Global Market Update
The global market experienced a mix of highs and lows, with U.S. equities starting the week on a positive note due to optimism around a U.S.–China trade deal and strong early earnings. However, momentum faded after the Federal Reserve (Fed) cut rates by 25 basis points (bps) and ended quantitative tightening while signaling caution on further easing.
U.S. Market Performance
U.S. equities returned 0.46% as the Fed cut rates, ended quantitative tightening, and signaled caution, while mixed tech results added pressure. The 2- and 10-year U.S. Treasury yields rose 12 basis points (bps) and 10 bps, respectively.
Canadian Market Performance
Canadian equities returned -0.48% after the Bank of Canada’s (BoC) second 25 bps cut and guidance limiting further easing, compounded by weak August GDP and muted growth projections in the most recent Monetary Policy Report. The 2- and 10-year Canadian yields rose 3 bps and 4 bps, respectively.
European Market Performance
European stocks fell -0.15% as the European Central Bank (ECB) held rates and reiterated a data-dependant stance, with modest GDP surprises and sticky services inflation offering little support amid geopolitical uncertainty.
Emerging Markets
Emerging markets were -0.81% lower despite pledges from Chinese lawmakers to boost consumption as trade frictions persisted.
Rates Rise as Central Banks Signal Caution
U.S. rates were stable early in the week ahead of the Fed meeting, then climbed after officials cut the policy rate and ended quantitative tightening but signaled caution on further easing. Canadian yields initially held firm before rising post-BoC decision as policymakers delivered a second 25 bps cut yet indicated the policy rate is near neutral.
Weekly Dashboard
The Bank of Canada cut its benchmark interest rate but signaled that it might be at the end of its easing cycle even as U.S. tariffs inflict significant damage on the Canadian economy. The bank’s governing council voted to lower the policy rate by a quarter-percentage-point to 2.25%.
Bank of Canada Cuts Rate to 2.25%
The Bank of Canada cut its benchmark interest rate for the second consecutive time, driven by a weakening economic outlook and a belief that inflation is largely contained. Governor Tiff Macklem suggested that it may be the bank’s last rate cut for some time.
U.S. Federal Reserve Cuts Key Rate
The U.S. Federal Reserve cut its key interest rate for a second time this year as it seeks to shore up economic growth and hiring even as inflation stays elevated. The latest quarter-point cut reduces the Fed’s benchmark short-term interest rate to a range between 3.75% and 4%.
European Central Bank Holds Interest Rates Steady
The European Central Bank held interest rates steady for the third meeting in a row, as investors question whether the institution’s most aggressive easing campaign since the financial crisis is really done. The ECB held its key interest rate at 2%, where it has been since June.
Conclusion
In conclusion, the global market experienced a mix of highs and lows, with U.S. equities starting the week on a positive note but momentum fading after the Fed cut rates and signaled caution. The Bank of Canada cut its benchmark interest rate but signaled that it might be at the end of its easing cycle, while the European Central Bank held interest rates steady. As the global economy continues to evolve, it is essential to stay informed about the latest market trends and updates to make informed investment decisions.
