On Tuesday, global stocks hovered close to their highest in a month, supported by easing recession worries and expectations that the U.S. Federal Reserve may offer further clues of imminent interest rate cuts.
As the data calendar across major economies is relatively light this week, the focus is on Wednesday’s release of the Fed’s meeting minutes for July and Chair Jerome Powell’s address at Jackson Hole on Friday for cues on the outlook for U.S. rates.
Fed policymakers have recently indicated possible easing in Sept., and markets expect a similar tone from global central bankers in Jackson Hole, including Powell at their annual meeting
DataTrek Research LLC’s co-founder, Nicholas Colas, said markets believed that once the Fed starts reducing rates it would pursue a predictable strategy of trimming them at every, or nearly every, meeting over the next year.
Although that might seem like an aggressive expectation, consider that eight 0.25% cuts would only take Fed Funds to between 3.25% and 3.50%, which was still higher than the Fed’s own estimate of the neutral interest rate.
The S&P 500 was down 0.2%, the NASDAQ Composite dropped 0.5%, and the dow jones Industrial Average fell 0.2%.
That kept the MSCI’s global index unchanged close to its strongest level in more than a month.
