Stocks
Asian Traders Navigate Volatility Amidst Rate Cut Forecasts
Asian traders endeavored to regain momentum in the recent rally on Thursday following a lukewarm performance on Wall Street. However, soaring achievements in Europe underscored optimism surrounding potential interest rate cuts by central banks.
London celebrated another milestone, reaching an all-time high ahead of an anticipated Bank of England meeting. Many anticipate that officials will signal their intention to commence the normalization of monetary policy in the summer.
This development follows Sweden’s central bank’s decision to lower borrowing costs for the first time in eight years, hinting at further reductions in the future.
The Riksbank’s move comes almost two months after the Swiss National Bank’s groundbreaking decision, making it the first major Western central bank to adjust its policies amidst a global tightening campaign aimed at combatting inflation driven by Covid recovery and the Ukraine conflict.
Traders, who had been anticipating rate cuts from the Federal Reserve, experienced a tumultuous journey this year. A series of inflation readings surpassing forecasts compelled them to revise down their expectations. Initially estimated at six, the consensus now stands at around two rate cuts by January 2024.
Several Federal Reserve policymakers have also attempted to moderate expectations. Boston Fed President Susan Collins, the latest to weigh in, suggested that rates might need to remain at their highest levels in two decades for a longer period to rein in prices. Her sentiments echoed those expressed by her Minneapolis counterpart, Neel Kashkari, the previous day.
Nevertheless, a slew of positive corporate results, reassuring remarks from Fed Chair Jerome Powell regarding the likelihood of a rate hike, and a significant shortfall in US jobs data last month have buoyed trader sentiment over the past week.
Analysts maintain a generally positive outlook on equities despite the absence of encouraging news on inflation. Mark Hackett of Nationwide noted, “As the Federal Reserve extends the timeline for interest rate cuts, historical data shows that longer Fed pauses often correlate with better equity returns. This should give investors reasons to be optimistic.”
Following London’s record-breaking performance and gains in Paris and Frankfurt, New York witnessed a mixed session, while Asian markets encountered challenges.
Hong Kong resumed its upward trajectory after a two-day decline following a ten-day winning streak, with Tokyo, Shanghai, and Manila also posting gains. However, Sydney, Singapore, Seoul, Wellington, and Taipei experienced marginal declines.
Oil prices saw a second consecutive increase as investors monitored efforts towards a ceasefire in the Middle East, notwithstanding Israel’s ongoing assault on Rafah in southern Gaza.
Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent loss of 1,023 points, reaching a closing value of 16,690 points by the end of the week. Similarly, the S&P 500 index showed a positive trend, losing 240 points to settle at 5,408 points. Meanwhile, DJIA Index experienced a notable hike, adding 1,218 points during the week and concluding at 40,345 points after a week of gaining.
In contrast, Russell 3000 Index saw a loss in week performance, with a slight drop of 141 point to reach 3,077 points by the end of the week.
Moving to Russell 2000 Index, demonstrated a notable lost of 126 points, ending the week at 2,091 points.
In the Outgoing week, the European stock market displayed a mixed 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 loss of 18.49 points to close at 506.56.
The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant drop, losing 195 points or finishing the session at 8,181.
In Germany, the DAX 30 index, added by 605 points to reach 18,301, while France’s CAC 40 decreased by 278 points to stop at 7,352 at the end of the trading day.
Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, decreased by 1,081 points to 33,291. However, Spain’s IBEX 35, lost by 228 points, to close at 11,173.
A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has lost 1,182 points during the week. At the end of the week, the index stood at 82,365 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange dropped by 383 points last week. At the end of the week, the index stood at 24,852 points.
Pakistan Stock Exchange Index ‘KSE 100’, added 459 points last week. After a week of losing, the index settled at 79,002 points.
On the other hand, The Sri Lankan stock market index loss, and the Colombo Stock Exchange index ‘ASPI’ decreased by 94 points in a week. After a week the index settled at 10,775 points.
Bhutan’s stock market index ‘BSI’ dropped by 9 points hence the index stood at 1,500 points throughout the whole week. Nepal’s ‘NEPSE’ lost 22 points, therefore the index stands at 2,727 points.
Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ lost by 75.77 points or 1.31 percent, in the outgoing week. At the end of the week, the index stands at 5,728 points.
