Global Markets Mixed as Rate Cut Hopes Collide with Economic Data
Global stock markets presented a mixed picture on Friday, following a week of gains fueled by optimism surrounding potential interest rate cuts by central banks. However, concerns about a cooling labor market and persistent inflation tempered enthusiasm.
In the US, the Dow Jones Industrial Average edged down 0.43%,closing at 46,043 points after reaching a historic high earlier in the week. The S&P 500 and Nasdaq Composite both held steady, finishing at 4,585 and 22,050 points respectively, maintaining the record closing levels achieved in the previous session. Investors are closely watching for signals from the Federal Reserve, widely expected to begin lowering interest rates, potentially as early as their September meeting. While a recent consumer price index reading came in higher than anticipated, economists surveyed by Bloomberg predict at least two rate cuts before the end of 2024, with over 40% anticipating three. The Fed is also expected to acknowledge increasing risks to the labor market in its upcoming statement on September 17th.
european markets finished the week on a strong note but saw a slight pullback on Friday as investors braced for a credit rating decision on France from Fitch. The Stoxx 600 index closed down 0.11% at 554.74, with the healthcare sector leading the decline. Pharmaceutical company Novartis saw its shares fall 2.8% following a downgrade from Goldman Sachs, while Zealand Pharma dropped 4.1%. The European Central Bank held interest rates steady on Thursday, but its optimistic outlook on growth and inflation dampened expectations for further easing of monetary policy. Political uncertainty in France, stemming from a recent change in prime ministers, also contributed to investor caution, pushing French 30-year bond yields higher.
Asian markets performed strongly. Japan’s Nikkei 225 index soared to a record high for the second consecutive session, closing up 0.89% at 44,768.12 points, marking its largest weekly gain since mid-July. The broader Topix index also rose, gaining 0.4% on the day and 4% for the week. Leading the gains were chip equipment manufacturer Tokyo Electron, up 5.5%, and Advantest, rising 1.82%. Notably,shares of SoftBank,with its significant investments in the technology sector,also saw positive movement,poised to close with a gain of 1.82%.
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