Expectations of Future Interest Rate Cuts Maintain World Stocks Around Two-Week Highs

Investors around the world this Wednesday continue to bet on an imminent wave of central bank stimulus, keeping world stocks on extended highs.

Investors expect the Federal Reserve and the EU Central Bank to provide a wave of lower interest rates as early as this July.

Markets have been particularly sensitive to the president of the European Union’s Central Bank decision to abruptly shift his policy into a more dovish approach. Yet the near future of the global market is contingent on what the Federal Reserve’s decision will finally be. While it is widely expected that the Fed will follow the EU Central Bank’s decision, political tension resulting from the U.S.-China trade tension adds uncertainty to the Fed’s decision.

Nonetheless, the possible meeting between President Trump and President Xi Jinping thus upcoming July have stimulated market expectations. As Ben Gwinn for NatWest Markets states, “Market expectations for a dovish shift are nearly universal, the only question seems to be the degree”.