MSCI’s gauge of stocks across the globe advanced 13.12 points, or 1.64%, to 814.55
MSCI’S global equities index registered its biggest daily gain in more than five months on Wednesday and the dollar slightly pared losses after the U.S. Fed held interest rates steady but opened the door to interest rate cuts as soon as September.
The central bank in its statement noted further progress towards its 2% inflation and said the economy “continued to expand at a solid pace,” while job gains moderated and the unemployment rate “remains low.”
Chair Jerome Powell told reporters “there is a growing sense of confidence that you could move at the next meeting” as long as inflation data affirms its recent softening trend.
Investors had priced in unchanged rates and a strong signal that rate reductions could begin in September from the Fed, which has kept its policy rate in the 5.25%-5.50% range for the past year.
It was the worst kept secret on the planet that the Fed was not going to cut in July, according to Jake Dollarhide, CEO of Longbow Asset Management.
The Fed is going to have its day in the sun in September with a 25 or 50 bp cut, but I would not be surprised if that is already priced into stocks, he added.
Citing the Fed’s reference to easing inflation and unemployment ticking up, Don Calcagni, CIO at Mercer Advisors, said if you were going to make a case to cut rates, those are the data points you better cite in order to manage market expectations.
On Wall Street the DJIA gained 99.46 points, or 0.24%, to 40,842.79, the S&P 500 added 85.86 points, or 1.58%, to 5,522.30 and the Nasdaq Composite rose 451.98 points, or 2.64%, to 17,599.40.
It was the biggest one-day percentage gain for the S&P and the Nasdaq since February 22.
MSCI’s gauge of stocks across the globe advanced 13.12 points, or 1.64%, to 814.55 also showing its biggest one-day percentage gain since February 22. Earlier Europe’s STOXX 600 index had closed 0.8% higher.
