The U.S. Federal Reserve’s recent interest rate hike has sent ripples through global markets. Investors are now turning their attention to China and Switzerland, anticipating potential rate cuts from their central banks. In Tokyo, Japan’s Nikkei stock average surged past an all-time record high set in December 1989.
Stock prices on the electronic screen inside a building demonstrated the market’s upward momentum. Nikkei futures climbed, and S&P 500 futures rose by 0.3%. Analysts expect rate cuts in Switzerland and Sweden this week, likely adding further stimulus to the global economy.
However, the People’s Bank of China (PBOC) has shown inertia, which may pose a drag on economic recovery efforts. Chinese stocks received a lift after the central bank lowered its 14-day reverse repurchase rate to 1.85% from 1.95% on Monday, despite opting to keep key lending rates unchanged last week.
Fed’s hike impacts global markets
Elsewhere, Australia’s S&P/ASX 200 lost 0.7% to 8,152.90 as the Reserve Bank of Australia began a two-day policy meeting. South Korea’s Kospi climbed 0.3% to close at 2,602.01. On Friday, the S&P 500 slipped 0.2% from its record, closing at 5,702.55.
The Nasdaq composite fell 0.4% to 17,948.32. The Dow Jones Industrial Average added 0.1% to close at another record high, at 42,063.36. Critics argue that the Fed may have acted too late in cutting rates, potentially hurting the economy.
This week will bring preliminary reports on U.S. business activity, the final revision for economic growth during the spring, and an update on consumer spending. As central banks around the world continue to play pivotal roles in stabilizing and boosting their economies, the focus now shifts to how China and Switzerland will respond. Their decisions could further influence the trajectory of global markets in the coming weeks.
