Global Markets Rally on Fed Rate Cut Hopes; U.S. Stocks Surge

UPDATE: Global markets are surging as hopes for a Federal Reserve interest rate cut fuel investor optimism. European and Asian shares mostly gained on Tuesday following a significant rally in U.S. stocks. The S&P 500 climbed 1.5% in its best performance since summer, while the Dow Jones Industrial Average rose 0.4% and the Nasdaq jumped 2.7%.

This surge comes as traders anticipate that the Federal Reserve may cut its main interest rate at its next meeting in December, a move that could stimulate economic growth and boost investment prices. A nearly 85% probability of a rate cut has emerged, up from 71% just last Friday, according to data from CME Group.

In Europe, Germany’s DAX slipped 0.1% to 23,216.76, while the CAC 40 in Paris added 0.1% to 7,965.77. Meanwhile, Britain’s FTSE 100 gained 0.1%, closing at 9,542.55. In Asia, Japan’s Nikkei 225 picked up 0.1% to 48,659.52, despite a 10.3% drop in SoftBank shares due to concerns over its AI investments.

Why This Matters Now: The upcoming U.S. inflation data, set to be released on November 28, 2023, is crucial. Economists anticipate a 2.6% rise in wholesale prices compared to the previous year, the same as in August. A higher-than-expected report could deter the Fed from cutting rates, adding pressure to already anxious markets.

In Hong Kong, the Hang Seng climbed 0.7% to 25,894.55, while the Shanghai Composite index jumped 0.9% to 3,870.02. E-commerce giant Alibaba gained 2.1% ahead of its earnings report due later today.

Meanwhile, U.S. oil prices saw a slight decline, with benchmark crude losing 47 cents to $58.37 per barrel. The international standard, Brent crude, shed 49 cents to $62.23 per barrel. The dollar fell to 156.30 Japanese yen from 156.91 yen, while Bitcoin rose 1.6% to $86,836.

As the U.S. stock market braces for a shortened trading week due to the Thanksgiving holiday, investors are on high alert for the inflation data release. This week marks a critical moment for the markets, with the potential for significant shifts in investor sentiment based on economic indicators and Fed policy decisions.

Stay tuned for updates as this story develops.