26 August 2024 – On Friday, Fed Chairman Jerome Powell signaled that nothing would stand in the way of interest rate cuts in the United States. The prospect of US rate cuts triggered a stock rally. And the United States imposed 400 new sanctions, including against companies in the Russian Nornickel Group.
Prospect of US rate cuts triggers stock rally
Fed Chairman Jerome Powell signaled at the central bank meeting in Jackson Hole that the US monetary authorities will soon lower their key interest rates in order to avert a further weakening of the US labour market. An excessive cooling of the labor market is neither desired nor desirable; the time for an adjustment of monetary policy has come.
US inflation down significantly
Inflation has fallen significantly, while a sharp rise in unemployment is to be avoided. The direction of monetary policy is therefore now clear – although the level and sequence of further interest rate hikes have not been determined, according to Powell. These would continue to depend on the development of the economy. Powell also said that his confidence had grown that inflation was on a sustainable path towards two percent.
US Small Cap 2000 jumps up by almost 3.2%
The major US stock indices rose significantly following the announcement. The Dow Jones Industrial Average rose by around 1.14% on Friday, the S&P 500 by around 1.15%, the NASDAQ Composite by 1.47% and the US Small Cap 2000, which is reserved for smaller and medium sized public companies, even jumped by almost 3.2%.
Nickel prices on the SHFE rise by up to 1.5%
Nickel prices on the SHFE also reacted positively to the prospect of interest rate cuts on Monday, rising by up to 1.5%. Due to the Summer Bank Holidays in the UK, prices on the LME commodity exchange are not expected to react until Tuesday.
US OFAC imposes new sanctions on 400 individuals and companies
Last Friday, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on 400 individuals, companies and entities worldwide in relation to Russia’s war of aggression against Ukraine.
Three Nornickel Group companies sanctioned
These include at least three companies belonging to Russia’s largest nickel producer Norilsk Nickel (Nornickel). This inevitably raises an important question: With this development, how can the LME continue to list the Russian nickel stocks, which according to the current Brand List are exclusively attributable to this one supplier, as valid and legal stocks?
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