LIVE MARKETS-Non-recessionary rate cuts: the sweet spot for global markets

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NON-RECESSIONARY RATE CUTS: THE SWEET SPOT FOR GLOBAL MARKETS
Market positioning is currently "very neutral" for most assets, Societe Generale's Global Asset Allocation strategists led by Alain Bokobza said in a note, as investors geared up for the Federal Reserve's crucial rate decision later in the day.
"From here, we would expect to see material divergence emerge," SocGen said, noting that they have shifted cash into global equities.
"History shows that a more dovish Fed clearly boosts global equities, and not just U.S. equities," they added.
SocGen maintained its 8% weighting in European equities and increased its allocation to Japanese stocks to 6% from 3% in June, citing the Bank of Japan's resolve to manage yen volatility.
Financials and cyclical stocks are expected to lead gains globally, with the strategists identifying a "significantly more dovish Federal Reserve in a non-recessionary environment" as the key catalyst for risk assets.
The strategists said they were still "big fans" of gold and recommended a long position in copper, while continued pressure on the dollar as U.S. growth exceptionalism fades.
Wall Street futures point to a subdued open ahead of the Fed's policy decision at 2 p.m. ET where the central bank is widely expected to deliver a 25 basis point rate cut. Focus will also be on an updated slate of projections indicating policymakers' view of the economy and monetary policy.
Here's a snapshot as of 08:33 a.m. ET:

(Medha Singh)

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