Global markets have shown a positive response to the possibility of interest rate cuts by the Federal Reserve and key economic data releases. European stocks and US equity futures advanced in anticipation of potential easing measures by the Fed next month.
In Europe, the Stoxx 600 Index rose by 0.3%, reflecting investor optimism. US futures also pointed towards a positive opening on Wall Street, with the S&P 500 extending its winning streak for the fifth consecutive day. Cisco Systems Inc. witnessed a premarket surge of 6.3% following better-than-expected results.
Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, highlighted the significance of the latest US inflation data, supporting the view of a gradual economic slowdown and reinforcing expectations of Fed policy easing in September. This expected policy shift is seen as beneficial for risk assets and could lead to lower returns on cash holdings.
Traders remain attentive to key economic updates this week, including initial jobless claims, retail sales figures, and Walmart Inc.’s earnings report, which are expected to provide insights into the state of the American consumer.
Recent data indicating a slow increase in year-on-year core consumer prices in the US has solidified expectations of a 25 basis-point rate cut by the Fed next month, with projections of up to 100 basis points of reductions by the end of the year.
In Asia, positive market reactions were observed following data releases from Japan and China. Japan’s economy grew faster than analysts had forecast in the second quarter, while China showed signs of stabilization, including improved retail sales and a slowing decline in home prices.
While some analysts view the latest data from China as a signal for potential stimulus measures to meet the country’s economic growth target, others express concerns about confidence levels among businesses and consumers, which could impact investment and spending.
Commodity markets saw oil prices rebound slightly after a recent decline, while gold prices edged higher after consecutive declines, trading above $2,450 per ounce.
Key events to watch this week include US initial jobless claims, retail sales, and industrial production data, as well as speeches from Federal Reserve officials and the release of housing starts and consumer sentiment figures.
In summary, global markets are responding positively to expectations of Fed policy changes and key economic data releases, setting the stage for potential shifts in investment strategies and market dynamics in the coming months.
