On Wednesday, the United States saw some news that raised expectations of an interest rate cut. The central bank, the Fed, is expected to possibly make the first interest rate cut as early as September. However, contrary to expectations, the June ISM purchasing managers’ index figure for the US service sector fell below 50 to 48.8 points, with a forecast of 52.7. A figure above 50 indicates an increase in activity, while a figure below 50 indicates a decline in activity.
Meanwhile, the minutes of the Fed’s previous interest rate meeting were also announced on Wednesday, showing that the Fed’s Open Market Committee is divided on how long they want to keep interest rates high. Despite this division, Wall Street had a bullish day on Wednesday, with Asian stock markets following suit on Thursday. The Asia Dow index was up by more than one percent and was driven mainly by discretionary consumption and the financial sector. Exchange rates in mainland China and Hong Kong were slightly down, with small increases seen in India and stronger increases in South Korea and Taiwan.
On Thursday morning, European stock exchanges were expected to open cautiously based on index futures due to potential economic concerns from Europe’s trade tensions with China and uncertainty surrounding Brexit negotiations. Despite this uncertainty, exchange rates in mainland China and Hong Kong were slightly down while there were small increases seen in India and stronger increases in South Korea and Taiwan. Overall, market sentiment was influenced by news from the United States about potential interest rate cuts which led to bullish behavior in both stock markets and currency exchanges
