LONDON: Global stock markets diverged Tuesday as traders assessed the outlook for interest rates in the United States and Europe and awaited the US presidential debate.
Wall Street’s main indices opened modestly after rallying on Monday following a plunge late last week.
The sole scheduled debate between US presidential candidates Kamala Harris and Donald Trump is a potentially game-changing moment for the 2024 US presidential election.
The tepid US stocks gain “has to do in part with some hesitancy in front of tonight’s presidential debate and some hesitation to see if there will be follow through on yesterday’s rebound effort,” said Briefing.com analyst Patrick O’Hare.
Monday’s strong gains on Wall Street followed a slump Friday after disappointing US jobs data rekindled fears the Federal Reserve had waited too long to begin cutting interest rates and the economy could fall into recession.
Investors were also looking ahead to US inflation data due Wednesday.
“Tomorrow’s US inflation figures could be the next key test of investor sentiment,” noted AJ Bell investment director Russ Mould.
The Federal Reserve is widely expected to cut US interest rates at next week’s meeting but debate surrounds whether it will be by 25 or 50 basis points, with some arguing that going for the bigger option could suggest decision-makers are worried.
“Financial markets have shifted their focus from bringing down inflation to shoring up economic growth,” said Saira Malik, chief investment officer at asset manager Nuveen.
“Market volatility has climbed amid downside surprises in macroeconomic data — especially labour market indicators.”
Official data in Britain on Tuesday showed wages grew at the slowest pace in two years, indicating that the Bank of England could next week decide against cutting interest rates for a second meeting in a row.
The pound firmed against the dollar and euro on the data, while London’s FTSE 100 stock index — featuring numerous multinationals earning in the US currency — dropped.
In the eurozone, Paris edged higher and Frankfurt slid in afternoon deals.
The European Central Bank holds a monetary policy meeting on Thursday and is widely expected to deliver another interest rate cut.
Fresh worries about China’s economy are also dampening sentiment, with a mixed bag on trade doing little to encourage investors and weighing on oil prices.
Data showed exports jumped in August but imports fell well short of expectations as the country’s leaders struggle to boost consumption.
That came a day after news that inflation rose less than expected in July, reinforcing the view that moves to boost consumer demand and business activity have not taken hold.
China’s leaders are now facing pressure to unveil fresh stimulus for the world’s number two economy, although they have shown little desire to embark on the bazooka-like spending seen during the global financial crisis.
Key figures around 1330 GMT
New York – Dow: UP 0.2% at 40,892.92 points
New York – S&P 500: UP 0.4% at 5,491.15
New York – Nasdaq Composite: UP 0.4% at 16,949.64
London – FTSE 100: DOWN 0.5% at 8,233.17
Paris – CAC 40: UP less than 0.1% at 7,430.52
Frankfurt – DAX: DOWN 0.5% at 18,343.57
Tokyo – Nikkei 225: DOWN 0.2% at 36,159.16 (close)
Hong Kong – Hang Seng Index: UP 0.2% at 17,234.09 (close)
Shanghai – Composite: UP 0.3% at 2,744.19 (close)
Euro/dollar: DOWN at $1.1036 from $1.1041 on Monday
Pound/dollar: DOWN at $1.3071 from $1.3075
Dollar/yen: DOWN at 143.08 yen from 143.11 yen
Euro/pound: UP at 84.43 pence from 84.42 pence
West Texas Intermediate: DOWN 0.5 percent at $68.35 per barrel
Brent North Sea Crude: DOWN 0.6 percent at $71.44 per barrel
KARACHI – A masterful blend of refined elegance, imposing looks and elevated performance has helped Toyota Yaris to grab a significant share in Pakistani market which was earlier ruled by Honda City in this niche before the Yaris’ launching.
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The hatchback is equipped with three airbags to ensure the safety of the riders.
Toyota Yaris Variants in Pakistan
The variants of Toyota Yaris include 1.3 GLI MT, 1.3 GLI CVT, 1.3 ATIV MT, 1.3 ATIV CVT, 1.5 ATIV X CVT – Beige interior and 1.5 ATIV X CVT – Black interior.
Toyota Yaris 1.3 GLI CVT Price in Pakistan
The ex-factory price of Toyota Yaris 1.3 GLI CVT stands at Rs4,760,000 without any change as of September 2024.
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The Federal Reserve cut interest rates by half of a percentage point on Wednesday, kicking off what is expected to be a steady easing of monetary policy with a larger-than-usual reduction in borrowing costs that followed growing unease about the health of the job market.
The Fed’s decision will affect the rates at which commercial banks lend to consumers and businesses, bringing down the cost of borrowing on everything from mortgages to credit cards.
The news will likely be well-received by Democratic candidate Kamala Harris, who has looked to highlight President Joe Biden’s economic record in her race against Donald Trump.
Policymakers voted 11-to-1 in favour of lowering the US central bank’s benchmark rate to between 4.75% and 5%, the Fed announced in a statement.
The key holdout was Fed governor Michelle Bowman, who supported a more conventional quarter-point cut.
Fed ‘gained greater confidence’
The Fed said its rate-setting committee “has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”
The bank has a dual mandate from Congress to act independently to tackle both inflation and employment.
Analysts were expecting the Fed to cut rates on Wednesday, as inflation eases toward the bank’s long-term target of two percent, and the labour market continues to cool in the surprisingly resilient post-Covid economy.
But they were highly uncertain about the size of the move, with some anticipating a small cut of a quarter of a percentage point, and others predicting a more significant half-point cut, which carries a greater risk of reigniting inflation.
In updated economic forecasts published alongside the Fed’s rate decision, policymakers’ median forecasts pointed to an unemployment rate of 4.4%, on average, in the fourth quarter of this year, up from 4% in the last update in June.
They also pencilled in an annual headline inflation rate of 2.3 percent, slightly lower than in June.
The decision to cut more sharply, to begin with, caught some analysts by surprise.
“In our base case, the Fed cuts 25bp (basis points) but signals 100bp of cuts this year with the median 2024 ‘dot'”, economists at Citi wrote in an investor note published ahead of the rate decision.
Election stakes
The Fed’s mandate gives it the independence to set monetary policy solely based on economic data.
But its decision will likely have political ramifications, given the importance of inflation and the cost of living to US consumers.
Americans have consistently said both are a top concern ahead of the election.
Trump has repeatedly criticised Fed Chair Powell, who he first appointed to run the Fed, and has suggested that its decisions are political — accusations the US central bank has strongly refuted.
Your source for latest Pakistan, world news. Stay updated on politics, business, sports, lifestyle, CPEC, and breaking news. Accurate, timely, and comprehensive coverage.
Your source for latest Pakistan, world news. Stay updated on politics, business, sports, lifestyle, CPEC, and breaking news. Accurate, timely, and comprehensive coverage.