US treasury secretary Scott Bessent calls for half-point interest rate cut at next Fed meeting – business live

Global equities, including the MSCI All-Country World Index, S&P 500, and Nikkei, surged to record highs on heightened expectations for a September 50bp Federal Reserve rate cut, despite mixed US inflation data (headline 2.7%, core 3.1%), which also strengthened Sterling to a three-week high of $1.3572 against a weaker dollar. Concurrently, the IEA projects faster-than-expected global oil supply growth, driven by OPEC+ unwinding cuts, signaling a market surplus and pressuring Brent crude prices to $65.79. Separately, Rolls-Royce reported a 50% rise in half-year profits to £1.7bn, with its CEO forecasting the company could become the UK's largest via nuclear reactors for AI datacentres, while China's Evergrande faces delisting, formalizing the end of its era amid the nation's ongoing property crisis.

Analysis

Global equity markets are reaching all-time highs, with the MSCI All-Country World Index, S&P 500, and Nikkei posting records, fueled by heightened expectations of a Federal Reserve rate cut. Despite a mixed US inflation report showing headline CPI steady at 2.7% but core CPI rising to 3.1%, markets have aggressively priced in a 94% probability of a rate cut in September, a sentiment amplified by the US Treasury Secretary's call for a 50-basis-point reduction. This divergence in monetary policy outlooks has weakened the dollar and propelled Sterling to a three-week high of $1.3572, even as the Bank of England signals caution with UK inflation potentially reaching 4%. In contrast to equity market optimism, the energy sector faces headwinds. The International Energy Agency (IEA) has increased its global oil supply forecast for 2025 to 2.5 million barrels per day (bpd) while trimming demand estimates, pointing to an increasingly oversupplied market that has pushed Brent crude down to $65.79 per barrel. On the corporate front, Rolls-Royce stands out with a 50% rise in half-year profits to £1.7bn and a share price that has increased ten-fold since January 2023, driven by a powerful growth narrative centered on supplying power systems and small modular reactors (SMRs) to the AI data center industry. Conversely, the delisting of Evergrande's shares in Hong Kong marks a definitive end for the developer, crystallizing near-total losses for shareholders and underscoring the severe, ongoing risks within China's property sector.

Key Decisions for Investors

• Given the market's aggressive pricing of a near-term Federal Reserve rate cut, investors should re-evaluate positions in US dollar-sensitive assets and consider the potential for continued strength in currency pairs like GBP/USD, which is benefiting from diverging central bank expectations.