Global stock markets displayed mixed performances following a record-setting day on Wall Street, while the prices of gold and silver surged ahead of a significant interest rate decision by the U.S. Federal Reserve. Later on Wednesday, the central bank is expected to announce its latest stance on interest rates, with many analysts predicting that it will maintain the current rate for the time being.
In Europe, Germany’s DAX index fell by 0.2% to close at 24,837.57, while the CAC 40 in Paris decreased by 1.1% to 8,065.62. The FTSE 100 in Britain slipped by 0.2% to 10,188.28. Despite losses in Europe, futures for the S&P 500 gained 0.3%, while futures for the Dow Jones Industrial Average remained nearly unchanged.
Asian Markets Show Divergent Trends
Asian trading revealed a more optimistic picture, particularly in South Korea, where the benchmark Kospi index rose by 1.7% to 5,170.81, bolstered by strong performances from technology stocks like SK Hynix, which gained 5.1%. Tokyo’s Nikkei 225 index managed to recover from early losses, finishing slightly higher at 53,358.71, aided by a 3.7% increase in shares of SoftBank Group Corp. following plans for further investment in OpenAI.
The U.S. dollar demonstrated some recovery against the Japanese yen, trading at 152.68, up from 152.19, yet remaining nearly 4% lower than last week’s levels. This decline has prompted warnings from both Japanese and U.S. officials about potential interventions to stabilize the yen.
The euro also weakened against the dollar, dropping to $1.1983 from $1.2041 on Monday. An index tracking the U.S. dollar’s strength against several currencies fell to its lowest level since 2022.
Surge in Precious Metals Prices
The price of gold soared by 3.9% to $5,279.30, while silver prices jumped by 6.7% to $112.69. This rise in precious metals is attributed to investors— including major central banks—reallocating their assets away from the dollar in favor of safer investments amidst economic uncertainty.
In other Asian markets, Hong Kong’s Hang Seng index gained 2.6% to 27,826.91, while the Shanghai Composite index added 0.3% to 4,151.24. Taiwan’s Taiex advanced by 1.5% and India’s Sensex rose by 0.3%.
On Tuesday, U.S. stocks showed volatility following mixed earnings reports from major corporations including UnitedHealth and General Motors. The S&P 500 climbed by 0.4% to 6,978.60, surpassing its previous all-time high set weeks earlier. The Dow fell by 0.8% to 49,003.41, while the Nasdaq composite grew by 0.9% to 23,817.10.
Investors are now looking ahead to earnings reports from influential companies such as Meta Platforms, Microsoft, and Tesla later this week, with Apple scheduled to report on Thursday.
The weakening dollar has been influenced by various factors, including trade tensions initiated by former President Donald Trump, who threatened tariffs against several European nations. Concerns over the U.S. government’s substantial debt have also led to a cautious approach from global investors, a trend often referred to as “Sell America.”
According to a report from the Conference Board, consumer confidence in the U.S. declined last month, dropping to its lowest level since 2014, even lower than during the COVID-19 pandemic. Rising inflation remains a challenge, with rates stubbornly above the Federal Reserve’s 2% target. While lower interest rates have the potential to stimulate the economy, they could also exacerbate inflationary pressures on consumers.
Traders anticipate that the Federal Reserve may resume cutting interest rates later this year, placing additional pressure on companies to demonstrate strong profit growth following record highs in stock prices. Given that stock prices typically align with corporate earnings over the long term, there is heightened scrutiny regarding whether profits can keep pace with the increasing valuations.
In other market developments early on Wednesday, U.S. benchmark crude oil saw a slight increase of 1 cent, reaching $62.40 per barrel. Brent crude, the international standard, fell by 9 cents to $66.50 per barrel.
