Markets Open Week Mixed as Fed Eyes Rate Cut

(MENAFN) Global markets opened the week on a mixed note, buoyed by growing expectations that the Federal Reserve will begin easing interest rates this month. However, investor caution lingered ahead of Friday’s closely watched U.S. non-farm payrolls report.

Money markets now see a 90% probability that the Fed will cut rates by 25 basis points at its Sept. 17 meeting. A second identical cut is widely anticipated by December.

Speculation over potential monetary easing has buoyed investor sentiment, though friction between the Trump administration and the Federal Reserve remains unresolved. On Monday, Treasury Secretary Scott Bessent defended the Fed's independence but pointed to policy missteps, while dismissing concerns that recent government actions have unsettled markets.

Meanwhile, President Donald Trump intensified trade tensions with India, criticizing its continued reliance on Russian oil and defense imports over American alternatives. He also signaled that the window to adjust tariffs on New Delhi had already closed.

Precious metals extended their rally on rate cut optimism. Gold surged to an all-time high of $3,508.92 on Tuesday after rising for six consecutive sessions. It now trades around $3,496, up 0.6%. Silver marked its fourth straight gain, hitting $40.82 per ounce—its highest since September 2011.

In the bond market, the U.S. 10-year yield climbed 2 basis points to 4.25%, while the U.S. dollar index rose 0.2% to 97.9, snapping a five-day losing streak. Brent crude edged up 0.4% to $68.3 per barrel.

With the New York Stock Exchange closed Monday for Labor Day, U.S. futures dipped slightly in early Tuesday trading.

In contrast, European markets posted moderate gains Monday, ahead of key eurozone consumer data. Optimism was bolstered by signs of recovery in the region’s manufacturing sector. The eurozone Purchasing Managers’ Index (PMI) climbed to 50.7 in August—just above the growth threshold.

The European Central Bank, aiming to tame inflation and ease funding conditions, has already delivered a total of 100 basis points in rate cuts this year, a move now filtering through to broader economic indicators.

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