- U.S. indexes had a stellar session. The Nasdaq 100 and S&P 500 gained around 1.7%, while the small-cap Russell 2000 jumped nearly 4%. The driver was Fed Chair Jerome Powell’s relatively dovish remarks at Jackson Hole, which opened the door to potential U.S. rate cuts.
- In contrast, Europe closed the session with very limited gains in major benchmarks. Germany’s DAX and the UK’s FTSE barely managed to finish in positive territory.
- Markets are currently pricing in two full rate cuts this year, with the first expected in September. Powell signaled that the risks of a weakening labor market, amid slowing GDP and fading consumption, now outweigh the risks of rising inflation.
- According to Powell, the recent uptick in some inflation measures reflects the impact of tariffs, but this effect is likely to be short-lived. Equity markets welcomed the tone of his speech. The U.S. dollar weakened, while bonds, cryptocurrencies, and stocks all rallied.
- Ethereum — often viewed as a proxy for risk appetite — surged nearly 10% immediately after Powell’s remarks, breaking above $4,600, while Bitcoin rebounded from around $112,000 to $115,000. U.S. 10-year Treasury yields fell 7 basis points to 4.26%, and EUR/USD climbed more than 1.15%.
- Precious metals also gained alongside the weaker dollar. Silver rose nearly 2.5%, while gold advanced over 1%. In energy markets, natural gas futures retreated almost 4% amid concerns about cooler U.S. weather, high supply, and elevated inventory levels. Oil traded flat.
- Canada announced it will lift tariffs on many U.S. goods under the USMCA and remove retaliatory tariffs on a wide range of American products, with exemptions taking effect September 1. “Strategic” tariffs, such as those on aluminum and steel, will remain in place as the country continues negotiating the final shape of the trade deal with the U.S.
- Chinese indexes also advanced today, with the key Shanghai Composite climbing to a 10-year high. CHN.cash futures were up nearly 2.5%. China’s stock market rally was fueled by dollar weakness, renewed interest in emerging markets, reduced geopolitical and tariff risks, and above all — inflows into semiconductor and AI-related stocks such as Alibaba and SMIC.
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