US Economy's Slowdown Triggers Market Rally as Fed Rate Cuts Loom

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In Asia, stock markets saw varied performances. China's Shanghai Composite and Hong Kong's Hang Seng Index witnessed declines beyond 1% and 0.6% respectively. Meanwhile, Japan's Nikkei 225 also experienced a drop of 0.9%, with escalating bond yields cited as a contributing factor. However, Australian markets had a sharper sell-off, with the ASX200 dropping nearly 2%, despite positive cues from Wall Street prompting a slight rise in futures.

European indices managed a lukewarm recovery, with the Eurostoxx 50 marking a 0.6% increase owing to a weaker Euro. However, the sustainability of this momentum remains a question as recent downturns continue to challenge the market's strength.

Wall Street rebounded, buoyed particularly by the NASDAQ’s more than 1% rise and a 0.5% lift in the S&P500. Here, short-term charts suggest a potential return to upward momentum following a strategic repositioning post-long weekend.

Currency markets are responding dynamically to the falling USD, with the Euro rebounding to mid-1.16 levels aided by weak US economic indicators. USDJPY pair adjustments post-Fed announcements indicate a complex interplay between geopolitical factors and domestic economic signals.

In commodities, the Australian dollar holds steady despite the Reserve Bank of Australia’s anticipated rate cut and recent poor CAPEX data. Supporting levels around 65 cents bolster the currency, suggesting resilience amid USD fluctuations.

Crude oil markets are attempting a push for positive growth but faced restrictions overnight as both WTI and Brent prices pulled back. Similarly, gold exceeds previous highs, continuing its bullish trend with strong investment interest and market confidence supplementing upward momentum.

Overall, the financial markets are navigating a multi-faceted landscape: from currency shifts to commodity movements, each reflecting underlying economic strategies and outcomes.

Published:Friday, 5th Sep 2025
Source: Paige Estritori

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