US Stock Markets Surge as Fed Signals Potential Rate Cut
The American stock markets ended the first trading day of the week on a positive note. Several Fed officials spoke in various forums throughout the day. San Francisco Fed chief Mary Daly stated in an interview with the Financial Times that recent data has given confidence that inflation is under control, signaling a potential rate cut. Investment bank Goldman Sachs lowered its odds of a US recession from 25 percent to 20 percent after last week’s employment statistics. The S&P 500 rose by 1.0 percent, the Nasdaq Composite strengthened by 1.4 percent, and the Dow Jones Industrial Average traded up by 0.6 percent.
Commodities traded in different directions yesterday. Oil prices continued to fall on Monday, following Friday’s trend. The decline was primarily attributed to weak economic data from China. Last week, China released statistics showing that the country’s housing prices had dropped at the fastest rate in nine years. Investors interpret the weak numbers as a sign that China’s economy is recovering slower than previously anticipated. WTI oil decreased by $2.3 to $74.3 per barrel, while Brent oil dropped by $1.9 to $77.8 per barrel.
Most base metals saw positive developments. Aluminum saw the biggest increase, climbing by 2.6 percent. Nickel rose by 2.2 percent, tin by 1.7 percent, copper by 0.9 percent, and zinc by 0.7 percent. Lead fell by 0.3 percent. The price of gold dropped by $2.8 to $2,504.0 per ounce.
Among individual companies on the US stock markets, chipmaker AMD was the big winner of the day. The stock rose by 4.5 percent after acquiring server developer ZT Systems in a $4.9 billion deal. This acquisition is seen as a move to challenge Nvidia in the AI data field. President Donald Trump announced his intention to block Japanese Nippon Steel’s planned acquisition of US Steel if he wins the election, causing the stock to fall by 6.0 percent. Computer manufacturer HP decreased by 3.7 percent after Morgan Stanley downgraded the stock from overweight to equal weight.
The yield on the 10-year US Treasury bond dropped by 3 basis points to 3.88 percent.
Asian markets are trading mixed on Tuesday morning. At 07:30, the Japanese Nikkei 225 is up by 1.9 percent, the Hang Seng is down by 0.5 percent, and the Shanghai Composite Index is down by 1.1 percent.
There have been no new target prices released this morning. Latour will release its interim report at 08:30.
It is a quiet day on the macroeconomic front. Germany will release its producer price index at 08:00. The central bank will announce its interest rate decision at 09:30. Canada will release its consumer price index at 14:30.