Markets Climb on Back of Expected ECB Rate Cut

Global share markets experienced a fourth consecutive day of gains, influenced by anticipation of another rate cut from the European Central Bank. Additionally, a boost in U.S. tech stocks and a recovery in commodity markets have contributed to a positive trading mood. Key attention now shifts to ECB Chief Christine Lagarde's forthcoming message.

Global share markets have enjoyed a fourth consecutive day of gains, buoyed by the strong anticipation of another rate cut from the European Central Bank (ECB). This sentiment has driven shorter-term euro zone borrowing costs to near their lowest levels since the end of 2022, along with pushing the euro to a four-month low.

An overnight rally in large U.S. tech stocks and a resurgence in commodity markets also contributed to the positive trading mood. However, investors are now keenly focused on what ECB Chief Christine Lagarde will communicate from Frankfurt. While a second quarter-point rate cut of the cycle seems almost certain, the pace and strategy for the rest of the year remain uncertain. The meeting will also provide new ECB staff forecasts.

Paul Hollingsworth, Chief European Economist at BNP Paribas, suggested that upcoming inflation projections could be higher than the last set in June, despite recent dives in oil prices. He believes this will translate into a 'message of gradualism' from Lagarde. Although not completely ruling out a third cut in October, Hollingsworth notes it seems unlikely for now.

(With inputs from agencies.)