Yesterday the Federal Reserve slashed interest rates by 50 basis points, bringing the benchmark rate to a range of 4.75% to 5.0%. This was the first rate cut since March 2020, and the central bank indicated that further cuts are possible this year as part of an easing cycle aimed at supporting the economy. The decision wasn’t unanimous, with Fed Governor Michelle Bowman favoring a smaller 25 basis point cut. Fed Chair Jerome Powell highlighted that while the economy remains resilient with strong growth, inflation pressures have cooled, and the labor market remains solid.
Today the Bank of England will announce its policy decision. While no change in interest rates is expected, as the BoE is likely to maintain its 5.0% rate, the tone of the accompanying statement will be crucial. With U.K. inflation still above the central bank’s 2% target, the BoE remains in a difficult position.
The European markets have opened on a positive note, continuing the momentum from the previous session. The FTSE Italia All Share has risen by 0.86% to 36,083.33, while the FTSE IT Mid Cap is showing a strong performance, gaining 1.21% to 46,601.62. The Euro Stoxx 50 is also up by 1.44% at 4,904.95, reflecting broad-based gains across major European companies. Key indices like Germany’s DAX and France’s CAC 40 are similarly seeing positive movement, with the DAX up by 1.20% at 18,945.15 and the CAC 40 rising by 1.65% to 7,567.84. The FTSE 100 in the UK is trading higher by 0.85%, now at 8,324.01, while Spain’s IBEX 35 has advanced 0.35% to 11,725.91.
In contrast, the U.S. markets closed the previous session with slight losses, as major indices like the Dow Jones, S&P 500, and NASDAQ faced some selling pressure. The Dow fell 103.08 points (-0.25%) to 41,503.1, while the S&P 500 and NASDAQ declined by 0.29% and 0.31%, respectively. The market volatility came amid uncertainty surrounding the Federal Reserve’s interest rate path, although futures are indicating a rebound with Dow futures up 411 points (+0.98%) and Nasdaq 100 futures gaining 1.82%.
Commodity markets are also trading higher. Crude Oil is up 1.22% at $70.73, and Gold has risen by 0.43% to $2,609.70, reflecting investor confidence in safer assets as markets digest the Federal Reserve’s rate cut announcement.
In the currency markets, the EUR/USD pair has gained 0.45%, now trading at 1.1168, reflecting the euro’s strength as the European session progresses. The GBP/USD is also up by 0.49% at 1.3278. U.S. treasury yields have moved higher, with the 10-year yield rising to 3.685% as investors adjust to expectations of further easing by the Federal Reserve.
