Global Markets React to Powell's Hint at Potential Rate Cut
Stocks rise and US Treasury yields fall after Federal Reserve Chair Jerome Powell's speech at Jackson Hole.
Stock markets around the world responded positively to remarks made by Federal Reserve Chair Jerome Powell at the annual central banking symposium in Jackson Hole, Wyoming.
Powell hinted at a potential interest rate cut at the Fed's upcoming September meeting, signaling a shift in policy direction amid growing concerns about the job market and economic risks.
This announcement led to an increase in stock prices, with the S&P 500 and Nasdaq Composite indices rising by 1.4 percent and 1.6 percent respectively.
The Dow Jones Industrial Average also reached a new intraday high, increasing by 1.6 percent.
The two-year US Treasury yield decreased by nearly 10 basis points to 3.69 percent, while the benchmark 10-year yield fell by 6 basis points to 4.27 percent.
Powell's comments are being closely scrutinized given the recent criticism of his leadership from US President Donald Trump and concerns over the Fed's independence.
The Federal Reserve's upcoming meeting in September holds significant importance as it considers potential rate cuts, with a focus on job market data and inflation reports that will be released before the meeting.
Powell acknowledged the balance of risks shifting, indicating openness to future policy adjustments.
However, he provided limited guidance on the timing or pace of any further rate reductions, which may lead to continued pressure from Trump who advocates for an immediate cut in interest rates due to perceived low inflation risk.
European markets also responded positively but with less intensity than their US counterparts.
The STOXX 600 index increased by 0.6 percent, while Germany's 10-year yield, a key benchmark for the eurozone, decreased by 3 basis points to 2.72 percent.
The dollar weakened against the yen and the euro, reflecting lower US Treasury yields.
In Asia, Chinese shares saw significant gains, with the CSI 300 Index rising 2.1 percent.
This was partly driven by news from DeepSeek's upgrade of its AI model and Reuters' report that Nvidia had requested Foxconn to suspend work on its H20 AI chip, potentially benefiting Chinese competitors.
Tech stocks listed in Hong Kong also surged by 2.7 percent.
Japanese data showed core consumer prices slowing for the second consecutive month but remaining above the central bank's target rate, sustaining expectations of a rate hike in the coming months.
Powell hinted at a potential interest rate cut at the Fed's upcoming September meeting, signaling a shift in policy direction amid growing concerns about the job market and economic risks.
This announcement led to an increase in stock prices, with the S&P 500 and Nasdaq Composite indices rising by 1.4 percent and 1.6 percent respectively.
The Dow Jones Industrial Average also reached a new intraday high, increasing by 1.6 percent.
The two-year US Treasury yield decreased by nearly 10 basis points to 3.69 percent, while the benchmark 10-year yield fell by 6 basis points to 4.27 percent.
Powell's comments are being closely scrutinized given the recent criticism of his leadership from US President Donald Trump and concerns over the Fed's independence.
The Federal Reserve's upcoming meeting in September holds significant importance as it considers potential rate cuts, with a focus on job market data and inflation reports that will be released before the meeting.
Powell acknowledged the balance of risks shifting, indicating openness to future policy adjustments.
However, he provided limited guidance on the timing or pace of any further rate reductions, which may lead to continued pressure from Trump who advocates for an immediate cut in interest rates due to perceived low inflation risk.
European markets also responded positively but with less intensity than their US counterparts.
The STOXX 600 index increased by 0.6 percent, while Germany's 10-year yield, a key benchmark for the eurozone, decreased by 3 basis points to 2.72 percent.
The dollar weakened against the yen and the euro, reflecting lower US Treasury yields.
In Asia, Chinese shares saw significant gains, with the CSI 300 Index rising 2.1 percent.
This was partly driven by news from DeepSeek's upgrade of its AI model and Reuters' report that Nvidia had requested Foxconn to suspend work on its H20 AI chip, potentially benefiting Chinese competitors.
Tech stocks listed in Hong Kong also surged by 2.7 percent.
Japanese data showed core consumer prices slowing for the second consecutive month but remaining above the central bank's target rate, sustaining expectations of a rate hike in the coming months.
