Global Markets Rebound Amid Monetary Policy Uncertainty: Global markets have recently experienced a notable rebound,
Driven by a new wave of dip-buying activity despite tensions stirred by Moody’s downgrade of the U.S. credit rating.
While U.S. stocks regained momentum, the rally extended to Asian markets, which recorded their first rise in four days.

Contents

Wall Street Momentum

Credit Rating Downgrade

Search for New Catalysts

Political Pressures

Global Trade Dynamics

Monetary Policy Focus

The Return of the Magnificent Seven

Conclusion

Wall Street Momentum Reaches Asia

The S&P 500 climbed for a sixth consecutive day, nearing bull market territory,
despite falling over 1% in early trading.
The Dow Jones Industrial Average rose by 0.2%, while the Nasdaq 100 experienced some volatility.
This U.S. strength spread to Asian markets,
where the regional equity index advanced 0.5%, and Hong Kong stocks added 0.3%.

In a notable milestone, shares of Contemporary Amperex Technology Co. Ltd surged 13% in
Despite geopolitical tensions, their first local trading session reflected rising confidence in China’s tech sector.

Credit Rating Downgrade: Mixed Reactions

Moody’s decision to downgrade the U.S. credit rating caused a significant stir across financial markets.
The agency cited over a decade of political inaction in addressing fiscal deficits.
Nevertheless, U.S. Treasury yields stabilized following initial volatility,
with the 10-year yield retreating to 4.46%, even after briefly surpassing 5% on the 30-year.
Meanwhile, the Bloomberg Dollar Spot Index fell 0.6%.

Thomas Lee of Fundstrat Global Advisors deemed the downgrade “non-material,”
He stated he would buy aggressively during any market dip.
Michael Wilson of Morgan Stanley and Max Kettner of HSBC Holdings shared similar views,
emphasizing the current sell-offs as compelling buying opportunities.

Mark Haefele of UBS Global Wealth Management described the downgrade’s impact as “more psychological than fundamental.”
While Clark Giarnan of Kalb Investment warned that it adds to market uncertainty.

Markets in Search of New Catalysts

Chris Larkin of E*TRADE (a Morgan Stanley subsidiary) states, “Markets are beginning to search for new catalysts.”
He noted that the S&P 500 is just over 3% away from its all-time high
and added that reaching this level is one thing, but sustaining it is another.

Meanwhile, oil prices remained stable following two consecutive days of gains,
as investors await the outcomes of talks between Russia and Ukraine and the U.S.–Iran nuclear negotiations.

Political Pressures and Warnings of Financial Crisis

Amid growing economic pressures, Donald Trump plans to visit Congress to rally Republican support for his tax-cut agenda,
amidst warnings of looming risks.
Jim Millstein of Guggenheim Securities warned of a potential “financial catastrophe” in a recession,
If growth slows, the deficit could jump from $2.4 trillion to $4 trillion.

Global Trade Developments

On the trade front, investors are monitoring ongoing negotiations between the U.S., India, and Japan,
Following momentum from recent talks with China on tariff reduction.
In contrast, China accused the Trump administration of undermining recent
Geneva trade discussions after the U.S. warned that using Huawei AI chips globally would violate export laws.
China’s Ministry of Commerce demanded that Washington “correct its mistakes.”

Monetary Policy: Interest Rates Under the Spotlight

Officials from the Federal Reserve, including John Williams and Philip Jefferson,
signaled that the central bank is not ready to lower interest rates until at least September.
They called for a “wait-and-see” approach to avoid triggering sustained inflation.

The probability of a rate cut at the upcoming June policy meeting is just 10%.
Markets are now pricing in only two quarter-point cuts by year-end, down from four expected at the end of April.

In Australia, investors await the Reserve Bank of Australia’s decision on interest rates.
Expectations point to a rate cut to 3.85%, the lowest in two years,
though Governor Michele Bullock may refrain from signaling further easing for now.

The “Magnificent Seven” and a Global Tilt Toward Equities

David Kostin of Goldman Sachs anticipates a comeback by the “Magnificent Seven” to outperform the S&P 500,
backed by strong earnings momentum.

Vikas Pershad, portfolio manager at M&G Investments,
noted a continued convergence between U.S. markets and their global peers,
particularly in Asia, highlighting that many investors operate on multi-year horizons.

Conclusion

Despite concerns sparked by the U.S. credit downgrade,
global markets continue to demonstrate resilience and potential for growth.
This momentum is supported by strong corporate earnings, optimism surrounding trade negotiations,
and the anticipation of future monetary catalysts. Investment opportunities remain,
but vigilance and strategic analysis are essential in navigating an increasingly complex economic landscape.

Global Markets Rebound Amid Monetary Policy Uncertainty

Global Markets Rebound Amid Monetary Policy Uncertainty

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