Eyes on China as central bank cuts rates, Fed expected to pin US interest rate
ALBAWABA – Stocks rose Tuesday on optimism that the United States (US) Federal Reserve (Fed) will pause on further US interest rate hikes for June, as China’s central bank cut short-term interest rates.
The Fed’s Open Market Committee is expected to keep US interest rates in the 5-5.25 percent range on Wednesday, when their two-day meeting is done, June 13-14.
Markets around the world are looking to the Fed to put a pin on US interest rates for now.
Nonetheless, another rate hike in July may be necessary, according to Bloomberg.
China’s rate cut is the first in a series of proposed measures aimed at reinvigorating the world’s second-largest economy.
The shift from the People’s Bank of China rippled through rates and currency markets, with Chinese bond yields sliding and the yuan weakening about 0.2 percent against the dollar. This increased speculation that the bank will cut its key medium-term lending facility later this week.
The Nasdaq 100 and S&P 500 indexes closed at the highest level since April 2022, as futures for the Euro Stoxx 50 rallied 0.8 percent, Bloomberg reported. While at least one index of Asian equities rose more than 1 percent.
In China, technology stocks in Hong Kong saw the biggest gain, alongside Japanese equities, with the Topix rallying more than 1 percent in a third day of gains. The Topix index hit its highest level since 1990,
The two-year US Treasury yield, which is sensitive to imminent central bank moves, edged lower for a second day, Bloomberg reported.
The Bloomberg Dollar Spot Index fell 0.2 percent as major currencies gradually widened their trading ranges against the greenback after muted moves in the morning.
