Stock markets generally advanced on Monday, building on last week's robust performance, as gold prices surged in anticipation of a central bankers' meeting that might provide new insights on US interest rates. Positive economic data from last week alleviated worries about the US economy's health, which had been battered by recession fears and a Japanese interest-rate increase earlier this month. Traders are now focusing on the annual symposium of central bank leaders in Jackson Hole, Wyoming, this week. The focal point will be Friday's address by Federal Reserve Chairman Jerome Powell, with investors eagerly awaiting any indication of an interest rate reduction at the Fed's September policy meeting. "Investors and analysts will be closely monitoring any signals from Fed officials regarding the future trajectory of US interest rates," noted Luca Santos, a currency analyst at ACY Securities. "There is increasing speculation that Powell might hint at the potential for rate cuts starting as early as September. However, the magnitude of the cut remains uncertain." Santos suggested that a "moderate" cut of 0.25 percentage points appears probable, while a larger 0.50-point reduction would require more compelling evidence of a weakening US job market. All three major Wall Street indexes climbed on Friday, nearing the record highs achieved before their August 5 downturn, as investors gain confidence that the US economy will sidestep recession with the Fed's rate cuts. The upward trend continued on Monday, with all major US markets posting gains during mid-session trading. Asian markets fluctuated after a positive start on Monday, whereas European stocks ended higher following a mixed opening. Speculations on Fed rate cuts weakened the dollar, with the yen among the major gainers as traders evaluate the likelihood of another Bank of Japan rate hike at its upcoming meeting. The yen strengthened significantly against both the dollar and the euro on Monday. Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, commented that "the major players are ramping up their bets that the Bank of Japan will persist in raising rates despite the intense market response." Gold reached a new all-time high on Monday, driven by expectations of Fed rate cuts that enhance the metal's appeal to investors. The precious metal had soared to never-before-seen levels on Friday, surpassing the $2,500 mark for the first time. Oil prices continued to decline, following last week's losses, due to concerns over demand as China's economy grapples with recovery challenges. Investors are also monitoring negotiations aimed at brokering a ceasefire between Israel and Hamas in Gaza, amid fears of a broader conflict in the oil-rich Middle East. Major oil producer Iran has warned of retaliation against Israel for the recent killing of Hamas political leader Ismail Haniyeh in Tehran, which Iran attributes to Israel. US Secretary of State Antony Blinken met with Prime Minister Benjamin Netanyahu and other Israeli leaders on Monday to advocate for a ceasefire agreement and a prisoner-hostage exchange.
Text: Lara Palmer
19.08.2024
Investors Await Powell's Speech for Clues on US Interest Rate Cuts; Gold Hits All-Time High