European stocks held firm on Monday, with investors balancing upbeat economic data against rising global bond yields, while a dramatic surge in Chinese technology shares set the tone for broader market sentiment.
The pan-European STOXX 600 index edged up by 0.1 per cent in early trade, supported initially by stronger-than-expected manufacturing figures.
Gains, however, later moderated as investors shifted focus to global fiscal challenges and political uncertainty across Europe.
In Asia, Chinese technology stocks staged a powerful rally that reverberated across markets. E-commerce giant Alibaba led the surge, with its Hong Kong-listed shares soaring by 18.5 per cent.
The jump came after reports revealed that artificial intelligence had boosted revenues in the company’s cloud computing business, reinforcing investor optimism about China’s role in the global AI race.
The rally lifted sentiment across Asia-Pacific indices and provided a counterweight to cautious trading in Europe.
Analysts said the strong performance of Chinese tech could support global equity flows in the short term, particularly as investors seek growth opportunities outside traditional Western markets.
Across the Atlantic, Wall Street futures ticked higher as traders braced for a data-heavy week.
The U.S. is expected to release key indicators on manufacturing, services activity, and labour market health, culminating in the August nonfarm payrolls report on Friday.
Any surprises in the jobs data could sway the Federal Reserve’s next interest rate decision.
A strong labour market may harden the Fed’s stance on maintaining higher rates for longer, while signs of weakness could revive speculation about rate cuts before year-end.
While equities held steady, Europe’s bond markets came under renewed strain.
German 30-year government bond yields climbed to a 14-year high of 3.38 per cent, while benchmark 10-year yields rose by three basis points to 2.76 per cent.
Analysts attributed the pressure to lingering concerns over government spending, fiscal discipline, and persistent inflation risks.
The euro strengthened by 0.25 per cent to trade at $1.1711, supported by the yield spike.
Meanwhile, safe-haven assets also attracted interest, with gold prices reaching a four-month high of $3,489.5 per ounce.
Oil prices edged higher as well, buoyed by fears of supply disruptions linked to the ongoing Russia-Ukraine conflict and uncertainty around potential U.S. tariffs.
Political developments in France added another layer of caution for investors.
Prime Minister Francois Bayrou is expected to hold talks with political parties this week as he prepares for a high-stakes confidence vote.
Markets remain wary that political instability in one of Europe’s largest economies could weigh on regional sentiment, particularly if divisions stall fiscal or reform efforts.
Market analysts say Europe’s near-term outlook hinges on three factors: global interest rate decisions, China’s growth trajectory, and domestic political stability.
While the rally in Chinese tech stocks has offered a welcome boost, rising borrowing costs and fiscal pressures in Europe remain strong headwinds.
“The resilience in European equities shows investors are still searching for stability amid global uncertainty,” said a London-based strategist.
“However, bond market stress and political risks suggest the calm may not last.”
Global AI Boom: The success of Alibaba’s cloud division underscores the growing influence of artificial intelligence on global markets.
Tech firms across the U.S., Europe, and Asia are investing heavily in AI to drive productivity and capture new revenue streams.
Energy Prices: With oil prices climbing, inflationary pressures in Europe could resurface, complicating the European Central Bank’s policy decisions.
Emerging Markets Impact: Rising demand for Chinese tech shares could attract more global capital inflows into Asia, potentially creating ripple effects in emerging markets like Nigeria, where investors monitor global liquidity trends closely.
As September unfolds, the interplay between Chinese innovation, U.S. monetary policy, and European fiscal stability will determine whether markets can sustain their current resilience or face renewed volatility.