Global Markets Surge Amid Interest Rate Cut Prospects

World stocks reached new all-time highs as investors anticipated U.S. data to show inflation easing, potentially leading to the Federal Reserve's interest rate cuts. U.S. earnings season began, and positive GDP data from Britain boosted European markets. Commodities and currencies saw mixed reactions globally.

World stocks climbed to new historical highs on Thursday as traders awaited U.S. data expected to indicate a slowdown in inflation. Such a trend could set the stage for the Federal Reserve to initiate its anticipated cycle of interest rate cuts as early as September. The day was marked by significant financial activity. Alongside the upcoming U.S. CPI figures, Wall Street earnings season commenced, Britain reported robust GDP data, and central banks across various regions grappled with interest rates.

European stock exchanges rose between 0.4% and 0.7% in the morning session, contributing to a record-breaking week alongside all-time highs in both U.S. and Tokyo markets overnight. MSCI's all-country world index notched a 14% gain for the year. Meanwhile, the bond market and the dollar remained stable.

In Japan, the Nikkei surged 1% to a record 42,426 points, while strong performances from Nvidia and other Wall Street heavyweights propelled the Nasdaq and S&P 500 to new peaks. The anticipation of interest rate cuts was a primary driver of this bullish trend, according to Shane Oliver, chief economist at AMP in Sydney. U.S. Federal Reserve Chair Jerome Powell emphasized the importance of favorable data for justifying potential interest rate cuts.