Would you like to receive notifications on latest updates of the following headlines?

Global markets cautious on interest rate cut expectations

POSTED ON September 16, 2024 •   Business      BY Abiodun Saheed Omodara
Global Stock Market l Photo Credit: Mettis Global

Stock investors were cautious about extending recent gains on Monday, with discussion centered on the size of U.S. interest rate cuts expected this week, but sentiment was dampened by concerns about the Chinese economy.

Ahead of Wednesday's Federal Reserve decision and the Bank of Japan's policy meeting two days later, the yen fell below 140 yen to the dollar for the first time since mid-2023, while gold prices hit a new record high.

Data showing U.S. inflation slowed more than expected last month to the lowest since February 2021 has sparked renewed speculation that Fed officials will announce a big 50 basis points (bp) rate cut and extend easing into the  year.

Bets are rising for such a move, but some analysts have warned  it could  signal policymakers are worried about the economy, especially after two reports showing a weakening labor market.

Bankers have indicated they are open to discussing a wider cut, though they haven't played their cards yet, while former New York Fed president Bill Dudley said he believes "there is a strong case for 50."

"The Fed, like other central banks, is now focused on economic growth, not inflation risk," said Michael Krautzberger of Allianz GI. "

There are growing concerns that monetary policy is behind the curve and that interest rate cuts may come too late to avert a recession or a sharp slowdown in growth."

"Therefore, in our view, we cannot rule out the risk of a significant rate cut at the next meeting later this year, especially if labor market activity deteriorates more quickly than currently expected and inflation continues to move toward our target," he said.

All three major Wall Street indexes rose on Friday, with the Dow and S&P 500 within striking distance of all-time highs.

However, Asian markets were volatile, with Hong Kong, Sydney, Taipei, Mumbai, Bangkok and Manila slightly higher, while Singapore and Wellington fell, and London, Paris and Frankfurt also fell.

Trading in Asia was muted due to public holidays in Tokyo, Shanghai, Jakarta and Seoul. In currency markets, the yen briefly hit 139.58 to the dollar, its highest since July last year, while gold hit a new record  of 2,589.70.

Traders are closely monitoring developments in China as further weak data on credit, retail sales, industrial production and property prices raised concerns about the world's second-largest economy.

National Australia's Ray Attrill said the  figures "intensify overall concerns that the policy measures announced in recent weeks and months, following weak second-quarter results, have so far not had a measurable impact on spurring economic growth  in the third quarter."

He added that investors are keeping an eye on the government's upcoming Politburo meeting (date not yet known).

Following a string of disappointing figures recently, the central bank outlined its plans to support the economy, saying it will "make maintaining price stability and promoting a gradual recovery in prices a key aspect of monetary policy, and better target adequate financing needs for consumption."

The Bank of Japan is expected to follow suit on Friday following the Fed's decision, with most analysts expecting it to keep rates unchanged after its surprise rate hike in late July caused market turmoil.

IG analyst Tony Sycamore said "the successive hikes are likely to be seen as too aggressive, especially given  criticism that the BOJ's hawkish stance contributed to the turmoil in global markets in early August."

"But stronger-than-expected inflation and wage growth in Japan last month has given the Bank of Japan confidence that the wage and price cycle is capable of sustaining inflation above 2 percent, paving the way for further monetary tightening."

– Key figures around 0810 GMT –        

Hong Kong – Hang Seng Index: UP 0.3 per cent at 17,422.12 (close)

London – FTSE 100: FLAT at 8,271.09

Tokyo – Nikkei 225: Closed for a holiday

Shanghai – Composite: Closed for a holiday

Dollar/yen: DOWN at 139.79 yen from 140.76 yen on Friday

Euro/dollar: UP at $1.1117 from $1.1079

Pound/dollar: UP at $1.3174 from $1.3125

Euro/pound: DOWN at 84.39 pence from 84.40 pence

West Texas Intermediate: UP 1.0 per cent at $69.35 per barrel

Brent North Sea Crude: UP 0.8 per cent at $72.18 per barrel

New York – Dow: UP 0.7 per cent at 41,393.78 (close)

AFP

READ ALSO
FG urges IMF, World Bank to bolster economic reforms in sub-saharan Africa
BY Abiodun Saheed Omodara April 24, 2025 0

Finance Minister Wale Edun has emphasized the need for increased global assistance to reform economi...

