This week, the global stock market index was mostly driven by rate cut expectations, which had been fuelled by the US Federal Reserve in its policy meeting. The major stock indices across the globe during the week, with very few ending in the red. Even the sluggish European market was somewhat boosted by rate cut signals from the US and Asian markets on the other hand, rallied as FIIs and FPIs returned with the declining dollar price and treasury yields.
Leading world market index week-on-week (WoW) change
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|WoW Change (%)
World Stock Market Index: US Market
Wall Street felt a sigh of relief after the Chairperson of the Fed pointed out cutting rates next year. Investors in the US and globally rejoiced as rate cuts will lower the cost of borrowing.
Powell’s comments after the Fed’s decision also pointed to a switch in tone from the bank. The benchmark rate was now “likely at or near its peak for this tightening cycle”, he said. [Source: Financial Times]
The central bank officials forecasted a provision of 75 basis points cut in the interest rates in 2024. This made the equity market soar higher this week and some of the major indices even hit their highest points, which happened almost after two years.
The dollar’s value also declined due to rate cut anticipations, and the lowering treasury yields added to the gains.
Though the weekly performance of the Dow Jones Index was positive this week, on Friday, the index remained flat. On a WoW basis, it gained 2.76%.
This broad equity market index slipped a little on Friday by 0.18% but ended the week with 2.32% gains on a WoW basis.
This index stayed positive on Friday, and its weekly gains rose to 2.79%.
World Stock Market Index: European Market
The European market was also driven by rate-cut expectations both in Europe as well as in the US.
ECB policymaker Francois Villeroy de Galhau said although the ECB’s next move should be lowering rates, it should first “enjoy the view” for a while. [Source: Reuters.com]
On the other hand, Barclays also shared its forecast of a decrease of 25 bps each with every policy meeting of the ECB.
While rate cut expectations boosted the market, but economic slowdown in Germany and France adversely impacted the European market this week.
This equity index declined on mixed reactions in the stock market this week followed by weekly growth data of Germany and France. The index fell 0.96% on Friday, while on a WoW basis, it only gained 0.29%.
This index was very slow on Friday, gaining only 0.28%, and weekly performance resulted in a rise of 0.93%.
This index ended in the red though only by a nominal 0.05% loss, and on Friday, it was flat and ended the day without any movement.
Global Stock Market Index: Asian Market
Coming to the Asian Market, which was highly under the influence of rate-cut possibilities in the West, moved significantly upward during the week. All the major indices except the Shanghai Composite ended in the green.
This index was slow on Friday and lost 0.37% however, throughout the week, it gained 1.90%. This week, India’s equity market was led by the US rate decisions and the increase in growth forecast and industrial production. However, the inflation rate for November also increased, which hurt the market.
This equity benchmark index in Tokyo rose 2.05 on a WoW basis and 0.86% on Friday following the rate cut signals from the Fed.
This Singaporean Index also gained during the week, but it was by a narrow margin. On a WoW basis, it rose 0.19% but on Friday, the index fell 0.21%.
The equity broad market index of Hong Kong gained one of the highest during the week and even on Friday. It went up 2.80% during the week, while on Friday itself, it gained 2.32%.
On Friday, this Taiwan index was supremely slow and thus gained only 0.12%, but on the WoW basis, it went up 1.67%.
This Korean index also gained during the week following dovish comments by the US Central Bank Chairperson on rates. The stock gained 1.82%, while on Friday only it gained 0.76%.
This index marginally gained during the week, which was a 0.73% rise on a WoW basis, but on Friday itself, it gained 0.87%.
With a nominal gain of 0.44% during the week, this index also made to the gaining indices of the global during this week. On Friday, it only increased 0.21.
This is the only index in the Asian market this week that ended in the red. The WoW performance was negative, leading to a 0.91% decline in the index, and on Friday, the index lost 0.56%.
So, mixed sentiments in Europe, and positive in the US and Asian Markets made the market rally in most economies of the world. While the interest rates played a pivotal role in determining the course of the market this week, there were other factors, such as crude prices, dollar prices, ‘and bond yields which also impacted the market to some extent.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.