Global Markets Steady as Economic Fears Ease

Global markets have stabilized after U.S. economic data eased fears of a deep downturn. The Federal Reserve is now expected to implement a modest rate cut, while Japan’s Nikkei surged. Investors are cautious about yen volatility, and the Bank of England may still ease rates amid subsiding inflation.

Global markets have found stability this week, following a wave of U.S. economic data that soothed concerns over a significant downturn in the world's largest economy. Investors are now less fearful of a recession, and expectations for Federal Reserve rate cuts have moderated significantly.

Market sentiment has shifted, with just a 25% probability of a 50-basis-point cut by the Fed next month, down from 55% last week, according to the CME FedWatch tool. Japan's Nikkei index saw a 3% rise on Friday, marking its best week since April 2020, despite the yen's volatility, which has fallen nearly 5% from its recent peak.

In Europe and the U.S., stock futures point to a positive open, bolstered by anticipated UK retail sales data. As most central banks move towards easing rates, the Reserve Bank of Australia remains cautious, with Governor Michele Bullock signaling that rate cuts are premature due to persistent underlying inflation.

(With inputs from agencies.)