Global Markets Surge Ahead of Critical US Inflation Data

Global stock markets hit record highs driven by expectations of U.S. interest rate cuts. Key indices in the U.S., Japan, and other Asia-Pacific markets gained, while bond yields and major currencies had modest moves ahead of U.S. CPI data. Oil, gold, and cryptocurrencies saw slight increases.

Global stock markets surged on Thursday, hitting record highs from Tokyo to New York, as traders anticipated U.S. data indicating easing inflation, possibly leading to rate cuts in September.

Bonds and the dollar remained steady, with the yen nearing its lowest levels in decades. Major technology shares boosted the S&P 500 by 1% to a record close, while Japan's Nikkei also rose 1% to an unprecedented 42,426 points. Similarly, Taiwan and Australian stocks reached record or near-record levels.

Optimism about interest rate cuts was the primary driver, noted Shane Oliver, AMP's chief economist. U.S. Federal Reserve Chair Jerome Powell's comments suggested that further good data would strengthen the case for rate cuts. Futures market pricing implied a 75% chance of a rate cut in September.

In Asia, the Bank of Korea and the Reserve Bank of New Zealand signaled potential rate cuts, influencing local market movements. China's market saw modest gains despite disappointing economic data and tariff concerns. The yuan and other currencies experienced slight changes, with bond yields steady across regions.

Commodity markets reflected modest gains in oil prices due to robust U.S. gasoline demand, with Brent and U.S. crude rising. Gold and bitcoin saw slight increases following recent market movements.