World Street | Fed opts for 50 bps jumbo rate cut, Asian markets mixed, Crude oil cools, and more

World Street offers sneak peak into top global news developments

Some of the top global developments include the US Federal Reserve opting for a jumbo rate cut to the tune of 50 basis points, followed by reaction of US and Asian markets. Dive into 19 September World Street edition for more details!

Jumbo rate cut

The US Federal Reserve made its first interest rate cut since the early Covid pandemic, reducing benchmark rates by half a percentage point to a range of 4.75 percent-5 percent to prevent a labor market slowdown. The Fed's "dot plot" suggests an additional 50 basis points of cuts by year-end, aligning with market expectations. Notably, the FOMC vote was 11-1.

US futures climb

US stock futures climbed overnight as investors reacted to the Federal Reserve's earlier decision to cut interest rates by half a percentage point. The central bank lowered its overnight lending rate to a range of 4.75 percent to 5 percent from the previous 5.25 percent to 5.5 percent, surprising some investors who questioned the magnitude of the reduction. This marks the Fed's first rate cut in four years.

Asian markets mixed

Asia-Pacific markets were mixed this morning as investors reacted to the Fed's half-point rate cut. Japan’s Nikkei 225 and Topix gained over 2 percent. The Hong Kong Monetary Authority followed suit, cutting rates by 50 basis points to 5.25 percent. Hong Kong’s Hang Seng and South Korea’s Kospi fell 0.51 percent, while Australia’s S&P/ASX 200 rose 0.15 percent.

Softening crude prices

Oil prices fell as weak US demand overshadowed the impact of a significant interest rate cut by the Federal Reserve and rising tensions in the Middle East. Brent crude hovered around $73 a barrel, while West Texas Intermediate neared $70. US gasoline demand dropped below 9 million barrels, and jet fuel consumption declined for a third consecutive week, according to Energy Information Administration data.

Chip stocks falter

Shares of SK Hynix Inc tumbled after Morgan Stanley downgraded the Korean memory chipmaker by two notches, citing weakening pricing power. The stock fell as much as 10 percent, hitting its lowest point since February 19. Other semiconductor stocks in Seoul also dropped, with Hanmi Semiconductor Co down 7.5 percent and Samsung Electronics Co losing 3.1 percent.

Harris-Zelenskiy meet?

Kamala Harris is set to meet with Ukrainian President Volodymyr Zelenskiy in Washington next week, according to reports, as she seeks to expand her foreign policy credentials. Harris has been a strong advocate of President Joe Biden's unwavering support for Ukraine since Russia's invasion began in February 2022.

(with inputs from Reuters and other agencies)