· European stocks traded higher on Friday as market players increase their bets the U.S. Federal Reserve will cut interest rates this month.
The pan-European Stoxx 600 was up by 0.4% after the opening bell, auto stocks leading the charge with a 1% climb as all sectors except media traded in positive territory.
Investors digested comments from a top Fed official that suggested the central bank would implement a pre-emptive “insurance” rate cut aimed at averting a major slump in economic growth.
· Asian stocks rose on Friday after a top Federal Reserve official cemented expectations of a U.S. interest rate cut later this month, fuelling appetite for riskier assets and keeping a cap on the dollar.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1%, bouncing back from the previous day’s losses, while Japan’s Nikkei advanced 2%.
New York Fed President John Williams said on Thursday that policymakers could not wait for economic disaster to hit before adding stimulus, in a speech read as a strong argument in favor of quick monetary action.
The comments by Williams made it a virtual certainty the Fed would cut interest rates by 25 basis points (bps) at its July 30-31 policy meeting and also revived expectations of an even deeper 50 bps reduction.
· Japanese stocks rebounded solidly on Friday from the previous day’s tumble, as riskier assets got a lift after a senior Federal Reserve official bolstered expectation of a U.S. rate cut later this month, with the semiconductor sector leading the gains.
The benchmark Nikkei share average rallied 2.0% to 21,466.99, following a 2.0% slump on Thursday. The rebound took the index above a few major technical support levels, including 25- and 50-day moving averages.
For the week, the Nikkei posted a 1.0% loss, its biggest weekly drop since late May.
“It’s not surprising to see this kind of technical rebound after yesterday’s selloff. But many investors opted to wait for more and clearer evidence from the upcoming flurry of corporate earnings announcements,” said Yasuo Sakuma, chief investment officer at Libra Investments.
Reference: CNBC, Reuters
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