Global Markets Surge as Fed Rate Cut Expectations Rise

Global stocks climbed for a second consecutive session, buoyed by rumors of a December rate cut by the U.S. Federal Reserve. This alleviated concerns about high valuations in the AI sector. U.S. stocks rallied, driven by optimistic Fed comments and early trading success.

Global stocks experienced an upswing for the second straight day on Monday. The rise was fueled by increasing speculation about a December rate cut by the Federal Reserve, calming recent anxieties over the high valuations seen in the AI sector. Longer-term U.S. Treasury yields also fell, contributing to the upward trend.

The stock market faced its largest weekly drop since August last week, influenced by pessimism surrounding potential interest rate cuts, the ongoing U.S. government shutdown, and high AI company valuations. However, positive remarks from New York Fed President John Williams revitalized investor confidence by implying potential rate cuts. Fed Governor Christopher Waller supported this sentiment, citing weak U.S. job market conditions.

In early U.S. trading, stocks witnessed a rally, spurred by a near 4% surge in the communication services sector and a significant 6% rise in Alphabet's shares. With Wall Street indices climbing and European stocks closing higher, global markets were encouraged by hopeful signs of progress toward a Russia-Ukraine peace deal and dovish rate expectations.

(With inputs from agencies.)