Global equities surged to all-time highs propelled by weakening US economic indicators, fueling expectations of imminent interest rate cuts by the Federal Reserve, possibly starting in September. European and US equity futures advanced ahead of the eagerly anticipated US non-farm payrolls report, anticipated to reveal a slowdown.
Quincy Krosby, chief global strategist at LPL Financial, emphasized the significance of the upcoming payroll report amidst a backdrop of declining economic indicators such as the ISM Manufacturing PMI and ISM Service Sector PMI. These factors could provide the Fed with the rationale needed to signal a reduction in interest rates.
In the UK, futures for equity indices rose following the Labour Party’s decisive majority win in Parliament, affirming their commitment to economic stability. Meanwhile, Japan’s Topix index briefly touched another record, surpassing levels not seen since 1989.
Emerging market equities saw gains, with the MSCI Emerging Markets Index reaching a two-year peak. European shares, particularly French equities, rallied on expectations that Marine Le Pen’s National Rally party would fall short of an absolute majority in upcoming elections.
The Japanese yen strengthened against the US dollar for a second consecutive day, rebounding from recent lows. China’s central bank announced plans to sell government bonds to manage a historic market rally.
The US dollar index, which measures the greenback against a basket of major currencies, declined for a fourth straight day, bolstering emerging-market currencies. The British pound maintained gains following Labour’s electoral victory, positioning Keir Starmer as the likely next prime minister.
In Asia, Chinese stocks faced the longest losing streak since 2012 ahead of an upcoming policy meeting, reflecting subdued investor sentiment amidst weakening economic data.
Commodities showed mixed performance: oil traded near a two-month high due to concerns over Hurricane Beryl potentially impacting the storm season, while gold extended its weekly gains. Conversely, Bitcoin prices dipped to their lowest levels since February amid market volatility.
This surge in global equities underscores market optimism amid expectations of monetary easing by major central banks, influenced by recent economic data trends.
