There has been a broad rebound in stocks on Wednesday. US stocks are expected to open higher today, and European indices are also higher, as risk sentiment picks up once again. Although there have been some sharp dips in stocks and risky assets in recent days, the dip-buying has been impressive. Investors don’t want to give up on this stock market rally, especially since we are in the middle of what is expected to be a strong earnings season.
The Fed, and a raft of better-than-expected earnings reports are driving sentiment this morning. The dollar has weakened after the Fed’s Jerome Powell said that concerns about a weakening labour market justifies interest rate cuts. A rate cut later this month is now fully expected. This could mean that the downside for stocks is limited.
Risk appetite has not been dented by news that Donald Trump could halt trade in cooking oil with China, as trade tensions between the two nations heats up. This suggests that the Fed holds the reigns for market sentiment for now.
The market mood has also received a boost from earnings season. US banks reported strong revenues and profits for Q3, even though the market reaction to their earnings was mixed. This morning, there were some stellar earnings reports. The AI trade received a boost from ASML, the Dutch maker of machinery that is used to produce semiconductor chips. ASML shares have opened higher after it reported that net sales rose by 15% this year, orders for Q3 were stronger than expected and it also predicted growth for 2026.
This suggests that the big capex spend in AI, especially by the hyperscalers including Google and Microsoft, are fueling demand for chips. ASML said that new orders topped EUR 5.4bn, and it will announce a new share buyback programme in China.
LVMH’s results were also a highlight today. The French luxury house , which is the world’s largest luxury goods maker, made a surprise return to growth last quarter. Group sales rose 1% on an organic basis, Fashion and leather goods, which is a highly lucrative sector for LVMH, also beat estimates, even though sales still declined.
This suggests that the slump in the demand for luxury is starting to level off. There was also growth in sales to China, which had been hit by a slump in recent years. Analysts now expect the leather goods sector, especially Luis Vuitton and Christian Dior, could fuel growth into next year.
This could boost the overall luxury sector in Europe, with Burberry, Hermes and Kerring also in focus on Wednesday. There has been a delay with LVMH’s opening this morning, but the stock is expected to open higher by 7% and could play catch up with its luxury peers in the coming weeks as it has been a laggard.
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