All eyes are on Wednesday’s release of the Fed’s July meeting minutes and Chair Jerome Powell’s speech at Jackson Hole on Friday
European shares hit a 2-1/2 week high on Tuesday, tracking a Wall Street rally driven by expectations that the Federal Reserve could offer further hints of imminent rate cuts later this week.
“Should they acknowledge the U.S. economy’s disinflation path, it will confirm a September rate cut,” said Thierry Wizman, global FX and rates strategist at Macquarie. “Since the report, we’ve had number after number after number suggesting that a recession in the U.S. economy is not around the corner,” said Josephine Cetti, chief investment strategist at Nordea, citing strong U.S. retail sales, upbeat business surveys, improving jobless claims numbers and a benign inflation reading.
Japan’s Nikkei 225 hit its strongest level in over two weeks, closing up 1.8%, but Chinese blue-chips fell 0.7% on continued worries over the country’s gloomy economic outlook. Hong Kong’s Hang Seng Index edged down 0.5%.That left global stocks 0.1% higher, at their strongest level in over a month. Against the yen, the dollar was flat at 146.50, with traders also looking to Bank of Japan Governor Kazuo Ueda’s appearance in parliament on Friday, where he is set to discuss the central bank’s decision last month to raise interest rates.
“With markets calming, Ueda may change tack and return to talking about normalising interest rates,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
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