World stocks near records as China, Switzerland in focus

MSCI'S broad index of world stocks held steady after two weeks of gains

World stocks were pinned close to record highs on Monday as investors turned their attention to China and Switzerland as the next destinations for monetary easing after last week's big rate cut by the U.S. Fed.

Markets were awaiting U.S. inflation data later this week, which traders expect to confirm forecasts for more easing there. Meanwhile, China's central bank reduced its 14-day repo rate by 10 bps, days after disappointing markets by not cutting longer-term rates.

MSCI'S broad index of world stocks held steady after two weeks of gains.

Europe's Stoxx share index traded flat and Wall Street stock futures wavered between small gains and losses.

The Federal Reserve reduced rates by a half point last week, from a 23-year high, and money markets are pricing a 50% chance it will deliver another outsized move in November.

More than 20 billion shares changed hands on U.S. exchanges on Friday, the busiest session since January 2021, after the S&P 500 hit all-time highs.

However, investors are divided over whether global monetary easing may have started too late to stop a slowdown, or even a U.S. recession, from taking hold.

Christopher Schon, multi-asset strategist at Simcorp, noted that the last two times the Federal Reserve started monetary easing with 50 bp cuts were 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 added.

Markets would also be unsettled, he added, if unexpectedly strong growth or inflation data lowered expectations for future rate cuts.

Soft U.S. labour market data and brisk retail sales have generated confusion over the true state of the country’s economy.

In Europe, purchasing manager surveys on Monday showed France's services sector declined sharply in September and German business activity tumbled by its sharpest pace in seven months.