A look ahead to the coming days in the US and global markets by Mike Dolan

With the end of the quarter fast approaching, tech excitement returned to Wall Street overnight as Micron Technology once again beat its AI results, while Chinese stocks rose again following this week’s blitz of monetary easing.

The topic of artificial intelligence had stalled somewhat in recent weeks as attention focused on the US Federal Reserve’s aggressive interest rate cuts – but Micron provided new momentum overnight.

The company’s shares rose 14% after the market closed after the company reported its biggest quarterly revenue increase in over a decade due to booming demand for its AI-related memory chips.

As investors’ attention turns to the upcoming third-quarter earnings season, Micron’s results, as usual, set the tone for the chip sector as the company stays ahead of its peers and serves a broad customer base spanning PCs, data centers and smartphones.

And that has given Wall Street futures a boost after a subdued Wednesday; Nasdaq futures rose by more than 1 percent before trading began on Thursday.

Perhaps due to some irregular capital flows at the end of the third quarter, global market movements have become somewhat chaotic.

But the dominant themes remain: global interest rate cuts and a “soft landing” in the US, disinflation fuelled by the recent fall in oil prices, China’s latest economic stimulus initiative and the upcoming US elections.

The Swiss National Bank was the last major central bank to cut interest rates – it is the third cut this year. The key interest rate was thus reduced by another quarter point to just 1% and further easing was announced. The franc coped well with the expected measure against an overall stable dollar index.

Inflationary pressures in energy markets increased again on Thursday, with crude oil prices falling after the Financial Times reported that Saudi Arabia was preparing to abandon its unofficial price target of $100 a barrel as it ramps up production.

US crude oil prices fell back below $70 a barrel, increasing the year-on-year decline to around 25 percent – which is likely to have a strong downward impact on the annual inflation rate throughout September.

Fed Governor Adriana Kugler also did not let hopes of an easing of US interest rates die down overnight. Although she stressed that the inflation target had not yet been reached and that further measures were “data dependent”, she added that the rapid disinflation meant that the Fed had to make cuts to keep the level of restrictive monetary policy stable.

The Chinese market recovery also reached a new high this week, with stocks in both mainland China and Hong Kong jumping another 4%.

The story continues

Led by price gains in the crisis-hit real estate sector, the latest upswing came just days after Beijing announced a series of massive interest rate cuts and financial injections for the markets and promised further economic policy measures to strengthen the economy.

State media reported, citing a Politburo meeting on the economic situation, that China will step up countercyclical adjustments to its fiscal and monetary policies and strive to achieve its economic and social development goals for the full year.

According to Reuters sources, China plans to issue special government bonds worth about 2 trillion yuan ($284.43 billion) this year as part of a new economic stimulus program.

The offshore yuan continued to test the 7-per-dollar mark, approaching its best level since May last year.

On Wall Street, meanwhile, Wednesday’s stalling near record highs appears to be proving to be only a temporary setback, as overnight news from the technology sector contributed to optimistic new home sales during the session, fueling hopes of an economic “soft landing.”

On Thursday, the weekly unemployment figures will again be released, which are extremely sensitive soundings from the labor market, and on Friday the PCE inflation report for August is expected, which according to Fed Governor Christopher Waller was a decisive factor in the excessive rate cut last week.

US Treasury yields remained stable on Thursday as this week’s series of auctions continued. The two-year yield was around 3.55% and the ten-year yield was around 3.77%. The newly positive yield curve gap between two and ten years was just over 20 basis points.

The U.S. Congress passed a stopgap bill on Wednesday to prevent a partial government shutdown starting next week, even as numerous Republicans in the House of Representatives rebelled against their leadership for failing to push through new cuts in federal spending.

The measure will keep the government’s annual discretionary funds at current levels of about $1.2 trillion through Dec. 20, avoiding the furlough of thousands of federal workers and the closure of broad government services just weeks before the Nov. 5 election.

US Vice President Kamala Harris said on Wednesday she would provide tax breaks to domestic manufacturers and invest in sectors that will “shape the next century” as she outlined her economic plan to strengthen the American middle class.

Key developments that should provide more direction to US markets later on Thursday:

* US weekly jobless claims, August pending home sales, August durable goods orders, Q2 GDP revision, September Kansas City Fed business survey

* Decision of the Central Bank of Mexico

* Federal Reserve Board Governors Michelle Bowman and Lisa Cook will both speak; New York Fed President John Williams, Boston Fed Chairman Susan Collins, Minneapolis Fed Chairman Neel Kashkari and Fed Vice Chairman for Financial Supervision Michael Barr will all speak; European Central Bank President Christine Lagarde and ECB Board Members Luis de Guindos and Isabel Schnabel will all speak

* Corporate profits in the USA: Costco, Carmax, Jabil, Accenture

* US Treasury sells 7-year bonds worth $44 billion and auctions 4-week bonds worth $90 billion

(By Mike Dolan, editing by Gareth Jones; [email protected])