Stock Markets Surge as Fed Rate Cuts Loom

Global stock markets are set for a weekly gain thanks to anticipated U.S. rate cuts, alleviating bond market stress and affecting the dollar. European shares dipped slightly, while Asian markets gained. The Federal Reserve is expected to cut interest rates next week amidst economic uncertainty.

Global stock markets appeared poised for a weekly increase on Friday, buoyed by expectations of imminent U.S. rate cuts designed to alleviate global borrowing costs. This shift is expected to provide relief to tense bond markets while simultaneously exerting downward pressure on the dollar.

Amidst this backdrop, European shares experienced an initial 0.2% drop in Friday's trading, while Nasdaq and S&P 500 futures also saw marginal declines. Despite these initial dips, the MSCI All Country World Index remained on track for a 1.7% weekly gain, demonstrating robust investor confidence. Simultaneously, gold prices continued their upward trajectory, marking a fourth consecutive weekly gain as investors remain cautious about ongoing global economic uncertainties.

In Asia, stock markets marked substantial gains, particularly in China where stocks surged to a three-and-a-half-year high. This rise can be attributed, in part, to ambitious expectations surrounding AI-driven earnings growth. Meanwhile, in the U.S., focus remained on the Federal Reserve's potential rate cuts next week, with analysts predicting 125 basis points of cuts over the next five meetings.

(With inputs from agencies.)