On Wednesday, U.S. stock markets regained their upward momentum amidst volatility, with the S&P 500 index returning to positive territory, driven primarily by strong earnings reports from Bank of America and Morgan Stanley. Despite uncertainties from political gridlock and potential government shutdowns, robust corporate earnings have instilled some confidence among investors.
Looking at global market performance, East Asian stocks generally strengthened, while European and American markets remained relatively weak, reinforcing the "strength in the East, weakness in the West" narrative that has persisted throughout the year. The KOSPI index in South Korea surged by 2.68%, the Nikkei 225 rose by 1.76%, and the Hang Seng Index and Shanghai Composite Index increased by 1.84% and 1.22%, respectively. In contrast, major indices in Europe and the U.S. showed mixed results, with the Dow Jones falling slightly by 0.04%, while Germany's DAX and the UK's FTSE 100 dropped by 0.23% and 0.30%, respectively, reflecting a cautious market sentiment.
In the commodities sector, precious metals continued to lead the market, with gold and silver maintaining their strong performance. Spot gold in London rose by 1.57%, while COMEX gold increased by 1.48%, reaching a new historical high. Silver performed even better, with COMEX silver jumping 3.76% and spot silver in London climbing 3.17%. Analysts suggest that the global risk-off sentiment and rising expectations for rate cuts are key factors driving gold prices higher.
However, the increase in precious metals did not extend to other commodities. Energy and industrial metals showed weak performance, with WTI crude oil edging up by just 0.09% and Brent oil rising by 0.10%. Copper prices remained relatively flat. Overall, market risk aversion continues to govern capital flows, as gold remains a safe haven while risk assets like crude oil and copper have yet to attract significant interest.
The financial sector has been a crucial driver of market gains. Shares of Bank of America surged by 4.4%, and Morgan Stanley climbed by 4.7%, as both firms reported earnings that exceeded market expectations. CFRA Research's Chief Investment Strategist, Sam Stovall, indicated that these results highlight the ongoing resilience of the U.S. economy, while the potential for another rate cut by the Federal Reserve at the end of the month is bolstering market confidence. Strong bank earnings have allowed investors to temporarily set aside concerns over macroeconomic uncertainties and refocus on the positive aspects of corporate profits.
Nevertheless, market volatility has not noticeably decreased. The Chicago Board Options Exchange's volatility index (VIX) rose to 20.6, continuing an upward trend that began the previous week, indicating that investor sentiment remains tense. Market participants noted that this high volatility reflects a defensive mindset amid current complexities, with any shifts in policy or economic data having the potential to trigger sharp short-term fluctuations.
Performance among high-growth stocks has been mixed. Leading AI firms saw their shares rise nearly 3% at one point, but ultimately closed down slightly by 0.1%. Analysts pointed out that these stocks are particularly susceptible to emotional swings within the current volatile environment, prompting investors to shift focus from chasing concepts to evaluating earnings fundamentals.
At the same time, uncertainty continues to escalate. The government shutdown has entered its third week, causing multiple economic data releases to be halted, which hampers market analysts' ability to access current macro indicators and creates a "data blind spot" for traders assessing economic trends.
U.S. Treasury Secretary Scott Bessent, speaking at an investment forum, emphasized that despite increased market volatility, policy decisions will not change direction due to stock market declines. He noted that the government will push forward with negotiations and reforms based on long-term economic interests rather than short-term market sentiment, somewhat alleviating investors' concerns over policy uncertainty.
Jose Torres, Senior Economist at Interactive Brokers, stated that investors are generally in a wait-and-see mode, with the market currently lacking the momentum to break through new historical highs. Traders are waiting for more corporate earnings reports and policy signals to gauge future trends. He warned that the current elevated volatility means the market could experience drastic two-way swings in the short term, as any new macroeconomic or geopolitical news could act as a trigger.
In the Asia-Pacific region, the risk appetite has noticeably increased, with stock indices collectively rising.
By the end of trading, the Shanghai Composite Index was up 1.22% at 3912.21 points, with the Shenzhen Component rising by 1.73% and the ChiNext Index increasing by 2.36%. The Wind All A Shares Index rose by 1.49%, and the Wind A500 rose by 1.54%, while various key technology stocks rebounded across the board. Sectors such as electric equipment and new energy, automobiles, and insurance saw substantial gains. The total trading volume for A-shares was 2.09 trillion yuan, lower than the previous day's 2.6 trillion yuan.
In Hong Kong, the Hang Seng Index climbed 1.84% to close at 25910.6 points, while the Hang Seng Tech Index rose by 2.57% to 6075.27 points, ending a seven-day downward streak. The Hang Seng China Enterprises Index increased by 1.89% to 9250.91 points, and the Hang Seng Red Chip Index was up 1.4% to 4045.5 points, with total market turnover reaching 315.8 billion Hong Kong dollars. Despite this, southbound capital recorded a net outflow of 5.443 billion Hong Kong dollars, while tech stocks rebounded across the board.
Major Asia-Pacific indices recorded gains, with South Korea's composite index rising 2.68% to close at a new historical high of 3657.28 points. The Nikkei 225 increased by 1.76%, while the S&P/ASX 200 in Australia rose by 0.25%, and the S&P/NZX 50 in New Zealand rose by 0.23%.