Global Markets Update: Fed Cut Bets, Record U.S. Stocks, Oil Retreat, and Geopolitical Tensions

                                                              Source: Krish Capital Pty Ltd

Index Update

U.S. stocks surged to record highs, with the Dow, S&P 500, and Nasdaq all advancing on strong momentum. Economic data showed consumer prices rising faster than expected in August, while jobless claims hit their highest level since 2021, highlighting labor market softness. Markets remain confident of a quarter-point Fed rate cut next week, with growing bets on a larger move. In earnings, Adobe gained on strong results, Super Micro Computer advanced on Nvidia-related shipments, while RH declined on weaker revenue

Market Movers

On Thursday, the top gainers were Vince Holding Corp. (+89.16%), followed by Opendoor Technologies Inc (+79.52%). On the contrary Eightco Holdings Inc. (-39.86%), and QMMM Holdings Limited. (-31.02%) declined the most the same day.

Commodities Update

Oil prices retreated, with WTI slipping below USD 62 and Brent below USD 66 per barrel, extending recent declines on concerns over weak U.S. demand and rising supply. U.S. crude inventories unexpectedly increased by 3.9 million barrels, while the IEA forecast faster global supply growth as OPEC+ boosts production. In contrast, OPEC maintained its steady outlook. Geopolitical factors, including U.S. pressure on G7 allies to raise tariffs on Russian crude purchases by India and China, kept supply risks in focus, leaving prices still on track for a modest weekly gain.

Gold advanced toward USD 3,650 per ounce, approaching record highs and marking a fourth straight weekly increase. The rally was fueled by firm expectations of U.S. monetary easing, after inflation data aligned with forecasts, producer prices declined, and jobless claims hit a four-year high. Growing speculation about a larger Fed rate cut and heightened geopolitical tensions, including conflicts in the Middle East and Ukraine, continued to bolster safe-haven demand.

Macro Updates

U.S. and China to Hold High-Level Economic Talks in Madrid

U.S. Treasury Secretary Scott Bessent will meet Chinese Vice Premier He Lifeng and other senior officials in Madrid next week to discuss trade, economic, and national security issues. The talks, part of Bessent’s trip to Spain and Britain, will also cover TikTok’s status and anti–money laundering cooperation. This marks their fourth in-person meeting in 2025, aimed at maintaining a fragile trade truce that has eased tariffs and restored Chinese rare earth exports to the U.S.

Dollar Steadies as Fed Rate Cut Bets Strengthen

The dollar index held near 97.6 but remained pressured as inflation data aligned with expectations and jobless claims hit their highest since 2021, reinforcing prospects of Federal Reserve easing. Markets see a strong chance of a quarter-point cut at the upcoming meeting, with rising odds of a larger move. Policy updates included a U.S.-Japan pledge to curb currency volatility and the ECB holding rates steady at 2%. The dollar is set to end the week slightly lower.

U.S. Pushes G7 to Raise Tariffs on India and China Over Russian Oil Purchases

The U.S. is pressing G7 nations to impose steep tariffs on India and China for buying Russian oil, aiming to increase pressure on Moscow amid the Ukraine war. Washington has already raised tariffs on Indian imports and briefly hiked Chinese levies, proposing rates of 50–100%. However, EU officials caution that such steps could strain relations with New Delhi and provoke retaliation from Beijing, instead favoring stricter sanctions and accelerated timelines for ending Russian energy imports, though opposition from some member states persists.

Bonds Commentary

The 10-year U.S. Treasury yield held near a five-month low around 4.03% as inflation data and rising jobless claims reinforced expectations of Federal Reserve policy easing. Markets are pricing in a high probability of a 25 basis point cut at the September meeting, with increasing speculation about a larger move, supported by softer producer price data earlier in the week.

Futures Update

U.S. stock futures were little changed after major indices closed at record highs in the previous session. Gains were driven by economic data that reinforced expectations of an upcoming Federal Reserve interest rate cut. The Dow Jones Industrial Average ended at a record level, while the S&P 500 and Nasdaq Composite also advanced to fresh peaks.

Stocks experienced a strong rally to the upside during Thursday’s trading session, with major averages notably higher after Wednesday’s mixed performance. The S&P 500 gained 55.45 points, or 0.85%, closing at 6,587.48. From a technical standpoint, the index held support at key levels and continued to rise steadily, indicating the potential for further gains in the near term.  Additionally, the 14-day RSI is approaching the midpoint, which could signal the possibility of an upward trend. Key support levels are around 6,495, while resistance is expected near 6,666.