Market Calm Returns Amid Prospects of US Rate Cuts

Global markets stabilized after recent tumult, spurred by hopes of forthcoming US rate cuts. The MSCI world index steadied while the dollar halted its slide, and U.S. tech stocks gained. Despite signs of recovery, experts warn of potential volatility ahead, with attention on upcoming U.S. retail sales data.

Global stocks and currencies steadied on Thursday as data suggesting imminent U.S. rate cuts helped ease the summer turmoil caused by a surprise Bank of Japan rate hike and economic growth fears. The MSCI world share index, which had seen significant fluctuations, remained stable.

The dollar remained flat against major currencies, breaking a losing streak that saw it drop to its lowest against the euro since late 2023, and down nearly 15% against Japan's yen since early July. Wall Street expected modest gains with futures trading indicating a rise for the S&P 500 share index, and the VIX equity volatility gauge fell to its lowest this month after peaking on Aug. 5.

The semblance of stability returned to markets, shaken by price drops and intense hedge fund selling, post-U.S. inflation data on Wednesday which reinforced bets on a September rate cut by the Federal Reserve. Some investors remain cautious due to the rapid market recovery and are eyeing upcoming U.S. retail sales data amidst persistent growth pessimism.