Global stock indices exhibited mixed performance last week as investors navigated optimism over potential interest rate cuts and caution ahead of crucial US inflation data. Early in the week, major indices were buoyed by hopes that central banks might soon ease monetary policy. However, as the week progressed, market sentiment became more tentative, with investors turning their attention to the upcoming Personal Consumption Expenditure (PCE) price index data, due out on Friday, for further clues on the direction of future rate hikes.
In the United States, stock market performance was varied. The Dow Jones Industrial Average (DJIA) edged up by 0.4%, driven by positive reactions to revised GDP data, which helped counterbalance a sharp decline in Nvidia’s stock following its latest earnings report. However, the S&P 500 dipped by 0.8%, reflecting a more cautious market sentiment as investors awaited the PCE data.
Across the Atlantic, European equities performed strongly, with the STOXX Europe 600 rising by 1.6% and the UK’s FTSE 100 gaining 1.0%. The cooling inflation in the Eurozone bolstered expectations that the European Central Bank (ECB) may implement a rate cut in September, lending support to regional markets.
In Asia, the Japanese stock market saw gains, with the Nikkei 225 advancing by 0.6%. The yen’s continued weakness provided a boost to export-oriented companies, fueling optimism in the market. Conversely, Chinese equities struggled, with the Shanghai Composite Index (SSE) declining by 0.4%, weighed down by significant losses in the technology sector.
Emerging and frontier markets also faced headwinds this week. The MSCI Emerging Markets Index slipped by 0.5%, largely due to the decline in Chinese stocks. Meanwhile, the MSCI Frontier Markets Index dropped by 0.4%, with losses in Vietnam (-0.1%) contributing to the overall decline.
As the week draws to a close, global markets remain on edge, with the forthcoming PCE price index data likely to be a key determinant of near-term market direction. Investors are particularly keen to assess whether the data will reinforce or dampen expectations of future rate cuts by the Federal Reserve, which could have far-reaching implications for global financial markets.
