Equities around the globe are experiencing a notable rally, fueled by easing inflation pressures, strong corporate earnings, and growing expectations for U.S. rate cuts. The MSCI All Country World Index, which tracks more than 2,500 stocks across both developed and emerging markets, has reached record highs for four consecutive sessions, according to data from LSEG. In a standout week for markets, the S&P 500 notched a record close for the second straight day, while Japan’s Nikkei 225, South Korea’s Kospi, and Singapore’s Straits Times Index all achieved all-time highs.
This positive market shift contrasts sharply with earlier concerns from this year when fears of persistent inflation, geopolitical tensions, and potential U.S. tariffs threatened economic growth. Eddy Loh, Maybank’s head of investment strategy, noted, “Markets have been a bit more resilient than what we’ve been expecting.” Loh emphasized that robust economic growth and impressive corporate earnings are supporting equity returns not only in the U.S. but also in markets in Europe, Japan, and Asia.
Recent U.S. economic data points have indicated some weakness in the labor market. Notably, a surprising drop in the U.S. producer price index (PPI) on Wednesday enhanced investor sentiment, leading many to believe that the Federal Reserve may have more leeway to ease monetary policy. U.S. wholesale prices fell by 0.1% in August, diverging significantly from the Dow Jones expectation of a 0.3% increase. “Stocks have hit fresh records as a much weaker-than-anticipated PPI depicted deflation rather than expected inflation,” remarked José Torres, a senior economist at Interactive Brokers. He further noted that this encouraging data boosts the likelihood of the Fed implementing cuts during its final three meetings of 2025.
Market expectations indicate a quarter-point rate reduction at the Federal Reserve meeting on September 17, with CME Group’s FedWatch tool showing approximately a 92% chance of this outcome. Loh anticipates two rate cuts this year, positioning September’s meeting as a strong candidate for action. Marvin Loh, senior global macro strategist at State Street, added, “Given that we are building a stronger case for the Fed to restart its cutting cycle while the economy remains on fairly solid footing, this environment serves as a tonic for risk investors.”
Despite concerns over long-term interest rates, investors are increasingly reallocating capital towards equities. Confidence in tech shares has been notably bolstered by Oracle’s robust outlook for AI-related revenue. The cloud computing giant reached an all-time high on Wednesday, gaining $244 billion in market capitalization-its best performance since 1992-and is now valued at $922 billion.
Looking ahead, investors are closely monitoring the forthcoming U.S. consumer price index (CPI). Torres indicated, “A downside shocker would create a trio of developments-revised payroll benchmarks, a softer-than-expected PPI, and subdued CPI-which would justify a larger Fed reduction and potentially drive stocks to new heights.” However, Loh cautioned that the full impact of new U.S. tariffs, which only came into effect in August, is yet to be felt and may temper market sentiment in the upcoming months.
As investor rallying continues, the interplay of economic data and Federal Reserve policy remains critical in shaping market trends. The next few weeks could prove pivotal as stakeholders assess incoming economic signals that may define the trajectory of global equities.
Original Source: https://www.cnbc.com/2025/09/11/stock-benchmarks-are-scaling-record-highs-animal-spirits-are-soaring-.html
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Publish Date: 2025-09-11 09:57:00
