Global Shares Surge as Wall Street Hopes for Fed Rate Cut

UPDATE: Global stock markets are surging today following a strong performance on Wall Street, driven by rising expectations that the Federal Reserve will implement a crucial interest rate cut in December. The U.S. stock market enjoyed a robust rally on Monday, with the S&P 500 climbing 1.5%, marking one of its best days since summer. This momentum is fueling gains across European and Asian markets, reflecting a growing optimism among investors.

European shares are mostly higher, with Germany’s DAX dipping slightly by 0.1% to 23,216.76, while France’s CAC 40 added 0.1% to reach 7,965.77. The FTSE 100 in Britain also rose 0.1%, landing at 9,542.55.

In Asia, the Nikkei 225 in Tokyo increased 0.1% to 48,659.52, although this was tempered by a significant drop in SoftBank shares, which plummeted 10.3% over concerns regarding its investments in OpenAI amidst competitive pressures from Google’s newly launched Gemini AI model. Meanwhile, South Korea’s Kospi advanced 0.3% to 3,857.78, and Taiwan’s Taiex soared 1.5%.

Chinese markets are also on the rise, with Hong Kong’s Hang Seng climbing 0.7% to 25,894.55, and the Shanghai Composite jumping 0.9% to 3,870.02. E-commerce giant Alibaba, set to announce its earnings later today, saw its shares increase by 2.1% in Hong Kong.

The U.S. market is preparing for a shortened trading week due to the upcoming Thanksgiving holiday on November 28, 2023, followed by the busy shopping days of Black Friday and Cyber Monday. Monday’s gains were significantly bolstered by investor enthusiasm over potential rate cuts by the Fed, which could stimulate economic growth and bolster investment markets.

The Dow Jones Industrial Average rose 0.4%, while the Nasdaq Composite surged 2.7%. The AI sector saw notable strength, with Alphabet rising 6.3% due to positive reception of its Gemini AI model, and Nvidia increasing by 2.1%.

However, uncertainty remains a concern for investors as they brace for a key inflation report scheduled for release on Tuesday. Analysts forecast a 2.6% year-over-year increase in wholesale prices for September, mirroring August’s figures. A higher-than-expected reading could deter the Fed from further rate cuts, as inflation remains above its 2% target.

Despite recent volatility, traders are increasingly optimistic, now assigning a nearly 85% probability that the Fed will lower interest rates next month, up from 71% last Friday.

In commodities, U.S. benchmark crude oil fell $0.47 to $58.37 per barrel, while Brent crude dropped $0.49 to $62.23. The dollar weakened against the Japanese yen and the euro, with the exchange rate moving to 156.30 yen per dollar.

As the market shifts, all eyes are on the Fed’s actions and economic indicators that will shape the landscape in the coming weeks. Stay tuned for further updates as this developing story unfolds.