LONDON/SYDNEY – Global stocks rose on Wednesday as investors took a breather after an artificial intelligence-led selloff while appreciating reports that European Central Bank President Christine Lagarde plans to step down early.
The STOXX 600 index rose 0.8% to a new all-time high due to gains in defense and mining stocks, while the pan-European index continued its upward trend for the third consecutive day. Wall Street futures also rose 0.6% on the previous day as major indexes rose slightly.
The move offers respite for investors hurt by a sharp selloff in recent weeks over concerns that AI could upend the labor market and make some businesses, particularly the software industry, obsolete.
“Ultimately, the future of software products and companies requires a more balanced and nuanced view. Not all software companies are going to go bankrupt,” said Julian Klimochko, CEO of alternative investment solutions firm Accelerate Financial Technologies.
“However, many software companies will be adversely affected by increased supply from competitors or decreased demand for their products.”
Focus on the possibility of Lagarde’s resignation
The Financial Times reported that ECB President Lagarde plans to resign ahead of next year’s French presidential election.
“She led us through one of the most volatile periods in modern financial history,” said Charles-Henry Montchaux, chief investment officer at SYZ Group in Geneva. “Her early departure would mark the end of an era defined by crisis management and the beginning of a high-stakes tug-of-war for the euro’s future.”
On Wednesday, the euro fell 0.2% to $1.1833, while the euro zone benchmark German 10-year bond yield was unchanged at 2.74%.
Elsewhere, negotiations to end the war in Ukraine are entering their second day. In an interview with Axios, Ukrainian President Volodymyr Zelenskiy said US President Donald Trump was putting undue pressure on him in an attempt to secure a solution.
“If geopolitical tensions continue to rise, investors’ appetite for risk-taking is likely to be constrained,” said Ryan Sweet, managing director of macro forecasting and analysis at Oxford Economics.
Asian companies in light holiday trade
Japan’s benchmark Nikkei stock average rose 1%, ending a three-day slide, while Australia’s S&P/ASX200 index rose 0.5%. Markets in mainland China, Hong Kong, Singapore, Taiwan, South Korea and other countries were closed for the Lunar New Year holiday.
Brent and West Texas Intermediate crude oil futures rose 0.2%-0.3% to $67.62 and $62.47 a barrel, respectively, after both crude oil futures closed at their lowest in more than two weeks in the previous session.
After talks in Geneva on Tuesday, Iran’s foreign minister said Iran and the United States had agreed on key “guiding principles” to resolve their long-standing nuclear dispute, allaying concerns about a military conflict near the Strait of Hormuz that could disrupt global oil supplies.
Gold has recovered from early losses. Silver rose 0.9% to about $4,922 an ounce, while silver rose 3.5% to about $76.05 an ounce.
Bitcoin rose 0.7% after three consecutive sessions of decline. Ether, the second-largest crypto token, rose nearly 1%, marking its longest winning streak since late January.
“Early signs point to stabilization in the crypto market after the easing in early February,” said Thomas Perfumo, global economist at cryptocurrency exchange Kraken.
Traditional currencies were also sluggish. The pound stabilized at $1.3574 after British inflation data fell in line with expectations, but the dollar rose 0.3% against the Japanese yen to $153.7.
The dollar index of the US dollar against a basket of major peers rose 0.1%.
The dollar could be influenced by the minutes of the Federal Reserve’s January meeting scheduled for later Wednesday, which could give a signal on the direction of interest rates.
The 10-year Treasury yield rose about 2 basis points to 4.07% from Tuesday’s 2-1/2-month low of 4.02%.
