Stock markets are mostly on the rise on Monday following a strong performance last week, with gold prices soaring ahead of a meeting of central bankers that could give fresh signals about US interest rates. Positive data last week helped ease concerns about the health of the US economy after markets were hit earlier this month by recession fears and a Japanese interest-rate hike. Traders are now focusing on the annual symposium of central bank chiefs happening this week in Jackson Hole, Wyoming.
The highlight of the event will be Federal Reserve Chairman Jerome Powell’s speech on Friday, with investors hoping for hints of a potential interest rate cut at the Fed’s next policy meeting in September. Analysts and investors are closely watching for any signals regarding the future direction of US interest rates. There is speculation that Powell may suggest starting rate cuts in September, with a modest 0.25 percentage point cut seeming likely, although a larger 0.50-point reduction would require stronger evidence of a weakening US job market.
Following the gains on Friday, all three main Wall Street indexes rose, returning to near record highs reached before the August 5 rout, as investors gain confidence that the US economy will avoid a recession with the Fed cutting rates. The positive momentum continued on Monday with major US markets trading up in the middle of the session. Asian markets wavered after a positive start to the day, while European stocks closed higher after a mixed opening. Bets on Fed rate cuts are pressuring the dollar, with the yen among the biggest gainers as traders consider the possibility of another Bank of Japan rate hike.
The yen rose sharply against both the dollar and the euro on Monday. Senior analysts predict that the Bank of Japan will continue raising rates despite market reactions. Gold reached a new all-time high on Monday, driven by expectations of Fed cuts that would make the precious metal more attractive to investors. Oil prices continued to decline following last week’s losses due to demand concerns as China’s economy struggles to recover. Investors are also monitoring talks to mediate a ceasefire between Israel and Hamas in Gaza, amid fears of a broader conflict in the Middle East.
Iran has threatened retaliation against Israel for the killing of a Hamas political leader in Tehran, which Iran attributes to Israel. US Secretary of State Antony Blinken is in discussions with Israeli leaders to secure a ceasefire and a prisoner-hostage swap. Overall, the stock markets are showing positive momentum following last week’s gains, with investors focusing on the upcoming central bank symposium for potential insights on US interest rates. Gold prices are soaring, while the oil market remains under pressure from demand worries. Geopolitical tensions in the Middle East are also being closely monitored by investors.
