Stock Markets React to Fed Rate Speculation as Global Indices Dip

Global stock indices mostly fell on Monday, reversing previous gains made after Federal Reserve Chair Jerome Powell suggested a possible rate cut in September. The dollar strengthened, while U.S. Treasury yields rose, reflecting investor optimism about a rate cut despite uncertain economic signals.

Major brokerages now anticipate a 25-basis-point reduction, with Fed funds futures traders assigning an 84% likelihood to a September cut. Spartan Capital Securities' chief market economist, Peter Cardillo, noted that while a rate cut is probable, the extent and timing remain dependent on upcoming economic indicators, especially this week's PCE price inflation index data.

In other market movements, the Dow and S&P 500 fell, as MSCI's global stock gauge declined. Meanwhile, oil prices rose amid prolonged Russia-Ukraine peace negotiations, and gold experienced a slight drop. European exchanges saw diminished activity due to a UK market holiday, and the European Central Bank is expected to maintain its rates unchanged for now.