Stocks Surge Amid Anticipation of Fed Revamp: Implications for Investors and Business Owners
Global Shares Rise Amid Optimism on U.S. Interest Rates
SINGAPORE/LONDON: Global stock markets rose on Friday, along with the U.S. dollar, as investors remained optimistic that interest rates in the United States may decrease further this year. Gold futures also climbed following reports of new duties on U.S. imports of bullion bars.
Despite some weaknesses in Wall Street and European markets the previous night, the global stock index traded near record highs. This increase was bolstered by a succession of strong corporate earnings and the belief that the significant U.S. tariffs implemented on Thursday could be subject to negotiation.
The outlook for U.S. monetary policy, a crucial factor for global markets, has grown increasingly uncertain due to several changes occurring within the Federal Reserve. Policymakers are divided regarding inflation’s impact, and leadership within the central bank is shifting.
On Thursday, President Donald Trump announced his intention to nominate Stephen Miran, the Chairman of the Council of Economic Advisers, to fill a temporary vacancy at the Fed while the administration searches for a permanent member of the governing board. Miran shares similar views with Trump, who has criticized Fed Chair Jerome Powell for being "too late" in implementing interest rate cuts, despite ongoing economic growth and rising inflation.
Ray Attrill, head of FX strategy at National Australia Bank in Sydney, remarked, "This locks in a vote for rate cuts at all the meetings between now and the end of January." He added, "Markets are already operating with a strong expectation of a rate cut, though there is uncertainty about whether the nomination will be confirmed in time for the September meeting."
The MSCI All-Country Index increased by 0.1%, approaching the record highs achieved two weeks ago, and is poised for a 2% weekly gain—the best performance since mid-June. Europe’s STOXX 600 rose by 0.2%, while Zurich’s SMI index, which previously absorbed Switzerland’s new 39% U.S. tariff without significant impact, dipped by 0.14%.
Market attention is also drawn to a Bloomberg News report suggesting that Fed Governor Christopher Waller is the leading candidate to succeed Powell, whose term ends on May 15, 2026.
Samy Chaar, an economist at Lombard Odier, remarked, "The effective shock from tariffs is present. The real question now is how and when it will impact the economy and related data. So far, the effects have been less severe than initially anticipated." While overall tariffs may be lower than expected back in April, they remain at their highest levels in at least a century. — Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The recent rise in global shares and the potential for US interest rate cuts create a unique opportunity for Omani businesses to leverage favorable financing conditions, bolstering investments and expansion. However, the imposition of high tariffs may pose risks, particularly to exporters, necessitating strategic adjustments to supply chains. Smart investors should closely monitor the evolving monetary policy landscape, as favorable conditions in the US could drive investment trends and increase competition for Oman’s markets.
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