Let's delve into the upcoming day in European and global markets with insights from Rae Wee.
On Monday, market dynamics showcased a shift in investor sentiment as they turned away from American stocks and redirected their focus towards European and Chinese markets.
Wall Street futures stumbled early in the day, failing to maintain the previous week's momentum, which had seen a rise in all three major U.S. stock indexes.
The downturn in U.S. stocks on Monday could potentially be attributed to comments made by the U.S. Treasury Secretary just the day before, where he mentioned "no guarantees" regarding the avoidance of an economic downturn, shortly after the U.S. President refrained from taking action.
Facing the volatility of the U.S. stock market, investors sought solace in a particular type of investment that provides a trade-off: limiting potential gains in exchange for a safeguard against losses.
Conversely, in Europe, a different narrative is unfolding. Buoyed by optimism surrounding Germany's economic revival strategy, investors have been pouring funds into European stocks, propelling the pan-continental STOXX 600 index up over 7% year-to-date.
The German DAX has mirrored this success, boasting a more than 15% increase, in stark contrast to the 4% decline in the S&P 500 index.
European stock futures are indicating a positive start to the day, with EUROSTOXX 50 futures up by 0.17% and DAX futures gaining 0.35%.
Germany's parliamentary budget committee unveiled plans on Sunday for a substantial increase in state borrowing, aimed at fortifying defense and revitalizing economic growth.
Similarly, in China, previously downtrodden stocks are now experiencing an upturn, defying the impact of shifting U.S. policies. A surge in tech shares, fueled by the successful debut of Chinese AI startup DeepSeek's R1 reasoning model, has driven the Hang Seng Index in Hong Kong, where many leading Chinese companies are listed, up nearly 20% this year.
Positive indicators from China reveal an acceleration in retail sales growth during January-February, offering optimism to policymakers despite a rise in unemployment and a slowdown in factory output.
Recent measures in China include a "special action plan" introduced by the State Council, focusing on elevating domestic consumption through initiatives like income increments for citizens and the establishment of a childcare subsidy program.
Financial regulators in China have also relaxed consumer credit limits and loan terms to facilitate access to substantial funds, signaling long-term support for market stability.
Investors are gearing up for a bustling week, anticipating central bank policy decisions, notably from the Federal Reserve. While interest rates are projected to remain steady, market participants will closely monitor hints of potential rate cuts to restore market equilibrium.
In geopolitical spheres, President Trump is scheduled to engage in discussions with Russian President Vladimir Putin on Tuesday, with intentions to address the conclusion of the conflict in Ukraine.