By Wayne Cole
SYDNEY (Reuters) -European shares and the euro climbed on Monday as Germany’s election produced a mainstream outcome, while Wall Street futures firmed on hopes results from AI diva Nvidia this week would justify the tech sector’s sky-high valuations.
DAX futures jumped 1.1%, while the single currency rose 0.5% to $1.0516 and looked set to test its January top at $1.0535. EUROSTOXX 50 futures added 0.4% and FTSE futures 0.1%.
German’s new conservative leader Friedrich Merz still has to form a coalition government and it is not yet clear whether that will include one or two partners, with the latter likely to take more time and horse trading.
The uncertainty comes as European Union leaders are set to hold an extraordinary summit on March 6 to discuss additional support for Ukraine and how to pay for European defence needs.
Liquidity was thinned by a holiday in Tokyo markets and MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.5%. Nikkei futures traded at 38,310, under the cash close of 38,776.
Chinese blue chips eased 0.1%, but Hong Kong shares firmed 0.2% to extend their recent tech-driven bull run.
“Chinese authorities have made a meaningful pivot in their rhetoric towards Big Tech and the private economy at large,” said Barclays analysts in a note.
“It may imply a policy shift intended to unwind very low local equity valuations, encourage inflows into China, and could moderate our bullish broad dollar and cautious EM views.”
S&P 500 futures and Nasdaq futures both gained 0.5%. The Nasdaq had fallen 2.5% last week, its worst week in three months, with losses led by the Magnificent Seven. [.N]
That pullback raised the stakes for Nvidia’s results on Wednesday where investors are looking for fourth-quarter sales around $38.5 billion and first-quarter guidance around $42.5 billion.
As usual, options point to a share price move of around 8% in either direction should the results surprise.
Wall Street had taken a hit on Friday when a survey on services showed a shock slide in activity amid concerns about tariffs and cost pressures. There were even reports the White House was pressuring Mexico to put its own tariffs on Chinese imports as part of a deal.
INFLATION SCARE
The Federal Reserve’s favoured measure of core inflation is due on Friday and expected to show a slowdown to 2.6% from 2.8%, but could be overshadowed by tariff worries.
A survey of U.S. consumers out on Friday showed inflation expectations for 5 to 10 years ahead climbed to 3.5%, the highest since 1995.
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