Global Stocks Rally Amid Fed Interest Rate Speculation

Global stocks hit a month-high, driven by expectations of potential U.S. Federal Reserve interest rate cuts, which could signal easing recession concerns. Investors anticipate further clarity from the Fed's July meeting minutes and Chair Jerome Powell's upcoming speech at Jackson Hole. Market dynamics fluctuated across different regions, influencing various financial instruments.

Global stocks hovered near their highest in a month on Tuesday, buoyed by expectations that the U.S. Federal Reserve could signal imminent interest rate cuts, easing fears of a looming recession. A light data calendar this week kept investors' focus on Wednesday's release of the Fed's July meeting minutes and Chair Jerome Powell's Friday speech at Jackson Hole for insights on U.S. economic policies.

Recent signals from Fed policymakers about possible easing in September have prepared markets for a dovish tone from Powell and speakers at the annual central banking meeting in Jackson Hole, Wyoming. "Markets believe that once the Fed starts cutting rates, it will pursue a predictable strategy of reducing them at every, or almost every, meeting over the next 12 months," said Nicholas Colas, co-founder of DataTrek Research LLC.

Despite uncertainties, investor hopes for monetary policy easing supported stock markets. By 1511 GMT, U.S. indexes like the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average had experienced modest fluctuations, while the MSCI index for global stocks remained near its strongest level in over a month. According to Thierry Wizman, a global currency and rates strategist at Macquarie, acknowledgment of the U.S. economy's disinflation path by the Fed could confirm a rate cut in September.

(With inputs from agencies.)