Global Markets Rally Amid Optimism on U.S. Rate Cuts

Global stock markets rose on Monday due to optimism about potential U.S. interest rate cuts. Oil prices spiked amid Middle East tensions and Libya's production halt. The S&P 500, Dow Jones, and European shares saw gains while the Nasdaq declined. Investors now await Nvidia's earnings report and upcoming U.S. inflation data.

Global stock markets edged higher on Monday, buoyed by optimism that the U.S. Federal Reserve might soon lower interest rates. This market sentiment persisted even as oil prices surged due to rising tensions in the Middle East. The S&P 500 and Dow climbed, while European shares also showed gains amidst subdued trading with the London market closed for a UK public holiday. Interestingly, Japan's Nikkei index fell nearly 0.7% as the yen appreciated.

The Dow Jones Industrial Average climbed 0.47% to 41,367.08, the S&P 500 gained 0.11% to reach 5,641.02, and the Nasdaq Composite dropped 0.21% to end at 17,840.46. Additionally, MSCI's global stock index inched up 0.13% to 832.39. Tensions between Israel and Hezbollah escalated with rocket exchanges and airstrikes, raising concerns about potential oil supply disruptions. Concurrently, Libya's eastern government announced the shutdown of all oil fields, further driving up crude prices.

Brent crude prices surged 3.11% to $81.48 per barrel, while West Texas Intermediate jumped 3.59% to $77.52 per barrel. At the Jackson Hole symposium last Friday, Federal Reserve Chairman Jerome Powell hinted at easing policies, stressing the need to avoid further weakening in the labor market. In contrast, ECB Chief Economist Philip Lane cautioned that while progress had been made in reducing eurozone inflation, challenges remained. The yield on the U.S. 10-year Treasury note increased by 0.7 basis points to 3.814%.

Nvidia's upcoming earnings report on Wednesday is also drawing significant attention, with the company's stock up 160% year-to-date. Market expectations are high, and investors are particularly interested in any guidance for the third quarter. U.S. personal consumption and core inflation data, due on Friday, along with a preliminary reading on EU inflation, are also under close watch. Analysts generally predict benign data, supporting potential rate cuts in September. Meanwhile, the dollar fell to a three-week low against the yen, and gold prices firmed close to recent highs due to safe-haven demand.

(With inputs from agencies.)