Global stock markets experienced an upward trend on Tuesday, building on Wall Street’s approach to record highs following a turbulent summer.
France’s CAC 40 saw a 0.3% increase in early trading, reaching 7,525.54, while Germany’s DAX also rose by 0.3%, landing at 18,468.96. Conversely, Britain’s FTSE 100 decreased by 0.5%, settling at 8,312.21. Investors are closely monitoring the upcoming eurozone inflation data expected later today.
Futures for the S&P 500 climbed by 0.1%, while the Dow Jones Industrial Average remained relatively unchanged.
In Tokyo, the Nikkei 225 index surged 1.8% to close at 38,062.92, recovering from a previous day’s decline. The yen briefly approached 145 against the U.S. dollar on Monday before retracting, trading at 146.94 on Tuesday.
China decided to maintain its benchmark lending rates on Tuesday, keeping the one-year loan prime rate at 3.35% and the five-year LPR at 3.85%. This follows a series of significant interest rate reductions aimed at rejuvenating the economy.
The one-year LPR is a benchmark for most corporate loans, while the five-year LPR serves as a reference for mortgages.
In Hong Kong, the Hang Seng index dipped 0.3% to 17,511.08, and the Shanghai Composite fell 0.9% to 2,866.66.
Australia’s S&P/ASX 200 advanced 0.2% to 7,997.70, following minutes from the Reserve Bank of Australia’s August meeting, which affirmed that the cash rate target will remain steady at 4.35%. The bank emphasized that controlling inflation is its highest priority.
The RBA indicated that it is “unlikely that the cash rate target would be reduced in the short term, and that future changes in the cash rate target are indeterminate.”
South Korea’s Kospi index rose by 0.8% to 2,696.63.
On Monday, the S&P 500 rallied 1%, marking its eighth consecutive gain and closing at 5,608.25. This long winning streak is the most sustained since November and follows the index’s strongest week of the year, bringing it within 1% of its all-time high after previously falling nearly 10% below that mark.
The Dow Jones Industrial Average gained 0.6%, reaching 40,896.53, while the Nasdaq composite surged 1.4% to 17,876.77.
Treasury yields remained relatively stable ahead of what could be a pivotal week for financial markets, highlighted by a speech from Federal Reserve Chair Jerome Powell on Friday.
This speech, set to take place in Jackson Hole, Wyoming, has historically been a backdrop for significant Fed policy announcements. Current expectations are modest, as many anticipate the Fed will initiate interest rate cuts next month.
This would mark the first rate cut since the Fed implemented substantial increases in early 2022, aiming to temper the economy enough to mitigate inflation without triggering a recession. As inflation continues to decline from its peak above 9% two summers ago, Fed officials have signaled that rate cuts are forthcoming. The key question remains whether the economy requires the Federal Reserve to ease its restrictions or if it seeks further acceleration and deeper cuts.
In the bond market, the yield on the 10-year Treasury fell to 3.87% from 3.88% late on Friday.
In energy markets, benchmark U.S. crude declined by 63 cents to $73.03 per barrel, while Brent crude, the international standard, increased by 91 cents to $76.75 per barrel.
The euro was slightly higher, trading at $1.1086, up from $1.1085.
