Global stock markets took a hit on Monday, with investors weighing the implications of U.S. inflation data and chip stocks’ decline, while oil and gold prices rose amid geopolitical tensions.
The Federal Reserve’s interest rate cut decision is expected to be cemented this week, with global shares falling 2.05 points or 0.23% to 871.68 in MSCI’s gauge. The Dow Jones Industrial Average fell 111.93 points or 0.26% to 44,528.20, while the S&P 500 dropped 27.07 points or 0.44% to 6,063.20.
China’s decision to alter its stance on monetary policy has lifted global sentiment, with Beijing pledging to introduce stimulus to encourage economic growth next year. This move helped boost oil and gold prices, which rose 1.56% and 1.06%, respectively.
The rapid collapse of the Syrian government has complicated an already fraught situation in the Middle East, raising concerns about geopolitical risk premiums on oil prices. The European Central Bank is expected to deliver a quarter-point cut on Thursday, while the Reserve Bank of Australia meets on Tuesday.
Markets now imply an 85% chance of a Fed rate cut next week, with markets pricing in further cuts for next year. Investors are also bracing themselves for the U.S. inflation report, which could impact interest rates and economic growth.
Meanwhile, South Korean stocks slid 2.8%, while the won currency weakened due to uncertainty over President Yoon Suk Yeol’s fate. The European share market closed at its highest levels in six weeks, led by mining and luxury stocks.
The Swiss National Bank is also expected to cut rates by half a point given slowing inflation, as could Canada’s central bank when it meets on Wednesday.
Source: https://www.reuters.com/markets/global-markets-wrapup-1-2024-12-09