Global Markets Experience Mixed Results Amidst US Budget Deal and Rate Cut Uncertainty
As the week comes to a close, global markets are exhibiting mixed performances, with US stocks experiencing a broad rally on Friday despite a mostly dismal week. The benchmark S&P 500 still ended the week down 2%, but the passage of a budget deal in the US has cleared one major shadow over markets.
European Markets Slip
In Europe, Germany’s DAX fell 0.3% to 19,830.42, while the CAC 40 in Paris slid 0.3% to 7,251.05. Britain’s FTSE also shed 0.2% to 8,068.17. However, futures for the S&P 500 gained 0.3%, and those for the Dow Jones Industrial Average were up 0.1%.
Asian Markets See Gains
In Asian trading, Tokyo’s Nikkei 225 index jumped 1.2% to 39,161.34, with the dollar trading at 156.50 Japanese yen, up from 156.48 yen. Japanese automakers Honda Motor Co. and Nissan Motor Corp. announced a possible merger, sending Honda’s shares up 3.8% and Nissan’s up 1.6%. Elsewhere in Asia, Hong Kong’s Hang Seng gained 0.8% to 19,883.13, while the Shanghai Composite index slipped 0.5% to 3,351.26.
Tech Stocks Lead the Charge
On Friday, the S&P 500 rallied 1.1%, led by superstar stock Nvidia and other Big Tech companies. A report suggesting inflation may be easing also boosted the market. Roughly nine out of every 10 stocks in the S&P 500 rose, as traders welcomed the news.
Interest Rate Uncertainty
However, the threat of higher inflation remains, and Fed Chair Jerome Powell’s warning last week that the central bank may deliver fewer cuts to interest rates next year than expected has sent a shock through the stock market. Traders are now betting on one, two, or perhaps even zero rate cuts next year, according to data from CME Group.
Global Economic Concerns
Critics have been warning that stock prices were vulnerable to drops after running so high, and that the market likely needed everything to go correctly to justify its stellar gains for the year. Besides the diminished hopes for several rate cuts next year, Wall Street got another reminder late Thursday that everything may not go as expected. Worries have risen that Trump’s preference for tariffs and other policies could lead to higher inflation, a bigger U.S. government debt, and difficulties for global trade.
Commodity Prices
In other dealings early Monday, U.S. benchmark crude oil picked up 24 cents to $69.70 per barrel, while Brent crude, the international standard, was up 24 cents at $73.18. The euro fell to $1.0415 from $1.0433.
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