On Thursday, global stock markets experienced a predominantly positive trend, driven by growing expectations of further interest rate cuts by the United States Federal Reserve. In Europe, markets saw modest gains, with France’s CAC 40 rising by 0.4%, Germany’s DAX edging up by 0.3%, and Britain’s FTSE 100 climbing by 0.4%. The positive momentum extended to the United States, where futures trading indicated a favorable opening, with Dow futures up by 0.2% and S&P 500 futures rising by 0.3%.
In Asia, Japan’s Nikkei 225 index surged by 0.8%, indicating strong investor sentiment. Australia’s S&P/ASX 200 and South Korea’s Kospi also registered gains of 0.5% and 1.3%, respectively. However, trading remained closed in Taiwan and China due to a national holiday, limiting market activity in the region.
Market analysts pointed to developments concerning Taiwan Semiconductor Manufacturing Co (TSMC), a key player in the global semiconductor industry. Despite a powerful earthquake disrupting its operations, expectations emerged for quicker-than-anticipated relief from potential production halts. This news alleviated concerns about supply disruptions and provided a boost to market confidence. Additionally, the market found reassurance in a weaker-than-expected U.S. services purchasing managers index, suggesting that overall demand may remain subdued and easing worries about inflationary pressures.
Further bolstering market sentiment was a report from Japan’s major labor union, Rengo, revealing robust wage increases during this year’s negotiations. The report indicated an average rise of over 5%, marking the highest increase in three decades. This positive outlook for wage growth bodes well for consumer spending and economic growth.
However, investor focus remained on the forthcoming U.S. government report on the job market for March, expected to provide insights into employment trends and wage growth. This report was anticipated to be a key economic data release for the week, potentially impacting market sentiment and Federal Reserve policy expectations.
While the Federal Reserve has hinted at the possibility of three interest rate cuts this year to support economic recovery, market participants have tempered their expectations. Traders have adjusted their forecasts in line with Fed officials’ cautious stance, reducing expectations from the six rate cuts initially anticipated at the start of the year. Some investors are even preparing for a scenario with fewer rate cuts, speculating that the Fed may be reluctant to implement significant policy changes close to November’s election to avoid appearing politically motivated.
In energy markets, benchmark U.S. crude oil prices dipped to $85.09 a barrel, while Brent crude slipped to $89.03 a barrel. These movements were influenced by factors such as supply dynamics, geopolitical tensions, and demand outlooks. Additionally, currency trading saw the U.S. dollar slightly strengthening against the Japanese yen and the euro, reflecting fluctuations in currency markets amid broader economic developments.