Global Stock Markets Rise as Fed May Soon Cut Rates

Last week, stock prices on global exchanges rose, primarily due to a signal from the U.S. central bank that a reduction in interest rates is possible in September.

The Dow Jones index increased by 1.5% last week, reaching a record 45,631 points, while the S&P 500 strengthened by 0.3% to 6,446 points. The Nasdaq, on the other hand, fell by 0.6% to 21,496 points.

On the world’s largest stock exchange, caution prevailed throughout the week as investors were reluctant to take risks ahead of the traditional annual gathering of central bankers in the U.S. town of Jackson Hole.

The most anticipated was the speech by Fed Chairman Jerome Powell regarding the economic situation and monetary policy.

In recent weeks, stock prices have risen sharply due to investors’ hopes that the Fed will cut rates by 0.25 percentage points at its meeting on September 17.

Such expectations were bolstered by recent data showing that the U.S. labor market is weakening.

However, on the other hand, recent data also indicate that the economy is growing solidly and that inflation remains elevated.

Therefore, investors were concerned that Powell might reiterate what he has been signaling for some time – that the Fed should not rush to cut rates until it is clear how the increase in tariffs on imports to the U.S. has affected inflation.

However, Powell stated on Friday that the risks are now balanced and that the time for adjusting monetary policy is approaching.

This was interpreted in the market as a signal that the Fed will cut interest rates in September, leading to a strong rise in stock indices, which ended the week with gains.

However, the Nasdaq fell on a weekly basis, a result of price corrections in several technology companies that have led growth in recent years.

Last week, this sector came under pressure as some analysts say that stock prices in this sector are overinflated.

Additionally, some research shows that many companies are failing to generate profit from artificial intelligence development.

Investors are also concerned about government interference in the private sector. President Donald Trump’s administration plans to take stakes in some chip manufacturers, such as Intel, after recently reaching an agreement with Nvidia and AMD that these companies will pay a portion of their revenue from chip exports to China.

Stock prices also rose on European exchanges last week, thanks to investors’ hopes that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky may soon sit down at the negotiating table to end the years-long war.

The London FTSE index strengthened by 2% to 9,321 points, while the Frankfurt DAX rose by 0.8% to 24,363 points, and the Paris CAC increased by 0.6% to 7,969 points.