HG MARKETS:

Following the massive rate decrease by the US Federal Reserve last week, investors’ focus shifted to China and Switzerland as the next targets for monetary easing, which kept global markets stuck near record highs on Monday. Later this week, traders expect U.S. inflation data to support their expectations for more softening, which is what markets were waiting for. Days after disappointing markets by not lowering longer-term rates, China’s central bank decreased its 14-day repo rate by 10 basis points.

Following a half-point rate decrease by the Fed last week from a 23-year high, money markets are putting in a 50% chance that the Fed will make another large move in November. Following the S&P 500’s all-time highs, over 20 billion shares were traded on American exchanges on Friday, marking the busiest session since January 2021. Investors disagree, nevertheless, on whether the global monetary easing program may have begun too late to prevent a slowdown or maybe a U.S. recession from emerging. He went on to say that if unexpectedly strong GDP or inflation statistics diminished expectations for further rate cuts, markets would likewise get uneasy. The exact status of the greatest economy in the world is unclear due to soft labor market data from the United States and robust retail sales.

According to purchasing manager surveys released on Monday, the services sector in France experienced a significant contraction in September, while business activity in Germany declined at its fastest rate in seven months. Markets are completely pricing a quarter-point reduction to 1.0%, with a 41% likelihood that it will ease by 50 basis points, when the Swiss National Bank meets on Thursday. Additionally, traders are increasing their wagers on a further October decrease by the European Central Bank. The core personal consumption expenditures (PCE), the Fed’s favored inflation measure, could reveal its findings on Friday, and that could determine whether the market attitude shifts. Forecasters anticipate a 0.2% increase each month, bringing the yearly rate to 2.7%.

There will be polls on durable goods orders and consumer confidence in the United States in the upcoming week. The euro fell 0.5% versus the dollar to $1.107 on currency exchanges. As investors speculate about the extent to which the dovish Bank of Japan would raise interest rates and the extent to which the Fed will cut, the yen strengthened 0.2% to 143.61 per dollar. Though Tokyo’s stock markets were closed for the holiday, Singapore’s main share index reached its highest level since late 2007 and futures contracts closed at 38,510, compared with a cash close of 37,723.