Equities: Falling oil and AI rebound drive record highs - Deutsche Bank

Deutsche Bank strategists report that falling energy prices and softer Federal Reserve (Fed) expectations helped push the S&P 500 and other major equity indices to new record highs last week. The rally was reinforced by a renewed AI trade, with the Philadelphia Semiconductor Index surging, while US high-yield credit spreads saw their biggest tightening since April, signalling broad risk-on sentiment.

S&P 500: Record highs with AI-led risk rally

"The fall in energy prices supported a risk-on move, helping the S&P 500 (+3.58%, +0.62% Friday), Stoxx 600 (+1.70%, +0.31% on Friday), DAX (+2.69%, +0.69% Friday) and CAC 40 (+2.41%, +0.17% Friday) all reach new record highs. For both the S&P 500 and the NASDAQ (+5.19%, +1.30% Friday), this also marked the largest weekly gains since April."

"Equities were also supported by the continued rebound in the AI trade that had started late the previous week. The Phily Semiconductor (Sox) Index rose +9.24% last week (+2.56% on Friday) after a difficult July."

"In Asia the Nikkei (+1.80%) is strong this morning but the KOSPI is fading after a decent start and is now broadly flat on the day. Elsewhere, Chinese equities are mixed, with the CSI 300 declining -0.52%, while the Hang Seng and Shanghai Composite are up +0.72% and +0.20%, respectively. In Australia, the S&P/ASX 200 is down -0.42%, surrendering a portion of the gains recorded on Friday."

"Brent is up around +0.8% this morning but US and European equity futures are fairly flat."

"On the corporate side, the earnings season is becoming less intensive, with 400 out of the S&P 500 having now reported, but several notable companies remain on the calendar. In the US, investors will focus on results from Cisco, Applied Materials and CoreWeave, while in China attention will fall on Tencent and BYD"

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)