LONDON/SYDNEY: Expectations of a resumption soon in US interest rate cuts bolstered world stocks on Monday, with shares in Asia rising to multi-year highs.
European shares retreated as enthusiasm following Federal Reserve Chair Jerome Powell’s Jackson Hole speech faded and investors refocused on the broader economic picture. London markets were closed for a holiday, thinning trading volumes in Europe.
Powell’s dovish shift has prompted futures to price in an 84% chance of a quarter-point rate cut in September and at least 100 basis points of easing to 3.25 — 3.5% by mid-2026. “As an investor, you lose an enemy whenever the Federal Reserve pivots because it gives valuations room to become ever more expensive”, said Florian Ielpo, Lombard Odier’s head of multi-assets.
MSCI’s broadest index of world shares rose 0.1% and held near Friday’s record highs, while China’s blue chips gained more than 2% to their strongest level since 2022. Japan’s Nikkei closed 0.4% higher. The dollar ticked higher, while euro zone bond yields also rose as traders reassessed the Fed-driven move.
Market focus is turning to Friday’s US personal consumption data, expected to show core inflation rising to 2.9%, its highest since late 2023. Any upside surprise would challenge the rally in longer-dated Treasuries, especially with $183 billion in new debt issuance this week.
Investors are also eyeing Nvidia’s results on Wednesday, with earnings per share forecast to rise 48%. Analysts expect details on shipments to China and the company’s deal with President Donald Trump to share revenue from advanced chip sales.
Elsewhere, Orsted plunged 17% after the US government ordered a halt to its Rhode Island offshore wind project. Shares in JDE Peet’s surged 17% after Keurig Dr Pepper agreed to buy the company for €15.7 billion. — Reuters
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