Global Shares Remain Steady Amid Anticipation of Fed Rate Cuts

Global shares paused their rise on Wednesday as investors awaited confirmation of anticipated U.S. Federal Reserve interest rate cuts. With the Fed expected to reduce rates to counter economic threats, stocks, oil prices, and gold prices experienced notable fluctuations. The S&P 500 and Nasdaq indices saw gains, while U.S. employers reported fewer jobs added than initially stated.

Global shares idled on Wednesday after a lengthy rebound brought them close to recent record highs, as investors awaited confirmation that the U.S. Federal Reserve would cut interest rates as expected. Fed officials last month were strongly leaning toward an interest-rate cut at their September policy meeting, according to the minutes of the July 30-31 gathering. Fed Chair Jerome Powell is expected to further strengthen the view that the central bank will start loosening credit conditions to counter the worst inflation outbreak in four decades during his speech on Friday at the Fed's Jackson Hole conference in Wyoming.

Oil prices dipped, while dollar weakness on the prospect of rate cuts kept gold near Tuesday's record high. On Wall Street, the Dow Jones Industrial Average rose 0.13%, to 40,889, the S&P 500 gained 0.42%, to 5,620, and the Nasdaq Composite gained 0.57%, to 17,918.

Overall global stocks, tracked by the MSCI All Country index, gained 0.4%, standing near its mid-July record high and up 13.9% for the year. In Europe, the STOXX index for 600 companies rose about 0.3%, also nearing its all-time high from June 7. Stocks have been volatile this month due to investor concerns over U.S. jobs data suggesting a potential recession, but those fears are giving way to hopes for a soft landing cushioned by expected U.S. borrowing cost cuts starting in September.

Data released Wednesday by the Labor Department indicated that U.S. employers added fewer jobs than previously reported through March, raising Fed concerns about the labor market's health. Quincy Krosby, chief global strategist for LPL Financial, noted, "The labor report supports the futures market's expectation that the Fed will cut rates at its Sept. 18 meeting." Interest rate futures fully price in a 25-basis-point cut next month, with a one-in-three chance of a 50-basis-point cut. Nearly 100 basis points of cuts are expected this year, with another 100 basis points next year. U.S. Treasury yields drifted lower, with the 10-year benchmark yield falling 2.3 basis points to 3.795% and the 2-year yield, typically aligned with interest-rate expectations, dropping 6.9 basis points to 3.9305%.

Investment bank Baird's U.S. equities managing director, Ross Yarrow, suggested a potentially unique scenario where significant rate cuts occur without a recession. "If the Fed is cutting rates, inflation is decreasing, and employment continues to rise, it starts to look like a Goldilocks scenario," Yarrow said. Another expert, Sameer Samana of Wells Fargo Investment Institute, noted that markets might remain constrained until after the U.S. elections in November.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%. The Hang Seng also dipped 0.7%, with JD.com dropping 8.7% amid shareholder changes. Japan's Nikkei fell 0.3%, hitting resistance at the 38,000 level. The falling dollar pushed gold to record highs and boosted the yen to 145.135 per dollar. The euro strengthened to $1.115, the highest since early December. Gold prices hovered around $2,510 an ounce, near record levels from Tuesday. Oil prices dropped again, with U.S. crude down 1.69% to $71.93 a barrel and Brent falling 1.49% to $76.05 per barrel.

(With inputs from agencies.)