The euro clung to a more than two-month low while world stocks rebounded on Wednesday as investors awaited the results of tech darling Nvidia (NVDA.O) later to see if the sector’s lofty valuations still look justified.
The MSCI All Country stock index (.MIWD00000PUS) jumped 1.08% by 1849 GMT, and U.S. stocks also climbed across the board. The Dow Jones (.DJI) added 0.67%, the S&P 500 (.SPX) gained 1.25% and the Nasdaq Composite (.IXIC) jumped 1.83%.
The euro hovered at $1.0867 against the dollar and a 12-month low against the pound after survey data showed German and euro area business activity slumped in August.
It was the fastest contraction in German business activity in over three years and prompted traders to firm up bets on the European Central Bank (ECB) now pressing pause on what has been a record-breaking run of interest rate hikes.
Lower euro zone government bond yields meant U.S. Treasury yields were also down. Ten-year Treasury yields eased to 4.191%, after touching a 16-year high of 4.36% a session earlier.
Investors are waiting for Federal Reserve Chairman Jerome Powell to speak at an annual central bank summit in Jackson Hole, Wyoming, on Friday when he might provide more clues about the U.S. rate outlook.
Though Richmond Fed President Thomas Barkin raised expectations that Powell might deliver a hawkish message on Friday given strong U.S. economic data, some investors are still betting on rate cuts next year, which have underpinned gains in stocks.