Fed Pivot Boosts Global Stocks and Lifts China Shares to Highest Since 2022: What Investors Need to Know
LONDON/SYDNEY: Global stock markets gained on Monday amid growing anticipation of imminent US interest rate cuts, with Asian shares reaching multi-year highs.
European markets, however, declined as the initial optimism following Federal Reserve Chair Jerome Powell’s speech at Jackson Hole diminished, prompting investors to reassess the wider economic outlook. London’s markets were closed for a holiday, resulting in reduced trading volumes across Europe.
Powell’s more dovish stance has led futures markets to price in an 84% probability of a quarter-point rate cut in September and at least 100 basis points of easing, bringing rates down to between 3.25% and 3.5% by mid-2026. Florian Ielpo, Head of Multi-Assets at Lombard Odier, noted, “As an investor, you lose an enemy whenever the Federal Reserve pivots because it gives valuations room to become ever more expensive.”
The MSCI all-world index edged up 0.1%, staying close to last Friday’s record levels. China’s blue-chip stocks surged more than 2%, reaching their highest point since 2022, while Japan’s Nikkei closed 0.4% higher. The US dollar gained slightly, and eurozone bond yields rose as traders adjusted their positions following the Federal Reserve’s dovish shift.
Attention now turns to US personal consumption data due on Friday, which is expected to show core inflation rising to 2.9%, marking its highest level since late 2023. Any upward surprise could put pressure on longer-dated Treasury bonds, especially in light of the $183 billion in new debt set to be issued this week.
Investors are also closely watching Nvidia’s earnings report on Wednesday, with forecasts predicting a 48% increase in earnings per share. Analysts are particularly interested in the company’s shipment figures to China and details on its revenue-sharing agreement with former President Donald Trump concerning advanced chip sales.
In other news, shares of Orsted fell sharply by 17% after the US government ordered a halt to its offshore wind project in Rhode Island. Meanwhile, JDE Peet’s shares jumped 17% following Keurig Dr Pepper’s agreement to acquire the company for €15.7 billion. — Reuters
تحلیل ویژه از عمانت | بازار عمان را کشف کنید
The anticipated U.S. interest rate cuts signal a potential easing of global borrowing costs, presenting opportunities for Omani businesses to access cheaper capital and boost expansion plans. However, investors should remain cautious of inflation dynamics and debt issuance that could introduce market volatility. Smart entrepreneurs and investors in Oman should strategically position themselves in sectors poised to benefit from global tech growth and increased liquidity, while hedging against geopolitical and economic uncertainties.
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