Dow Jones Surges 1.34% as Fed Hints at Rate Cut Amid Trade Tensions

The Dow Jones Industrial Average (DJIA) experienced a significant surge, rising over 500 points, as the Federal Reserve hinted at a potential rate cut. This development came amidst escalating trade tensions, with former U.S. President Donald Trump threatening to impose additional tariffs on India. The Federal Reserve's indication of a rate cut was seen as a response to the economic uncertainties caused by ongoing trade disputes, providing a boost to market sentiment.

On August 4, all three major U.S. stock indices saw substantial gains. The DJIA closed up 1.34%, the Nasdaq Composite Index rose 1.95%, and the S&P 500 Index increased by 1.47%. This rally was driven by a broad-based advance in technology stocks, with companies like NVIDIA, Google, Meta, and Broadcom seeing gains of over 3%, while Tesla and Microsoft rose by more than 2%.

In addition to the stock market gains, precious metals, coking coal, and cryptocurrencies also saw significant increases. Kinross Gold Corporation surged by over 10%, while Newmont Corporation and Pan American Silver Corporation both rose by more than 8%. The Nasdaq Golden Dragon China Index, which tracks the performance of Chinese companies listed on U.S. exchanges, closed up 1.33%. Notable gains were seen in Xpeng, Manner Coffee, and Bilibili, which all rose by more than 4%, while JD.com increased by over 2%. However, NIO saw a decline of over 8%.

Federal Reserve Governor Lorie Logan indicated that the timing for a rate cut is approaching, suggesting that two rate cuts this year would be an appropriate adjustment. Logan expressed satisfaction with the Federal Reserve's July decision but noted that another similar decision might not be as favorable. Logan also mentioned that while two rate cuts this year are possible, it is more likely that additional rate cuts will be needed.

Trump's threat to raise tariffs on India comes after his previous warnings about imposing 25% tariffs on Indian goods. This move adds another layer of complexity to the global trade landscape. Trump criticized India for purchasing large quantities of Russian oil and reselling it on the open market for profit. In response, India's Ministry of External Affairs spokesperson, Randhir Jaiswal, stated that the accusations against India are unfounded and that India will take all necessary measures to protect its national interests and economic security.

Jaiswal's statement emphasized that India's purchase of Russian oil was a passive choice due to the disruption of traditional supply sources caused by the Russia-Ukraine conflict. The U.S. had previously supported India's decision to stabilize the global energy market. The statement also noted that India's imports are aimed at ensuring affordable energy for its citizens, a necessary measure in the face of global market volatility.