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Global Markets Decline as Hopes for Early Rate Cuts Diminish, Slows China’s Economy

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Global Markets

Asian markets faced further declines on Wednesday as expectations for an immediate interest rate cut by major central banks faded. The buoyancy that marked the end of 2023 has been replaced by cautious sentiment, with the US Federal Reserve signaling a reluctance for a first-quarter dovish pivot due to persistent inflation and resilient labor markets. Fed governor Christopher Waller’s remarks, though expressing confidence in reaching a sustainable inflation level, emphasized a methodical approach to rate cuts, causing uncertainty in the markets.

 

Fed Governor Waller Points to Potential Rate Cut, Cautions Against Hastiness

Fed governor Christopher Waller, known for his dovish stance, suggested on Tuesday that the central bank could cut borrowing costs this year, provided inflation remains in check. However, he emphasized a deliberate and careful approach to rate reductions, stating that lowering rates should be done methodically. Waller’s comments followed recent data and signals from the Fed, indicating a preference for maintaining high rates to combat inflation. This tempered expectations for an early interest rate cut and impacted global market sentiment.

 

Global Economic Recovery Faces Headwinds Amid Rising Geopolitical Tensions

Rising tensions in the Middle East and Eastern Europe, coupled with the persistent US-China trade dispute, are contributing to concerns about the fragility of the global economic recovery. Investors are apprehensive that geopolitical uncertainties could potentially disrupt the ongoing economic rebound. The combination of these factors has added a layer of caution to the optimism seen at the close of 2023.

 

China’s GDP Growth Hits Three-Decade Low, Adding Pressure for Stimulus

China’s economy recorded its slowest growth in over three decades, expanding by 5.2% in the previous year. The data, while in line with expectations, underscored the impact of a property crisis, subdued consumption, and global challenges on the world’s second-largest economy. Calls for Beijing to implement substantial stimulus measures to boost growth and address the property sector’s debt crisis have intensified. Premier Li Qiang, however, asserted that the growth was achieved without massive stimulus in a speech at the World Economic Forum in Davos.

 

Market Reactions: Asian and Global Markets Slide Amid Rate Cut Uncertainty

Equity markets across Asia, including Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Wellington, Jakarta, and Manila, experienced declines as investors reacted to the uncertainty surrounding interest rate cuts. The negative sentiment spilled over to European markets and contributed to losses in Wall Street indexes. Tokyo, however, bucked the trend and resumed its rally after a brief drop, fueled by a weaker yen and positive inflation figures.

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U.S. Stock Indices in the Green on the Previous Week

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Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent hike of 46 points, reaching a closing value of 18,398 points by the end of the week. Similarly, the S&P 500 index showed a positive trend, gaining 48 point to settle at 5,615 points. Meanwhile, DJIA Index experienced a notable hike, adding 625 points during the week and concluding at 40,000 points after a week of gaining.

In contrast, Russell 3000 Index saw a gain in week performance, with a slight hike of 39 points to reach 3,189 points by the end of the week.

Moving to Russell 2000 Index, demonstrated a notable hike of 122 points, ending the week at 2,148 points.

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European Stock Weekly Review Highlights Positive Trend

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european stock

In the Outgoing week, the European stock market displayed a gaining performance.

Here is the data on the weekly performance of the European Stock Market, The STOXX Europe 600 index, which is considered a leading benchmark for the European market and covers approximately 90 percent of the market capitalization across 17 countries, reported a gain of 7.48 points to close at 524.08.

The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant hike, adding 49 points or finishing the session at 8,252.

In Germany, the DAX 30 index, added by 273 points to reach 18,748, while France’s CAC 159 increased by 49 points to stop at 7,724 at the end of the trading day.

Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, increased by 593 points to 34,580. However, Spain’s IBEX 35, added by 227 points, to close at 11,023.

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South Asian Stock Reports A Mixed Results in Past Week

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A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has added 523 points during the week. At the end of the week, the index stood at 80,519 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange gained by 179 points last week. At the end of the week, the index stood at 24,502 points.

Pakistan Stock Exchange Index ‘KSE 100’, added points last week. After a week of losing, the index settled at 80,030 points.

On the other hand, The Sri Lankan stock market index adds, and the Colombo Stock Exchange index ‘ASPI’ decreased by 104 points in a week. After a week the index settled at 11,843 points.

Bhutan’s stock market index ‘BSI’ lost 5 points hence the index stood at 1,515 points throughout the whole week. Nepal’s ‘NEPSE’ added 85 points, therefore the index stands at 2,204 points.

Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ gained by 142.15 points or 2.65 percent, in the outgoing week. At the end of the week, the index stands at 5,497 points.

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