On Wednesday, the United States’ central bank, the Fed, announced that it is considering making its first interest rate cut as early as September. However, contrary to expectations, the June ISM purchasing managers’ index for the US service sector fell below 50 to 48.8 points. A figure above 50 indicates an increase in activity while a figure below 50 indicates a decline.
The minutes of the Fed’s previous interest rate meeting were also released on Wednesday, showing that the Fed’s Open Market Committee is divided on how long they want to keep interest rates high. Despite this news, Wall Street had a bullish day and was followed by Asian stock markets on Thursday with the Asia Dow index up by more than a percent. In Japan, the rate of increase was almost one percent due to discretionary consumption and the financial sector.
On the foreign exchange market, exchange rates in mainland China and Hong Kong were slightly down while there was a small increase in India and a stronger increase in South Korea and Taiwan. The yen strengthened on Thursday morning against the dollar, euro, and pound by 0.1 percent each. “Bad news is good news,” said City Index and Forex.com’s Fawad Razaqzada regarding venture capital reacting to yesterday’s US numbers on market sentiment to Bloomberg.
European stock exchanges were expected to open cautiously based on index futures with some futures slightly up but the Euro Stoxx 50 future down by 0.04 percent
