Global Stock Markets Rise After ECB Rate Cut

European stock prices rose on Friday morning, continuing the trend from the previous day when the European Central Bank (ECB) cut interest rates to support the growth of the eurozone economy.

The STOXX 600 index of leading European stocks was up 0.5 percent at 9:30 AM, indicating a path towards weekly gains.

The London FTSE index strengthened by 0.22 percent to 8,260 points, while the Frankfurt DAX rose by 0.27 percent to 18,567 points, and the Paris CAC increased by 0.40 percent to 7,465 points.

The European Central Bank yesterday, for the second time this year, reduced interest rates by 0.25 percentage points to stimulate the growth of the eurozone economy.

However, there is no euphoria in the markets as ECB President Christine Lagarde stated that it is uncertain whether further cuts will follow soon.

Most Asian stock markets also saw rising prices. The MSCI Asia-Pacific index, excluding Japan, was up 0.4 percent at 9:30 AM.

In Tokyo, the Nikkei index weakened by 0.7 percent, while stock prices in Shanghai fell by 0.5 percent. In South Korea, Australia, and Hong Kong, prices rose between 0.1 and 0.8 percent.

Asian investors are reluctant to take too many risks ahead of the extended weekend, as some markets in the region will be closed due to holidays early next week.

Consequently, investors were not inspired by yesterday’s rise on Wall Street, where the Dow Jones increased by 0.58 percent, the S&P 500 rose by 0.75, and the Nasdaq index was up 1.0 percent.

In all 11 major sectors of the S&P 500 index, stock prices rose yesterday, primarily due to a correction following a sharp decline last week.

New data, however, is not particularly encouraging. After a report on consumer prices showed that inflation in the U.S. remains relatively high, this was confirmed yesterday by data on producer prices.

In August, those prices rose more than analysts expected – by 0.2 percent on a monthly basis.

This data did not change investors’ belief that the U.S. central bank will cut interest rates in September, the first time after years of conducting a restrictive monetary policy.

However, it is now almost certain that the Fed will reduce rates by 0.25 percentage points, rather than the 0.50 percentage points some had hoped for.

– This week’s data largely confirmed the thesis that the economy will ‘soft land’, that there will be no recession. Hopes for a sharper Fed rate cut have faded, but as long as investors expect a trend of rate reductions, the outlook for the capital market remains favorable – says Peter Tuz, president of Chase Investment Counsel.