Rise Early Thursday

In contrast to the optimism on Wall Street, European markets on Wednesday moved sharply lower. The Europe-wide Stoxx 600 closed down 0.8% amid increased uncertainty about the economic rebound and the slowdown in China. The pan-continental benchmark slipped to its lowest closing price in more than a month.

Spain’s IBEX35 retreated 1.65%, dragged lower by utilities. France’s CAC40 and the DAX in Frankfurt lost 1.04%, and 0.68%, respectively. London’s FTSE100 moved lower by 0.25%.

European markets today trade in positive territory with the Stoxx 600 up about half a percent.

Investors globally continue to assess the economic outlook and try to figure out how the Covid-19 outbreak and rising inflation could impact economic growth. In addition, pandemic-related supply snarls and the expected tightening of monetary policy by the US central bank weigh further on the uncertainty for the future.

Looking Ahead into the Day

As US investors prepare to enter the day, stock futures floated right at the flat line in pre-market trading on Thursday. Futures contracts on the Dow Jones, the S&P500 and the Nasdaq Composite swung between gains and losses.

An hour before the regular session, the US will publish its retail sales data for August as well as filings for unemployment benefits for the previous week.

Cryptocurrencies Rebound

Bitcoin spiked above $48,000 on Wednesday and continues to trade above the milestone on Thursday. The cryptocurrency market has experienced a significant rebound this week. Since Monday, the price of bitcoin has gained about 7%.

The leading asset continued to climb today even after Ray Dalio’s warning that if the digital currency became too successful, government authorities will “kill it”. Bitcoin reached a session high of $48,500 earlier today.