Large rate cuts not ruled out by the Fed: US governor Christopher Waller and New York Fed president John Williams signaled that the Fed has not ruled out bold half-point rate cuts, the Financial Times reports, citing statements from the officials in two separate appearances on Friday. The shift in monetary attitude comes on the back of a mixed jobs report, which signaled that the US labor market is softening alongside a fall in inflation.

REMEMBER- The Fed is widely expected to cut interest rates later when it meets next week, with most traders already pricing in a 70% chance of a 25 bps cut in the next meeting, and some expecting a larger one in the following meeting.

Expected rate cuts would be “done carefully,” Waller said, adding that “if the data suggests the need for larger cuts, then [he] will support that.” He also brushed off the jobs report as an indicator of a return to the “normal” pace of growth.

Wall Street reacted badly to the jobs report: US stocks closed lower on the news, with the S&P 500 experiencing its steepest weekly declines since early 2023, dropping 1.7%. Meanwhile, the tech-heavy Nasdaq logged its sharpest decline since January 2022, shedding 2.6%. Suspected cuts also sent down the two-year US Treasury yield to 3.66% and the 10-year yield to 3.72%.

Some experts are arguing that half-point cut suspicions are an overreaction. “The market is overly worried about a recession, and this report shows that there is no sign of a recession. There is no need to go 50 [bps] when the unemployment rate is falling,” the FT cited Apollo Global Management’s chief economist Torsten Slok as saying.

MARKETS THIS MORNING-

Asia-Pacific markets are mostly in the red, with Japan’s Nikkei leading losses with a 3% dip this morning, followed by the Topix, which is down 2.8%, tracking Wall Street losses on Friday. Traders will now be assessing key economic figures from Japan and China due out today. Meanwhile, Wall Street futures opened lower this morning across the board.

ADX

9,448

-0.3% (YTD: -1.4%)

DFM

4,373

0.0% (YTD: +7.7%)

Nasdaq Dubai UAE20

3,825

-0.6% (YTD: -0.4%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.9% o/n

4.3% 1 yr

TASI

11,982

-1.0% (YTD: +0.1%)

EGX30

30,273

-2.4% (YTD: +21.6%)

S&P 500

5,408

-1.7% (YTD: +13.4%)

FTSE 100

8,181

-0.7% (YTD: +5.8%)

Euro Stoxx 50

4,738

-1.6% (YTD: +4.8%)

Brent crude

USD 71.06

-2.2%

Natural gas (Nymex)

USD 2.28

+0.9%

Gold

USD 2,524.6

-0.7%

BTC

USD 54,526.2

+0.7% (YTD: +28.6%)

THE CLOSING BELL-

The ADX fell 0.3% on Friday on turnover of AED 931.16 mn. The index is down 1.4% YTD.

In the green: Aram Group (+12%), Abu Dhabi National Co. for Building Materials (+10.7%) and Al Khaleej Investment (+9.2%).

In the red: Al Dhafra Ins. (-9.9%), Borouge (-3.5%) and Fujairah Cement Industries (-2.4%).

Over on the DFM, the index remained flat on turnover of AED 251.1 mn. Meanwhile, Nasdaq Dubai UAE20 closed down 0.6%.

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