Wall Street rises, and Chile’s main index recovers the 6,500 points as US market rates continue to fall.

Global stock markets – including the Chilean – continue to show enthusiasm over signals of economic slowdown in the United States and the potential scenario for a rate cut by the Federal Reserve in September.

The Chilean S&P IPSA rose by 1.05% to 6,564.68 points, recovering from yesterday’s losses due to profit-taking. Parque Arauco (2.37%), Cencoshopp (-2.2%), and SQM-B (1.91%) led the session’s gains. The latter is the stock with the highest weighting within the IPSA.

Wall Street extended its recent gains marginally, with the Nasdaq Composite up by 0.25%, the S&P 500 climbing by 0.25%, and the Dow Jones growing by 0.2%. Thus, the S&P is once again nearing the 5,200 point mark.

[SPX[-graph]]

Borrowing costs continue to ease in light of the new rate outlook: the yield on the two-year Treasury fell to 4.8%, further away from the 5% level recorded a few days ago. Federal funds rate derivatives quotes imply a 70% probability of the Fed lowering the official rate in September.

The economic calendar is light this week in the US, so the focus shifts to Fed members, waiting to see if they replicate the more flexible tone displayed last week by Fed Chair Jerome Powell.

Minneapolis Fed President Neel Kashkari said at a public event that he expects rates to remain unchanged “for an extended period,” as the most likely scenario. However, he also noted that “if inflation begins to recede or we see a marked weakening in the labor market, it could lead us to cut rates.”

European stocks were rising strongly: the continental Euro Stoxx gained 1.19%, and the British FTSE 100 advanced 1.22%. The star of the day was the Swiss bank UBS (7.5%), leading by far the gains within the financial sector sub-index of the Stoxx 600, after positively surprising with its results.

ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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