1. The S&P500 is testing its 200 day moving average for the first time since november 2023.

U.S. stocks tumbled, ignoring Trump’s turnaround on Canada and Mexico tariffs.

Many negative factors are still swirling in the market, but a big earnings beat by Broadcom after the close may help boost the semiconductor industry and overall tech sector. The company offered strong guidance for its current quarter, citing a boom in its artificial intelligence (AI) business.

All eyes turn to the nonfarm payroll numbers, where investors will look to gauge U.S. recession risk. If it’s positive, the Broadcom boost could help give the bulls power to battle back before markets close for the weekend. Time will tell.

2. China stimulus.

Global stocks were down today, but China bucked the trend after the country’s ambitious target of around 5% growth in 2025 sparked more stimulus hopes.

Meanwhile, two of the company’s largest stocks saw positive developments, helping buoy the broader market. JD.com beat quarterly estimates and posted its best revenue growth since 2022, citing “rebounding consumption” domestically.

Also, Alibaba shares hit more than three-year highs after it unveiled QeW-32B, which it says “rivals cutting-edge reasoning model” DeepSeek-R1. Given its rally and new position in the AI arms race, analysts raced to upgrade the stock.

Below: Alibaba vs JD.com vs MSCI World year-to-date

3. Germany’s “whatever it takes” moment.

Just as Europe was starting to feel the pinch from worries about US growth and threats of tariffs, Germany decided to take the checkbook out.

More fiscal spending is feeding into European outperformance against the rest of the world. Deutsche Bank strategists say the German and European Union plans, plus China’s likely further stimulus, underpin preference for Europe’s stocks globally.

In conjunction with spending measures in China to meet an ambitious growth target, that’s putting the spotlight on sectors likely to be among the beneficiaries — such as basic resources, autos and luxury.

4. German equities are the ultimate beneficiaries of the latest announcements.

Not only is the German stimulus likely to favor the country’s companies, but large caps are also large exporters. DAX members make less than 20% of their revenue in Germany, and so are heavily driven by the global growth outlook.

China is the region’s second-biggest trading partner, with exports to the country relative to GDP about twice as high compared to the US, they say.

“Despite the strongest outperformance of European equities versus US equities into a year since 2000, we see our case for an overweight of European equities confirmed,” say Deutsche Bank strategists including Maximilian Uleer and Carolin Raab.

5. German mid-caps have catch-up potential.

Some investors may be reluctant to buy into large caps as a lot of good news could already be priced in.

Mid-caps offer some catch-up potential, especially in Germany. MDAX members make 33% of their revenue in the country and have lagged the DAX over the past three years.

The benchmark also looks reasonably valued. “Potential for a reflationary policy backdrop given dual fiscal and monetary loosening under a more cohesive European Union is looking more realistic by the day, and could be a game changer for the region,” say Barclays strategists led by Emmanuel Cau.

They see an attractive risk-reward for the more domestically-tilted small and mid-caps and the MDAX, as well as for financials and defense stocks.

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