Traders were busy on the floor of the New York Stock Exchange on September 3, 2025, amidst a global equity rally fueled by easing inflation, strong corporate earnings, and increasing expectations of U.S. interest rate cuts. The MSCI All Country World Index, which encompasses over 2,500 stocks from developed and emerging markets, has achieved record highs for four consecutive sessions, as reported by LSEG.
In the U.S., the S&P 500 closed at a record for the second consecutive day, while major indices in Asia—including Japan’s Nikkei 225, South Korea’s Kospi, and Singapore’s Straits Times Index—also reached unprecedented levels this week. This positive shift in market sentiment marks a significant turnaround from earlier this year, when concerns about persistent inflation, geopolitical tensions, and U.S. tariffs cast a shadow over growth prospects.
Eddy Loh, head of investment strategy at Maybank, noted the unexpected resilience of the markets. “Year-to-date performance has really been premised on still very robust economic growth, and, more importantly, corporate earnings,” he said, highlighting that this trend is supporting equity returns not only in the U.S. but also across Europe, Japan, and key Asian markets.
Recent U.S. economic data reflecting labor market weaknesses has contributed to this optimistic outlook. A surprisingly low reading on the U.S. Producer Price Index (PPI) also lifted investor spirits, as it suggested that the Federal Reserve may have more room to ease monetary policy. U.S. wholesale prices decreased by 0.1% in August, diverging from Dow Jones estimates of a 0.3% increase.
José Torres, a senior economist at Interactive Brokers, remarked that the much weaker-than-anticipated PPI indicated a deflationary trend rather than inflation, which has energized market dynamics. “Animal spirits are soaring because the well-received print is bolstering probabilities that the Fed will deliver cuts during each of its last three meetings of 2025,” he added.
Markets are currently anticipating a quarter-point reduction at the Federal Reserve’s upcoming meeting on September 17, with CME Group’s FedWatch tool indicating a 92% likelihood of a 25-basis-point cut. Loh expects that there could be two rate cuts this year, emphasizing that September’s adjustments are “pretty much” on the table.
Marvin Loh, a senior global macro strategist at State Street, noted that the prospect of a rate-cutting cycle is becoming increasingly likely as the economy remains robust. “This environment serves as a tonic for risk investors,” he stated. With ongoing concerns about the potential future trajectory of long-term interest rates, capital is flowing into equities as investors seek growth opportunities.
The technology sector has been particularly buoyed, especially following Oracle’s impressive outlook for AI-related revenue. The cloud computing giant saw its stock soar to an all-time high, gaining $244 billion in market capitalization and marking its best performance since 1992.
Torres indicated that investors are now keenly awaiting the upcoming U.S. Consumer Price Index (CPI) report. “A downside shocker would create a trio of developments—payroll benchmark revisions, softer-than-projected PPI, and subdued CPI—which would justify a larger reduction by the Fed and drive stocks to another new record,” he noted.
Despite the optimistic sentiment, Loh cautioned that the impacts of recent U.S. tariffs, which came into effect in August, may become more apparent in the coming months and could temper market enthusiasm.
