Global stock markets exhibited mixed results on Monday, following a week of pivotal interest rate decisions from central banks in the U.S., Japan, China, and the UK.
In Paris, the CAC 40 dipped 0.3% to 7,481.56 after composite factory activity data for September fell below the critical 50 threshold, indicating a contraction in the French economy. In contrast, Germany’s DAX gained 0.4%, closing at 18,796.33, despite the HCOB Manufacturing PMI for September dropping to 40.3, missing expectations. London’s FTSE 100 also saw a modest rise of 0.4%, ending at 8,258.47.
Futures for the S&P 500 and Dow Jones Industrial Average remained largely unchanged.
In China, stocks experienced a boost after the central bank lowered its 14-day reverse repurchase rate from 1.95% to 1.85%. The People’s Bank of China had kept key lending rates steady the previous week, but markets were anticipating this cut. Additionally, Governor Pan Gongsheng is scheduled to hold a news briefing to discuss measures to support the economy. The Hang Seng index in Hong Kong fell 0.2% to 18,226.58, while the Shanghai Composite rose 0.4% to 2,748.92.
Japan’s markets were closed on Monday due to a public holiday, but the country remained in the spotlight after the Bank of Japan opted to maintain its benchmark rate at 0.25% on Friday. This decision contributed to a decline in the Japanese yen, which fell from last week’s peak of approximately 140 to the U.S. dollar, trading at 143.56 yen on Monday.
In Australia, the S&P/ASX 200 decreased by 0.7%, closing at 8,152.90, as the Reserve Bank of Australia commenced a two-day policy meeting. Meanwhile, South Korea’s Kospi rose 0.3% to finish at 2,602.01.
Last Friday, the S&P 500 fell 0.2% from its record, closing at 5,702.55, while the Nasdaq composite dropped 0.4% to 17,948.32. The Dow Jones Industrial Average, however, recorded a 0.1% increase, finishing at another record high of 42,063.36.
In a notable move, the Federal Reserve cut its main interest rate for the first time in over four years, a shift aimed at curbing inflation while maintaining a solid job market. Despite inflation easing from its peak two years ago, the Fed faces scrutiny as hiring begins to slow under the weight of higher interest rates. Critics argue the central bank delayed too long in making cuts, potentially harming the economy.
There are also concerns that the U.S. stock market may be overvalued, driven by the belief that the Federal Reserve can successfully lower inflation to 2% without triggering a recession.
The Bank of England also opted to keep its main interest rate unchanged at 5% following the Fed’s decision.
This week, investors will be watching for preliminary reports on U.S. business activity, a final revision of spring economic growth, and updates on consumer spending.
In commodities, U.S. benchmark crude oil declined by 12 cents to $70.88 per barrel, while Brent crude fell 8 cents to $74.41. The euro dropped to $1.1096 from $1.1162.
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