Markets Surge as Inflation Eases and Rate Hike Speculations Shift

Global markets experienced a boost as easing U.S. core inflation raised hopes of potential Federal Reserve rate cuts. Stocks in Asia and Europe followed Wall Street's lead, while the yen surged on speculations about Bank of Japan's policy. Investor focus also shifted towards luxury firms, chipmakers, and political developments.

On Thursday, stocks climbed and the U.S. dollar weakened as an easing in core U.S. inflation kept the prospect of Federal Reserve rate cuts alive, while the yen hit a one-month high on expectations of a potential rate increase by the Bank of Japan next week. European stock futures pointed towards a muted opening following the STOXX 600's strongest daily performance in four months on Wednesday.

In Europe, investors shifted their focus to luxury firms and chipmakers, driven by strong earnings from Cartier owner Richemont and AI chipmaker Taiwan Semiconductor Manufacturing Co. Wall Street witnessed its biggest daily gains since the U.S. presidential election, powered by robust earnings from financial giants like JPMorgan and Goldman Sachs.

The global rally was driven by a moderate U.S. inflation report indicating a 2.9% rise in the consumer price index, aligning with expectations. Following the data, investors contemplated a potential easing of interest rates, as even the modest U.S. producer price increase signaled possible changes in monetary policy. Analysts suggested cautious optimism towards the Federal Reserve's future rate decisions.

(With inputs from agencies.)