📆 Thursday, September 19
► After the US Federal Reserve cut interest rates by 50 basis points and ahead of two more interest rate decisions by major central banks within the next 14 hours, European equity markets rallied after a negative session. The Stoxx 600 rose by around 1%, supported by hopes that the US economy can avoid sliding into recession and expectations of lower borrowing costs. Investors are now awaiting the Bank of England's interest rate decision (11:00 UTC+0), which is likely to keep rates on hold for the second time in a row. Strong gains in key sectors, particularly in the technology industry and financial stocks, contributed to the positive sentiment in Europe.
► US equity futures rallied, with the Nasdaq 100 futures up 1% (S&P 500 +0.7%), driven by the Fed's unexpectedly large rate cut. This is the first rate cut in more than four years and signals the Fed's commitment to support the US economy to avoid a recession. While Fed Chair Jerome Powell emphasized that future decisions will be data-driven and this is not the new pace, the central bank forecast further rate cuts of 50 basis points in 2024 (25 basis points twice, for a total of 100 basis points versus ~115 basis points expected). Powell made it clear that this strong start to the monetary easing phase is aimed at stabilizing the economy, but also warned and said that the Fed is not “in a hurry” to cut rates quickly and that it will continue to take a cautious tone on future easing. Investors initially reacted very pessimistically to Powell's hawkish comments, but are now optimistic that the rate cuts (=start of the monetary easing phase) will support equities, especially in the tech and growth sectors.
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