As investors await important central bank updates that could set the tone for the rest of the year, global equity markets are about to enter a crucial week.
Following lower-than-expected inflation data, Wall Street in the US ended the previous week on a positive note. Expectations that the Federal Reserve would make its first interest-rate cut in September were strengthened by the July Consumer Price Index, which increased by 2.7% annually. Now, traders are looking forward to Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, where they hope to learn more about the central bank’s policy direction.
Despite persistent growth concerns, stocks throughout Europe have demonstrated resilience. There is increasing pressure on the European Central Bank (ECB) to strike a balance between the fight against inflation and indications of a slowing economy, especially in France and Germany. Natural gas prices in particular continue to be a major risk factor for the area. Asia’s attention is on Chinese markets as Beijing introduces new stimulus plans to stabilize its real estate and technology industries. Although they want more robust policy commitments to increase consumer demand, investors are still cautiously optimistic. A weaker yen that benefits exporters and strong corporate earnings have kept Japan’s Nikkei 225 close to record highs.
In the commodities market, gold stays stable as traders protect themselves from policy uncertainty, while oil prices continue to hold steady due to OPEC’s continuous supply cuts.
Global markets begin the week with cautious optimism overall, and short-term momentum is probably going to be determined by central bank guidance.