After the fall of technology stocks, the American and European markets rebounded thanks to strong economic indicators in the United States, including better-than-expected job creation and expansion in the service sector.
The US Economy Sets the Tone
Following a day of panic on tech and crypto stocks, American and European exchanges regained momentum on Wednesday. Strong economic figures from the United States reassured investors, prompting a rapid ‘buy the dip’ mentality.
In New York, the S&P 500 was up 0.6% in early afternoon trading, while the Nasdaq Composite rose by 0.9%, erasing some of Tuesday’s losses (-1.2% and -2%). The risk-off sentiment earlier in the day quickly gave way to a resurgence of risk appetite, driven by two key statistics: better-than-expected job creation and an unexpected expansion in the US service sector.
These data acted as a wake-up call. Investors, previously wary of the lofty valuations in artificial intelligence, found a perfect excuse to re-enter the market. ‘Today’s figures provided a reason to buy this mini-dip,’ said Arun Sai, multi-asset manager at Pictet Asset Management. According to him, the earnings season is ‘exceeding all expectations,’ leading investors to overlook signs of overheating.
The motto is clear: ‘buy the dip.’ A strategy that has become almost reflexive, making each correction episode ‘shorter and less profound.’
Europe Follows Suit
On the Old Continent, indices also rebounded by the end of the session. The Stoxx Europe 600 ended up 0.3%, and the German DAX rose by 0.4%. The morning’s nervousness gave way to cautious relief as operators anticipate a gradual resurgence of flows towards risky assets.
Sovereign bonds, however, suffered from this renewed optimism: the yield on the US 10-year Treasury rose to 4.16%, the 2-year to 3.63%, with traders slightly reducing their bets on a Fed rate cut in December.
Bitcoin Bounces Back Above $104,000
Even the crypto market caught its breath. Bitcoin gained 4% to climb back above $104,000, benefiting from the return of risk appetite and overall market relief.
This resilience of Bitcoin, despite stock volatility, confirms its place in the global financial landscape: a risky asset, indeed, but now an essential player in rebound phases.
Asia Feels the Technological Shock
Prior to this Western rebound, Asian markets had plummeted. In South Korea, the Kospi, fueled all year by AI fever, plunged by -6.2%, before closing down by -2.9%. The Japanese Nikkei lost 2.5%, and the Taiwanese Taiex dropped by 1.4%.
‘We are probably closer to a correction than a new 20% rally,’ warned Andrew Schlossberg, CEO of Invesco. A statement that resonates as valuations of AI giants, OpenAI, Anthropic, xAI, continue to soar to dizzying heights, fueled by massive partnerships between Asian chip manufacturers and US companies.
The markets are digesting a dual reality: a still strong American economy, but tech valuations flirting with excessive levels.
