Stocks rally stalls ahead of PMIs data and US job reports

After rallying more than 5% in the previous three sessions on easing concerns about policy tightening, European shares fell on Wednesday, suggesting that the positive tone in Asian equities may prove short-lived, as investors' attention turned to regional and US data due later in the day.

Following weaker US manufacturing data, shrinking job openings, and a smaller-than-expected rate hike from the Reserve Bank of Australia spurred hopes that central banks worldwide might shift to less aggressive rate hikes in the future, the European STOXX 600 index posted its most positive one-day performance since mid-March on Tuesday.

As a sign that some central banks remain concerned about inflation, New Zealand raised its rates 50 basis points on Wednesday, as expected. However, it said it had considered increasing them 75 basis points.

Weak job reports grow Fed pivot bets

Job openings in the US fell by nearly two-and-a-half years in August, a sign the Federal Reserve has succeeded in taming demand by raising interest rates. Investors seem to be pinning their hopes on a slower pace of rate hikes from central banks, which is supportive of risk appetite.

To confirm that narrative, all eyes are now on the composite PMI data for the UK and eurozone, as well as US private payroll numbers.

Gold gains on softening dollar

For the second consecutive trading day, gold surged $33 per ounce to $1,734.7, well above the previous key resistance of $1,700. This is due to a softening US dollar and falling bond yields. Likewise, silver broke through the $20.70 resistance to continue rising.

Short-lived market correction

Ten-year Treasury yields rose to 3.6232% from 3.617% at Tuesday's close. The dollar index also eased around 110.50. Given that, rounding in the stock market is indicative of an oversold market because ten-year treasuries have stabilized, the US dollar has stabilized, and this has created a positive sentiment. However, in such a volatile market we have right now, it's one of those bounces that won't last.

Oil investors await OPEC+ decision

Despite strong gains the previous day, US crude fell 0.35% to $86.22 a barrel, while Brent crude dropped 0.29% to $91.58. Energy prices and inflation may be affected globally by OPEC+'s decision on the supply of oil later Wednesday. An earlier report from Reuters suggested that OPEC+, which also includes Russia and Saudi Arabia, could cut production between 1 million and 2 million barrels a day.