Major stock markets mostly advanced Monday as investors looked ahead to key interest-rate decisions this week in the United States and elsewhere.
Leading Asian indices largely gained, Europe was mixed and Wall Street’s top stock indices rose following last week’s volatility caused by mixed earnings and big selling of technology stocks.
“This week is a crucial one for the markets, with significant data releases, central bank meetings, and major company earnings reports set to impact indices, metals, and currencies,” said market analyst Fawad Razaqzada at City Index and FOREX.com.
The US Federal Reserve, Bank of England and Japan’s central bank are due this week to update on their monetary policies, with US jobs data and more results from multinationals also set to come out.
“While no change is expected at the Federal Reserve meeting this week, the odds are now strongly in favour of a cut in September,” noted Richard Hunter, head of markets at Interactive Investor.
Razaqzada said “the Fed adopting a more dovish tone is what we expect to witness”, adding that in addition to the 0.25-percentage-point cut in September the market has priced in nearly two more quarter-point rate cuts.
On Thursday, a day after the Fed’s latest decision, the Bank of England may cut borrowing costs for the first time since the Covid pandemic after a sizeable fall to British inflation this year, analysts said.
They added that the decision is on a knife-edge, similar to what is expected over the Bank of Japan’s decision.
Expectations for a rise, either this week or at the BoJ’s next meeting, along with bets on a Fed cut, have helped push the yen higher against the dollar after it hit a four-decade low near at the start of July.
Moody’s Analytics believes the BoJ will leave rates on hold despite a pickup in Japanese inflation.
Oil prices were steady despite rising tensions in the Middle East as Israeli Prime Minister Benjamin Netanyahu vowed a “severe response” to the rocket fire in the annexed Golan Heights that killed 12 children.
Market analyst David Morrison at Trade Nation said that traders are more worried about demand rather than supply.
“For now, there are enough concerns over the state of the Chinese economy to keep a lid on prices,” he said.
The calm in oil markets was helping the positive disposition in equity markets as was a drop in yields on government debt.
Briefing.com analyst Patrick O’Hare said it was not clear whether the US Treasury market was hit by geopolitical concerns or the prospect to a September rate cut.
“It just might be a little bit of both, but in any case, lower Treasury yields are providing some runway for a continuation of Friday’s rebound move,” he said.
Wall Street stocks rebounded on Friday on data showing a moderation in US inflation, firming expectations the Federal Reserve will start cutting interest rates in September.
McDonald’s was the latest company to report second-quarter results on Monday.
Its shares rose 1.5 percent despite the fast food chain missing sales and profit estimates, with restaurants in both the United States and abroad seeing sales decline.
– Key figures around 1330 GMT –
New York – Dow: UP 0.2 percent at 40,669.35 points
New York – S&P 500: UP 0.3 percent at 5,476.86
New York – Nasdaq Composite: UP 0.5 percent at 17,450.63
London – FTSE 100: UP 0.6 percent at 8,335.80
Paris – CAC 40: DOWN 0.8 percent at 7,460.93
Frankfurt – DAX: DOWN less than 0.1 percent at 18,405.07
Euro STOXX 50: UP 0.6 percent at 4,837.59
Tokyo – Nikkei 225: UP 2.1 percent at 38,468.63 (close)
Hong Kong – Hang Seng Index: UP 1.3 percent at 17,238.34 (close)
Shanghai – Composite: FLAT at 2,891.85 (close)
Dollar/yen: UP at 153.96 yen from 153.75 yen on Friday
Euro/dollar: DOWN at $1.0817 from $1.0859
Pound/dollar: DOWN at $1.2846 from $1.2875
Euro/pound: DOWN at 84.19 pence at 84.32 pence
West Texas Intermediate: FLAT at $77.14 per barrel
Brent North Sea Crude: DOWN 0.1 percent at $81.03 per barrel
burs-rl/lth