READ ALSO
Nigeria's Economic Reforms Boost Sovereign Credit Profile - IMF
BY Abiodun Saheed Omodara April 23, 2025 0

The Assistant Director for Global Markets at the International Monetary Fund (IMF), Jason Wu,  ...

READ ALSO
Trade Wars Take Center Stage at IM ,World Bank Spring Meetings
BY Abiodun Saheed Omodara April 22, 2025 0

Global finance leaders are convening in Washington this week for the semi-annual meetings of the Int...

READ ALSO
Kano secures $10bn investment for renewable energy, minerals in partnership with Morocco
BY Abiodun Saheed Omodara April 21, 2025 0

KANO, Nigeria (NAN) - The government of Kano state has announced that it will secure more than $10 b...

READ ALSO
RMAFC, ALGON collaborate to strengthen LG financial autonomy
BY Abiodun Saheed Omodara April 18, 2025 0

The Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Dr. Mohammed Bell...

READ ALSO
LCCI, NIXIN call for government support to revitalize Nigeria's paper manufacturing industry
BY Abiodun Saheed Omodara April 18, 2025 0

The Lagos Chamber of Commerce and Industry (LCCI), in collaboration with NIXIN Paper Mill Nigeria Li...

READ ALSO
Cross River to rejuvenate rubber estates after out-of-court settlement with Enghaut industries
BY Abiodun Saheed Omodara April 18, 2025 0

CROSS RIVERS, Nigeria - The Cross River State Government, along with Enghaut Industries, has reached...

READ ALSO
Nigeria, China forge strategic partnership to boost sugar production
BY Abiodun Saheed Omodara April 17, 2025 0

ABUJA, Nigeria - The National Sugar Development Council (NSDC) has entered into a memorandum of unde...

OUR CHANNELS:

2face get appointment as technical adviser to Benue Govt.
BY Abiodun Saheed Omodara April 24, 2025 0

The Governor of Benue State, Hyacinth Alia    has appointed music legend, Innocent Idibia...


Nigeria's Economic Reforms Boost Sovereign Credit Profile - IMF
BY Abiodun Saheed Omodara April 23, 2025 0

The Assistant Director for Global Markets at the International Monetary Fund (IMF), Jason Wu,  ...


Six dead in Okene Accident: Akpoti-Uduaghan Urges Immediate Road Safety Reforms
BY Abiodun Saheed Omodara April 23, 2025 0

KOGI, Nigeria - Following a tragic auto accident in Okene, Kogi State, which resulted in the loss of...


Plateau NBA expresses outrage over violence, urges FG to protect citizens
BY Abiodun Saheed Omodara April 23, 2025 0

PLATEAU, Nigeria - Due to the assaults and homicides occurring in Plateau State by alleged Fulani mi...


LASG reports over 517,000 traffic violations amid enhanced road safety measures
BY Abiodun Saheed Omodara April 24, 2025 0

LAGOS, Nigeria - The Lagos State Government on Tuesday revealed that from May 2024 to March 2025, mo...


Police Inspector Dies by Suicide in Port Harcourt
BY Abiodun Saheed Omodara April 24, 2025 0

RIVERS, Nigeria - A Police Inspector identified as Maxwell Zabu, who was attached to a former Chairm...


Tinubu lauds ECOWAS for regional integration, economic progress at golden jubilee
BY Abiodun Saheed Omodara April 23, 2025 0

President Bola Tinubu has praised the Economic Community of West African States (ECOWAS) for promoti...


LASG celebrates two million passengers on blue rail, highlights transportation achievements
BY Abiodun Saheed Omodara April 23, 2025 0

LAGOS, Nigeria (NAN) - The Lagos State Government has announced that over two million passengers hav...


FG aims to upgrade 2,701 PHC to enhance healthcare access across Nigeria
BY Abiodun Saheed Omodara April 24, 2025 0

The Federal Government, via the National Primary Health Care Development Agency (NPHCDA), has reveal...


Education minister urges colleges to embrace dual degree system
BY Abiodun Saheed Omodara April 24, 2025 0

ABUJA, Nigeria (NAN) - The Minister of Education, Dr. Tunji Alausa, has called on stakeholders in Co...


More Articles

Load more...

Menu