Global Stocks Surge Amid U.S. Rate Cut Speculation

Global stocks advanced as expectations for a U.S. Federal Reserve rate cut in December grew. This eased concerns about AI valuations and a protracted U.S. government shutdown. Comments from Fed officials signaled potential rate cuts, boosting markets, especially in communication services. U.S. markets will close for Thanksgiving on Thursday.

Global stocks saw an uptick for the second consecutive day Monday, driven by growing anticipation of a December interest rate cut from the U.S. Federal Reserve. This alleviated recent concerns about AI sector valuations, coupled with a dip in longer-term U.S. Treasury yields.

Markets had recently stumbled, marking their biggest weekly percentage drop since early August, marred by worries over interest rate cuts, a prolonged U.S. government shutdown, and high AI-related company valuations. Recent comments from New York Fed President John Williams hinted at potential near-term rate reductions, a sentiment echoed by Fed Governor Christopher Waller.

The likelihood of a 25-basis-point cut in December's meeting has risen sharply. As Mary Daly, San Francisco Fed President, expressed support for a rate cut citing a weakened job market, the likelihood jumped to 85.1%. Wall Street saw notable gains led by the communication services sector, buoyed by Alphabet's surge. Meanwhile, signs of progress toward a Ukraine-Russia peace deal added optimism in European markets.

(With inputs from agencies.)