Asian stock markets are celebrating as many believe the US Federal Reserve will cut interest rates soon. Japan’s stock index, the Nikkei 225, has hit record highs for two days straight.
On Wednesday, it jumped over 43,451 points because US inflation numbers suggested a rate cut might happen at the Fed’s September meeting.
The day before, the Nikkei had already broken 42,999 points, a first for the market. In the US, major indexes like the S&P 500 and Nasdaq also reached new records on Tuesday, with increases of 1.13% and 1.39%, respectively.
This was in response to inflation data from July showing consumer price rises were less than expected, at just 2.7%.
Why Are Investors So Optimistic?
The improved investor mood partly stems from President Trump’s announcement that he would extend a pause on tariffs for Chinese goods by 90 days.
This decision has significantly improved trade between Washington and Beijing. As a result, stock markets in Asia have seen big gains. For instance, Hong Kong’s Hang Seng Index surged about 2.5%, and South Korea’s KOSPI rose around 1%.
There’s a lot of talk and pressure on Fed Chair Jerome Powell to lower interest rates. Trump has consistently pushed for lower rates, saying it will boost the US economy, which in turn drives global growth.
However, the Fed is worried that cutting rates might increase inflation, especially when Trump’s tariffs are already hiking up prices. Trump voiced his opinion on Truth Social, stressing that Powell’s reluctance to cut rates has done “incalculable” harm.
Data from CME Group’s FedWatch tool now shows a 96.4% chance that rates will be cut in September, up from 85.9% the day before.
What Could This Mean for Global Markets?
If the rate cut happens, it will lower borrowing costs, which can boost consumer spending and business investments.
This development is closely watched by global investors as it holds the potential to influence financial markets and economies worldwide.
Rate, Like 👍, Comment💬, share this article, Follow us on our social media handles, and Submit your own story to get featured and earn rewards!
WhatsApp Channel
Telegram Channel
