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US markets and European stocks mixed after Powell says 'time has come' for rate cuts

Updated 2 min read
In this article:

As UK markets close for the August bank holiday Monday, global markets were mixed following Federal Reserve chair Jerome Powell's speech at the Jackson Hole symposium of central bankers on Friday.

Powell said the "time has come" to cut interest rates in the US — a hail Mary for those waiting for cheaper US debt.

He added that the bank would be watching for further warning signs of cooling in the job market and that he was confident the target rate of 2% inflation is within reach.

“The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," he said.

US markets rose following the speech on Friday, with the three major gauges closing more than 1% higher.

Read more: Stocks to watch this week: Nvidia, Prudential, CrowdStrike and Foot Locker

On Monday, the S&P 500 (^GSPC) fell roughly 0.2%, while the Dow Jones Industrial Average (^DJI) added roughly 0.1%. The tech-heavy Nasdaq Composite (^IXIC) slipped 0.8%.

Now the focus is firmly on Nvidia earnings — the marquee event of the week — which will likely determine whether the market mood stays upbeat. If the chipmaker's results on Wednesday fail to meet sky-high expectations, that could further dent the AI trade that has powered stock gains — and, in turn, put the market's rebound from August lows to the test.

Nvidia (NVDA) was 1.8% lower following an analyst rating from Loop Capital that reiterated the stock as a "buy".

European markets were mixed on Monday, with Germany's DAX (^GDAXI) trading almost flat by the end of the day and the CAC 40 (^FCHI) in France rising 0.2%.

The pan-European STOXX 600 (^STOXX) flatlined.

Traders' attention turned to the conflict in the Middle East as they weigh risks. Strikes by both Israel and Hezbollah over the weekend have led oil prices higher. Crude oil futures contracts (CL=F) were trading as high as $75.63 per barrel and were almost 1% higher than the previous session on Monday morning in London.

Earlier on Monday, major Asian indexes went in different directions, as the Nikkei (^N225) fell 0.7% in Japan and the Hang Seng (^HSI) rose 1.1%.

Japanese stocks dipped as the Yen strengthened against the dollar and the country's central bank chief hinted at further rate hikes. He also said the bank is looking closely at the major fluctuations in stock prices.

Meanwhile, the People's Bank of China left its rates on one-year policy loans at 2.3% following a 0.2% cut in July. It is another sign of cautious policymaking in one of the world's growth engines.

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