Rate cuts are coming - and markets are ecstatic
- Stocks climbed on Thursday after Federal Reserve Chair Jerome Powell signaled the central bank would lower interest rates this month.
- "A July rate cut seems set in stone as Powell cites geopolitical uncertainties and global growth slowdown as the reasons why an easier policy will help sustain the expansion domestically," said Konstantinos Anthis, head of research at ADSS.
- Oil prices rose after three Iranian vessels tried to impede a British oil tanker in the Strait of Hormuz, fanning fears of regional tensions leading to supply disruptions.
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Stocks climbed on Thursday after Federal Reserve Chair Jerome Powell signaled the central bank would lower interest rates this month, reassuring investors who had feared robust US employment data would take a cut off the table.
"A July rate cut seems set in stone as Powell cites geopolitical uncertainties and global growth slowdown as the reasons why an easier policy will help sustain the expansion domestically," said Konstantinos Anthis, head of research at ADSS.
Minutes from the Fed's June meeting were released during Powell's testimony in front of Congress, indicating market expectations also factored into the central bank's decision.
"While overall financial conditions remained supportive of growth, those conditions appeared to be premised importantly on expectations that the Federal Reserve would ease policy in the near term to help offset the drag on economic growth stemming from uncertainties about the global outlook and other downside risks," the minutes read.
However, it's unclear what the Fed has planned for the coming months.
"There remain doubts about whether this is going to be first of several cuts or just an 'insurance' cut designed to keep markets on an even keel," said Neil Wilson, chief market analyst for Markets.com.
Here's the market roundup as of 9:05 a.m. (4:05 a.m.):
Asian stocks climbed with the Shanghai Composite up 0.1%, Japan's Nikkei up 0.5%, and Hong Kong's Hang Seng up 0.7%.
European equities rose with Germany's DAX up 0.2%, and the Euro Stoxx 50 and Britain's FTSE 100 up 0.3%.
US markets are set to open higher with futures underlying the Dow Jones Industrial Average and S&P 500 up 0.2%, and Nasdaq futures up 0.3%.
Oil prices jumped after three Iranian vessels tried to impede a British oil tanker in the Strait of Hormuz, fanning fears of regional tensions leading to supply disruptions. West Texas Intermediate crude was up 0.6% at $60.80, and Brent crude up 0.6% at $67.40.
Gold climbed 0.8% to $1,424.
Bitcoin slumped 10% to around $11,600.