Surge in Asian and European Stocks Boosted by Risk Appetite and Fed’s Optimistic Outlook
The Asian and European stock markets experienced a surge on October 10, driven by a wave of risk appetite. This bullish resurgence was also influenced by the optimistic outlook on bond yields from the United States Federal Reserve.
On Tuesday, U.S. Treasury yields dropped significantly as Federal Reserve officials hinted that there may not be further interest rate hikes. The Vice Chair of the Fed, Philip Jefferson, stated that the institution would proceed carefully in determining whether additional rate rises are necessary. Additionally, Dallas Fed President Lorie Logan suggested that rising Treasury yields could prevent the Fed from raising rates.
This positive sentiment led to a decrease in demand for safe assets like the dollar, gold, and government bonds. Oil prices also retreated from their spike on Monday.
Asian Stock Market Led by Japan Shows Bullish Momentum
The Asian stock market experienced a surge on Tuesday, primarily led by Japan. The Nikkei 225, Japan’s benchmark index, rose over 2.4% and closed at 31,763.50 points. This increase was driven by Inpex Corporation, an oil and gas exploration company, which saw an 8.6% rise.
In contrast, South Korea’s Kosdaq Index fell 2.62%, reaching its lowest level since March 16. The Kospi Index also dipped 0.26%, closing at its lowest level since March 21. Hong Kong’s Hang Seng Index saw a late-hour increase of 0.84% due to the hawkish comments from the Federal Reserve. However, mainland Chinese markets experienced declines with the CSI 300 index dropping 0.75% for the third consecutive day.
Bullish Surge in European Markets
European stocks saw a significant recovery on Tuesday following dovish remarks from U.S. Federal policymakers. The STOXX 600 index, Europe’s benchmark, rose 1.5%, approaching its largest single-day percentage gain in almost four weeks. This rebound came after a decline of 0.3% on Monday, as investors sought refuge in Treasurys and gold amidst the spike in oil prices.
The FTSE 100 Index in the United Kingdom reached a one-week high due to the Fed’s positive outlook and expectations that the Bank of England would not raise interest rates. The FTSE 250 Index, which is more domestically focused, increased by 1.6%, while the globally focused FTSE 100 jumped by 1.4%.
Hot Take: Asian and European Stock Markets Rebound with Risk Appetite and Positive Fed Outlook
The surge in Asian and European stock markets on October 10 was fueled by a renewed risk appetite among investors. The United States Federal Reserve’s optimistic outlook on bond yields, coupled with hints of no further interest rate hikes, boosted market sentiment.
Japan’s Nikkei 225 led the Asian market’s bullish momentum, driven by Inpex Corporation’s significant increase. However, South Korea’s Kosdaq Index experienced a decline, while Hong Kong’s Hang Seng Index saw gains. In Europe, the STOXX 600 index recovered strongly after Monday’s dip, with the FTSE 100 Index reaching a one-week high.
This rebound indicates growing confidence among investors as they navigate uncertain economic conditions.
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