Central banks near end of tough monetary policies as US elections approach
Date
7/23/2024 3:50:13 AM
(MENAFN) Central banks across the globe are nearing the end of their stringent monetary policies aimed at curbing inflation, with shifts in policy becoming more apparent as they begin to adjust their approaches. The impact of potential changes resulting from the upcoming US elections continues to reverberate through the global markets.
Recent developments have heightened political uncertainty, particularly with concerns surrounding US President Joe Biden’s health. Biden's announcement on Sunday that he plans to withdraw from the presidential nomination and endorse Vice President Kamala Harris, coupled with former President Donald Trump's leading position in the polls following recent controversies, has sparked significant debate and controversy. These political dynamics are contributing to the volatility and unpredictability in the markets.
On the macroeconomic front, this week’s data, especially related to US economic growth, suggests that the US Federal Reserve (Fed) might implement up to three interest rate cuts by the end of the year. The latest figures indicate a cooling labor market, which, combined with the Fed's potential easing measures, is expected to create a more favorable environment for expansionary policies. However, these adjustments are also contributing to a cautious sentiment toward high-risk investments globally.
The financial performance and earnings reports of major corporations such as Alphabet, Tesla, Qualcomm, and IBM are anticipated to drive significant volatility in stock markets and various sectors throughout the week. These large companies are likely to influence market trends and investor sentiment considerably.
In addition to corporate earnings, upcoming macroeconomic data releases and guidance from European Central Bank (ECB) officials are expected to impact market pricing. Analysts predict that the ECB is likely to announce at least two interest rate cuts for the remainder of the year, which could further influence market expectations and financial conditions.
On Friday, US markets saw declines across major indices. The Nasdaq Composite fell by 0.81 percent, the S&P 500 dropped 0.71 percent, and the Dow Jones Industrial Average decreased by 0.93 percent. In the currency and commodities markets, the dollar index stood at 104.3, while Brent crude oil prices stabilized at USD82.20 per barrel. The yield on the US 10-year Treasury bond closed at 4.23 percent, and gold prices saw a slight increase of 0.2 percent, reaching USD2,405 per ounce.
European markets also experienced losses on Friday. The FTSE 100 index in the UK fell by 0.6 percent, Italy's MIB 30 index dropped 0.91 percent, France's CAC 40 index decreased by 0.69 percent, and Germany's DAX 40 index was down by 0.1 percent. Despite these declines, European index futures began the week with a positive trajectory, reflecting a mixed but cautious outlook in the region’s financial markets.
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