Global markets rally after Fed's 50-basis-point rate cut, positive trends continue

By Mahmut Cil

ISTANBUL (AA) - Global markets are showing positive momentum following the US Federal Reserve’s 50-basis-point rate cut on Wednesday, its first in four years.

The Fed signaled another 50-basis-point cut by year’s end, contributing to optimism among investors who are closely watching the US economy as signs of avoiding a recession are feeding the risk appetite.

US jobless claims fell below expectations to 219,000 last week, while the current account deficit rose 10.7% to $266.8 billion in the second quarter.

The markets were further boosted by a surge in tech stocks, with Nvidia and AMD climbing 3.9% and 5.7%, respectively, and gains in Apple (+3.7%), Meta (+3.9%), Microsoft (+1.8%), and Alphabet (+1.5%).

US 10-Year Treasury yields stood at 3.71%, while the US Dollar Index Futures balanced at 100.4 on Friday.

Brent crude oil rose 2.4% on Thursday to $74 a barrel before sliding 0.2% on Friday.

Gold, which closed at $2,587 an ounce, rose 0.3% to $2,594 on Friday.

While US index futures opened on a negative note, Thursday saw the Dow Jones rise 1.26%, the S&P 500 climb 1.70%, and the Nasdaq jump 2.51%.

- European stocks see gains amid rate stability

In Europe, a buying trend was noted after the Bank of England (BoE) kept its policy rate unchanged at 5%, in line with expectations.

BoE Governor Andrew Bailey signaled that lower inflationary pressures could allow gradual rate cuts but cautioned against moving too fast to achieve the 2% inflation target while ensuring sustainable growth.

“It’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much,” said Bailey.

Germany’s DAX 40 hit a record high on Thursday, closing at 19,002.38 points, up 1.55%. The CAC 40 gained 2.29%, the FTSE 100 rose 0.91%, and the FTSE MIB climbed 1.16% while European index futures contracts started Friday on a negative course.

Analysts believe the Fed’s easing could create a more favorable environment for the European Central Bank and BoE to consider loosening monetary policies by year’s end.

- Positive trend in Asia, except China

Asian markets followed a positive trajectory, except for China, after the Bank of Japan left its interest rate unchanged at 0.25%, in line with its continued economic recovery and easing inflation pressures.

Japan’s Consumer Price Index (CPI) rose 3% year-on-year in August, while core CPI increased 2.8%. The US dollar/Japanese yen parity closed Thursday at 142.6, and it is trading at 142.2 on Friday, down 0.3%.

China surprised markets by keeping its benchmark lending rates steady, with the 1-year LPR at 3.35% and the 5-year rate at 3.85%.

In contrast, Hong Kong cut its benchmark rate in line with the Fed. Near Thursday’s close, Japan’s Nikkei 225 rose 1.8%, Hong Kong’s Hang Seng Index was up 1%, and South Korea’s Kospi Index increased 0.9%. China’s Shanghai Composite Index fell 0.5%.

- Turkish markets follow buying trend

In Türkiye, the BIST 100 ended Thursday up 2.06% at 9,975.61 points. The Turkish Central Bank held its one-week repo auction rate steady at 50%, citing low core goods inflation, but expected services inflation to improve by the final quarter.

Türkiye’s 5-year credit default swap (CDS) fell to its lowest level since February 2020 at 254.2 basis points. The U.S. dollar/Turkish lira exchange rate was 34.0303 on Thursday, down 0.1%, before rising 0.2% on Friday to 34.0820.

*Writing by Emir Yildirim