Global investors are reacting positively to the Federal Reserve’s decisive interest rate cut.
In pre-market trading, U.S. stock futures surged after U.S. markets showed a relatively subdued response to Wednesday’s 0.5% rate cut. Federal Reserve Chair Jerome Powell tempered some optimism by suggesting that further rate cuts were not guaranteed.
Still, the Fed has demonstrated its commitment to ensuring steady economic growth, according to Jan von Gerich, chief analyst at Nordea. This could help buffer against negative market reactions to weak data, especially from the labor market, which has been a source of concern for investors.
Meanwhile, on Thursday, the Bank of England left interest rates unchanged, as expected, following its first rate cut in four years in August.
Key market movements include:
- U.S. stock futures saw a boost, with Nasdaq-100, S&P 500, and Dow Jones Industrial Average futures climbing by over 1%. Major indexes had dipped on Wednesday.
- Global stocks moved higher. Japan’s Nikkei 225 gained 2.1%, driven by a weaker yen, while Hong Kong’s Hang Seng Index and the Stoxx Europe 600 also rose.
- The WSJ Dollar Index continued to slide, while the British pound hit its highest intraday level against the dollar since March 2022.
- U.S. Treasury yields ticked up slightly, with the 10-year yield settling at 3.685% on Wednesday.
- Crude oil prices increased, supported by the dollar’s weakness, with Brent crude futures surpassing $74 per barrel.
Currently, investors are closely monitoring upcoming economic data and central bank decisions for further clues on the direction of global markets. With the Fed’s stance on future rate cuts still uncertain, market participants are weighing the potential impact of inflationary pressures and economic growth. Any significant developments in the labor market, consumer spending, or geopolitical tensions could further influence market sentiment and drive volatility in the weeks ahead.
Source: WSJ
