Global Markets Steady Ahead of Crucial US Jobs Data and Potential Fed Rate Cut: What Investors and Business Owners Need to Know
SINGAPORE – Stock markets remained subdued, the US dollar steadied near five-week lows, and gold reached new record highs on Tuesday as investors awaited a series of key economic data releases this week. These reports are expected to clarify the Federal Reserve’s possible decision to cut interest rates in September.
Currently, the markets are pricing in an 89 percent probability of a 25-basis-point rate cut later this month. However, the strength of the upcoming US economic indicators will influence whether the Fed might consider a larger reduction. The most closely watched data is Friday’s nonfarm payrolls report, which follows job openings and private payroll numbers, and will give a clearer view of the labor market—a critical factor in the Fed’s policy deliberations.
Vasu Menon, managing director of investment strategy at OCBC Bank, commented, “While an outsized 50 basis points cut in September is not the base case, it cannot be ruled out altogether if the August jobs data shows exceptional weakness.”
Additionally, the US inflation report due on September 11—just one week before the Fed’s policy meeting—will be a decisive factor in shaping the central bank’s next move.
The likelihood of lower borrowing costs has kept Wall Street near record highs, with global equities also advancing in recent weeks. On Tuesday, MSCI’s broad index of Asia-Pacific shares excluding Japan was flat. Nasdaq futures fell 0.1 percent, while European futures slipped 0.07 percent. With US markets closed Monday for a holiday, Asian trading lacked clear direction.
Kyle Rodda, senior market analyst at Capital.com, noted, “It is all about gauging whether the Fed remains ahead of a possible slowdown in the US economy, or if it’s behind the curve.”
Chinese stocks, lifted by a recent AI-driven rally, pulled back as investors took profits. The blue-chip CSI300 index declined 0.9 percent after reaching a three-year high earlier in the session, while Hong Kong’s Hang Seng eased 0.6 percent following a 2 percent surge on Monday.
In currency markets, the dollar regained some ground ahead of the European open. The euro fell 0.16 percent to $1.1692, and the British pound declined 0.17 percent to $1.3526. The Japanese yen weakened 0.3 percent to 147.70 per dollar after Bank of Japan Deputy Governor Ryozo Himino expressed caution regarding further monetary tightening amid global uncertainties. The dollar index rose 0.2 percent to 97.847, though it remained close to Monday’s five-week low. Yields on 10-year US Treasury bonds increased by 2.4 basis points to 4.249 percent.
Political tensions surrounding Fed independence also dampened market sentiment. Reports that former President Donald Trump intends to dismiss Fed Governor Lisa Cook have sparked concerns about future Fed appointments. Cook is expected to contest the dismissal on Tuesday. Trump has frequently criticized Fed Chair Jerome Powell for resisting rate cuts, recently targeting costly renovations at the Fed’s Washington headquarters. Treasury Secretary Scott Bessent reaffirmed the importance of Fed independence while acknowledging the central bank had “made a lot of mistakes.”
In commodities, gold surged due to the weaker dollar and expectations of a rate cut, reaching a record high of $3,508.5 per ounce. Oil prices rose on fears of supply disruptions linked to the Russia-Ukraine conflict. Brent crude gained 0.4 percent to $68.44 per barrel, while US West Texas Intermediate jumped 1.42 percent to $64.92 per barrel.
— Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The anticipated Federal Reserve rate cut signals potentially lower borrowing costs globally, which can spur investment and growth opportunities for Omani businesses, especially those reliant on international capital flows. However, political uncertainties around Fed independence and volatile oil prices present risks that require careful monitoring. Smart investors and entrepreneurs in Oman should strategically prepare for a mixed environment of global economic easing paired with geopolitical and market volatility, focusing on sectors that benefit from lower rates while maintaining flexibility against external shocks.
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