Global Stocks rise as US Federal Reserve hints at Interest Rate Cuts
On November 29, global stocks surged as the Federal Reserve of the United States hinted at the possibility of interest rate cuts. The American exchange rate dropped to its lowest level since September, which led to two-year Treasury yields falling sharply. This news comes after remarks made by Fed Governor Christopher Waller, which suggested that rate cuts could begin in a matter of months.
European stocks edged up by 0.1%, following the data from Germany’s North Rhine-Westphalia, which supported expectations for a drop in German inflation. The MSCI world equity index saw gains of 8.7% this month, its best performance in three years. However, the Hang Seng index in Hong Kong fell by 2.4%.
Several currencies, including the euro, yen, sterling, Australian dollar, yuan, Swiss franc and a host of Asian emerging market currencies made fresh multi-month peaks, and gold hit a seven-month high above $2,501 an ounce.
Another significant event is the upcoming OPEC+ meeting on Thursday, which will decide output policy for the next few months. On a different note, Australian inflation eased by more than expected.
Analysts warn that markets have run with parts of Fed officials’ remarks of possible rate cuts, even though the comments have been conditional on further declines in inflation and on financial conditions staying restrictive. This suggests that the future performance of the market should be guided by conditionality, rather than over-confidence in the Fed.
This news has contributed to a rally in global stocks and bonds over the past two weeks. However, experts are keeping an eye on China, where doubts about the economy and a deepening property crisis have investors downbeat.
Despite this, the remarks from the U.S. Federal Reserve have had a significant impact on the global market, indicating potential changes in the future.