LONDON/SYDNEY - World stocks stuck around record highs as investors turned their attention to China and Switzerland as the next central banks to add vim to the global economy with rate cuts after last week's decisive move by the US Federal Reserve.
MSCI'S broad index of world stocks held steady after two weeks of gains and its gauge of Asia-Pacific shares outside Japan added 0.3 percent after bouncing 2.7 percent last week. Singapore's main index climbed to its highest since late 2007.
Stock markets in Tokyo were closed for a holiday but futures trading suggested these recent laggards would join the party with Nikkei contracts were trading at 38,510 compared to a cash close of 37,723.
The index rallied 3.1 percent last week as the yen eased and the Bank of Japan (BOJ) signaled it was in no rush to tighten policy further.
Markets were still basking in the afterglow of the Federal Reserve's half-point rate cut, with futures implying a 50 percent probability it will deliver another outsized move in November. But Christoph Schon, multi-asset strategist at Simcorp, warned a recession in the US might still be imminent and noted that the last two times the Fed started with a 50 bps cut was in 2008 and 2001, which were years of severe downturns.
"Every time we hear this time is different and maybe this time it is, but there is now growing concern," he said.
Conversely, a downward shift in rate cut expectations caused by economic data coming in surprisingly strong would likely result in share prices falling too, he said.
Not much caution was evident in markets on Monday, however, as Europe's Stoxx share index held steady and futures trading indicated Wall Street was set for a strong session.
S&P 500 futures firmed 0.3 percent and Nasdaq futures added 0.6 percent. The S&P is up 1 percent so far in September, historically the weakest month for stocks, and has gained 19 percent year-to-date to reach all-time highs.
This came after more than 20 billion shares changed hands on US exchanges on Friday, the busiest session since January 2021.
The importance of US monetary policy was "hard to overstate, given the Fed's role in USD liquidity conditions worldwide," Barclays economist Christian Keller said.
More cuts
Market exuberance may also depend on what the Fed's preferred inflation gauge, the core personal consumption expenditures (PCE) show on Friday. Analysts expect a 0.2 percent month-on-month rise taking the annual pace to 2.7 percent, while the headline index is seen slowing to just 2.3 percent.
This matches a more benign inflation backdrop worldwide.
The Swiss National Bank meets Thursday and markets are fully pricing a quarter-point cut to 1.0 percent, with a 41 percent chance it will ease by 50 basis points.
Sweden's central bank meets on Wednesday and is also expected to ease by 25 basis points, again with some chance it might go larger.
The coming week also includes surveys on global manufacturing, US consumer confidence and durable goods.
One bank not easing is the Reserve Bank of Australia (RBA) which meets on Tuesday and is considered almost certain to hold at 4.35 percent as inflation proves stubborn. In currency markets, the dollar edged up 0.1 percent to 144.30 yen, having bounced 2.2 percent last week from a 139.58 low. The euro gained almost 3 percent last week to reach 161.09 yen, and on Monday it held firm on the dollar at $1.1160.
The yield on the benchmark US 10-year Treasury, which sets borrowing costs worldwide and moves inversely to the security's price, was barely moved at 3.745 percent.
But in one sign of recessionary fears, gold traded at an all-time peak of $2,630.93 an ounce.
Net long positions in Comex gold futures hit their highest level in four years last week.
Oil prices also weakened, despite tensions in the Middle East as Israel struck Hezbollah targets, and following a rally last week.
Brent eased 0.2 percent lower to $74.35 a barrel, while US crude also down 0.2 percent to $70.89.
