World shares experienced a mostly positive trend on Friday, buoyed by the record highs achieved on Wall Street the previous day. The rise in global markets was largely fueled by a mixed set of economic data from the U.S. that reinforced expectations for a Federal Reserve interest rate cut aimed at providing a stimulus to the economy.
In Europe, market reactions were mixed during early trading, despite the initial upward trajectory. Germany’s DAX index saw a slight dip of 0.3%, settling at 23,628.56. The CAC 40 in Paris dropped 0.5% to close at 7,784.93, while Britain’s FTSE 100 managed a modest gain of nearly 0.3% to reach 9,323.66.
U.S. futures indicated a cautious outlook ahead, with the S&P 500 dropping 0.2% and the Dow Jones Industrial Average declining by nearly 0.3%. In contrast, Japan’s Nikkei 225 index experienced a 0.9% rise, closing at 44,768.12, as Japanese stocks achieved new milestones. Notable performers included semiconductor giant Tokyo Electron, as well as leading brands like Sony Group and Fast Retailing.
Chinese markets reflected optimism as Hong Kong’s Hang Seng index surged 1.2% to hit 26,388.16, driven by rising tech shares amid growing excitement surrounding artificial intelligence. Additionally, the property sector also benefited from Beijing’s efforts to address local government debt. On the other hand, the Shanghai Composite index experienced a slight decline of 0.1%, settling at 3,870.60.
In Asia, South Korea’s Kospi index climbed 1.5% to reach 3,395.54, while Australia’s S&P/ASX 200 advanced by 0.7%, closing at 8,864.90. India’s BSE Sensex ascended by 0.5%, and Taiwan’s Taiex saw a 1% increase, reflecting a generally positive sentiment across the region.
Market analyst Stephen Inness from SPI Asset Management noted that the current movements in the markets are indicative of a significant shift towards a dovish Federal Reserve stance, which could have global ramifications. This aligns with Wall Street’s ongoing rally, as stocks climbed following the release of U.S. economic reports that indicated a clearer path for potential interest rate cuts.
The S&P 500 notched a 0.8% increase, marking the third consecutive day at an all-time high. The Dow Jones Industrial Average surged by 617 points, or 1.4%, with the Nasdaq composite also gaining 0.7%, both reaching record levels.
In the bond market, Treasury yields eased after the release of key economic data, which are among the last indicators likely to influence the Federal Reserve’s decision-making ahead of its upcoming meeting. The anticipated interest rate cut, projected to be the first of the year, has generated hope for a carefully managed economic slowdown.
Traders have been closely watching the job market, hoping for conditions that would prompt the Fed to lower interest rates without triggering a recession. The latest inflation report indicated that household prices were rising more quickly than the Fed’s 2% target, with a year-on-year increase of 2.9% in August, slightly accelerating from July’s 2.7% rate.
Despite these inflationary pressures, market sentiment remained focused on the prospect of a slowing job market as a greater concern than inflation itself. Stocks of companies likely to benefit from lower interest rates, particularly those in real estate and homebuilding sectors, saw significant gains on Wall Street.
In commodity markets, benchmark U.S. crude prices fell by 12 cents to $62.25 per barrel, while Brent crude decreased by 4 cents, settling at $66.33 per barrel. The U.S. dollar strengthened against the yen, rising to 147.92 from 147.15, while the euro slipped to $1.1716 from $1.1740.
