Global Markets Poised for Gains as Yen Weakens and Central Banks Signal Rate Cuts
The fourth quarter is off to a strong start, with European stocks expected to rise following a boost in Japanese equities driven by a weaker yen. Asian markets also gained, while US futures pointed to a softer open. The yen’s decline came after Federal Reserve Chair Jerome Powell hinted at lowering interest rates, citing a solid economic backdrop.
Investors are optimistic about the remainder of the year, with many expecting the global economy to prove more resilient than initially thought. “The macro backdrop and growth are looking better than expected, which should support risk assets,” said David Chao, a strategist at Invesco Asset Management.
Asian shares outperformed their US and European counterparts in the third quarter, and are now a key focus for investors anticipating lower US interest rates and a potentially volatile presidential election. China’s markets are closed for a week-long holiday, but the MSCI China Index surged 22 percentage points in September, its best performance since 1999.
In Japan, trading houses saw gains after Berkshire Hathaway announced plans for a potential yen bond offering. Meanwhile, Australia’s retail sales exceeded expectations in August, driven by tax cuts and warmer weather. The country’s dollar strengthened on the news, while iron ore miners fell as the metal’s price edged lower.
In the US, the S&P 500 secured its fourth consecutive quarter of gains, with the tech-heavy Nasdaq 100 also posting a strong run. “The bull market has survived the historically weak third quarter and is likely to remain intact through the end of the year,” said Emily Bowersock Hill at Bowersock Capital Partners.
This week, investors will be watching key events, including speeches from central bankers and the release of US nonfarm payrolls data on Friday. Oil prices climbed slightly amid concerns over a wider conflict in the Middle East, while the International Longshoremen’s Association shut down all ports from Maine to Texas, halting container cargo and auto shipments.
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