Global banks tried to give the market what it was looking for, but investors were having none of it. Finally, several central banks gave into economists and investors, and cut interest rates, or acted in a way that should provide a boost to their respective economies. The European Central Bank cut its main interest rate even further, to a record low of 0.75% from 1.00%. China’s central bank similarly cut interest rates, both its benchmark lending rates and deposit rates, for the second time in a month. Lastly, the Bank of England announced a $78 billion increase to its bond buying stimulus program.
All of these measures are meant to benefit the global economy, and yet the S&P 500
Looks like investors are interpreting these moves as a sign that these authorities are more alarmed about the world economy than previously thought, and felt the need to act sooner than expected. Also, investors had likely already priced in the changes announced by the Bank of England and the European Central Bank.
What should investors expect looking forward? That’s going to depend on jobs, jobs, jobs. Some positive numbers were announced today. Applications for jobless benefits fell 14,000 last week to 374,000, below expectations of 385,000, and reaching the lowest level in six weeks. In addition, the June ADP labor report smashed expectations, as private sector payrolls rose 176,000 jobs instead of the expected increase of 100,000 jobs. And yet, pessimism pervades expectations for tomorrow’s announcements, which include the June Non-Farm Payroll report and June unemployment data. With positive indicators coming out today, perhaps we are in for a surprise and a jumping market tomorrow. Either way, it seems like investors were not ready to bet either way ahead of tomorrow’s reports. Make sure to follow that announcement at 8:30 AM.
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