The risk-on sentiment prevailing today can likely be chalked up to three developments: guidance raise by MU, deepening of the monetary easing cycle round the globe, and supportive data on the domestic front.
MU. In a surprise move, MU raised top and bottom line guidance (reported after market yesterday), highlighting a robust AI environment and recovery in traditional servers. The stock is up over 15% on the back of these results, with other semis stocks also gaining, as investors continue to buy into the AI secular growth theme.
Source: Bloomberg
Policy support. Central banks and governments appear to be following in the footsteps of the Fed, as they take steps to stimulate their economies with rate cuts. Overnight, China announced significant fiscal support on top of the monetary support announced earlier in the week.
In Europe, the Swiss National Bank cut policy rate by 25bp, and Goldman now expects another cut at the December meeting.
Goldman also expects the ECB to speed up the pace of rate cuts to consecutive steps.
Interestingly, as the rest of the world enters 'easing' mode, the US markets priced in a less dovish easing cycle today (with 2024 now back below 3 more rate cuts priced in)...
Source: Bloomberg
Strong data at home. Finally, we also received a flurry of data today that allay concerns about the US economy: Real GDP growth was unrevised at 3.0% annualized in the second quarter consumers are saving more than expected, and initial jobless claims also declined.
Source: Bloomberg
The sum of all that was decent gains for the US majors with Nasdaq leading overnight but fading back to join the rest by the US open...
AI-related stocks soared (thanks to MU)...
Source: Bloomberg
Despite the AI gains, Mag7 stocks overall were practically unchanged - after testing new highs intraday...
Source: Bloomberg
Most Shorted stocks were squeeze hard at the cash open but selling pressure hit shortly after....
Source: Bloomberg
But, without a doubt, China was the focus today with the HXC Index +10% post the fiscal stimulus announcement with Goldman's trading desk noting that it was 3x better to buy in ADRs with a flurry of activity from both LOs and HFs.
Source: Bloomberg
Of course, with China stimulating, US data improving, The Fed cutting, and physical inventories plunging, it makes perfect sense that crude oil prices would plunge today (on some anonymously sourced malarkey around OPEC+ production increases)...
Source: Bloomberg
Gold continued its charge to new highs, hitting $2685 intraday today...
Source: Bloomberg
The roller coaster in FX markets continued too with the USD giving back much of yesterday's gains...
Source: Bloomberg
Treasuries were mixed today with the long-end outperforming (30Y -1bps, 2Y +6bps), but all yields are now higher on the week...
Source: Bloomberg
Bitcoin surged back above $65,000 for the first time since July...
Source: Bloomberg
Finally, is this the start of Bitcoin's breakout to new highs...
Source: Bloomberg
Gold has certainly shown the other alternate currency the way (and now Beijing is back in the game).
