Daily summary: US200 gains 1.2% driven by first interest rate cut since 2020 and dovish Powell 💵

• The Fed cut interest rates by 50 bps today, and the dot-plot shows that the FOMC will cut rates by another 50 bps by the end of 2024. In 2025, rates are expected to fall by a further 100 bps, or to a range of 3.25-3.50%. 
• Previously, forecasts pointed to 4.1%. At the same time, the Fed expects more than 2% GDP growth in 2024 and a still robust labor market, which it has pledged to support. The market perceived this as a higher chance of a soft landing for the US economy
• Jerome Powell was dovish at the conference, although he indicated that the Fed does not need to rush and 50 bp cuts will not be any 'new normal'. However, Fed dot-plot signals somehow 'aggressive' rate cuts cycle
• The Fed made sure of the disinflationary trend, while it still sees ample chances for the economy to remain robust, with resilient consumer demand and historically low unemployment
• The U.S. dollar is losing ground today. Gaining on this wave are gold, which saw a jump above $2,600 an ounce (new historic highs) and Bitcoin, which surpassed $60,000, initially supported by optimism on Wall Street and a drop in yields. 
• Powell was dovish with his optimistic comments, and the Fed cut rates in line with market expectations, but indexes on Wall Street erased initial gains. The Nasdaq 100 and S&P 500 are losing slightly, although in the medium-term Powell's comments as well as the decision seem positive to the stock market; US200 rallies almost 2% today. 
• According to the BoC report, the central bank still sees risks in terms of price pressures in the economy, with higher wages stoking inflation in the service sector all the time. On the other hand, however, some BoC members were more concerned about downside risks to inflation, with concerns linked to potential further weakness in the economy and labor market.
• European markets, meanwhile, closed today's session slightly lower. Germany's DAX lost 0.06% intraday, while France's CAC40 was down 0.57% and Britain's FTSE100 was down 0.68%.
• Data from the U.S. real estate market showed a sizable rebound in building permits, which rose more than 4.9% m/m versus 1% forecasts and -3.3% in July. Construction starts showed an increase of 9.6% m/m, 6.5% was expected after a -6.8% decline in July
• Gasoline inventories rose in the U.S. according to the DoE Report 69,000 barrels vs. 1 million forecast and 2.3 million previously
• According to the Quinnipiac Poll, Kamala Harris outpaced Donald Trump's ratings in the state of Michigan and Pennsylvania. According to Moody's, Fed rate cuts will be negative for the credit ratings of most US banks

Source: xStation5