Global equity market gains extended, supported by renewed expectations of a Federal Reserve rate cut in December, as weaker U.S. data and falling bond yields boosted risk appetite, lifting major indexes in Asia and Europe. Market sentiment continues to be shaped more by the trajectory of monetary policy than by corporate fundamentals, after soft U.S. economic figures pushed the dollar index to its lowest level in a week, reinforcing the view that the Fed is leaning toward policy easing next month. The weakness in retail and wholesale data, combined with stable labor indicators, has been perceived as sufficient justification for near-term rate cuts without signaling a severe economic downturn.
This macro backdrop provided a solid foundation for broad gains on Wall Street, which in turn spilled over to Asian and European trading at the start of Wednesday’s session. While the rally was broad-based, the technology sector attracted additional attention as investors reassessed the leadership narrative in the artificial intelligence space. Nvidia shares came under pressure amid concerns that Google may ramp up efforts to develop its own AI chips, yet Nasdaq 100 futures continued to edge higher, indicating that investors remain more focused on liquidity and policy catalysts than on sector-specific risks.
In Europe, gains were more cautious ahead of the U.K. budget announcement, where fiscal tightening measures are expected. The main question is whether higher taxes will help cool inflation, providing the Bank of England greater room to recalibrate its rate path. In Asia, momentum appeared stronger, with the Nikkei rising 1.8% and SoftBank rebounding 5.8% after sharp declines in the previous session, while South Korea’s Kospi climbed 2.7% on strong demand for growth sensitive assets.
U.S. equity futures traded higher ahead of the shortened holiday session, with S&P 500 futures up 0.4%, Dow Jones up 0.3%, and Nasdaq up 0.5%, reflecting continued risk appetite driven by monetary policy expectations rather than improved earnings. In FX markets, the dollar weakened near its recent lows, while the British pound rose on expectations of restored fiscal discipline in the U.K., and the euro remained relatively stable. Meanwhile, U.S. Treasury yields inched slightly higher ahead of a seven-year bond auction, while U.K. gilt yields saw modest gains.
Commodity markets remained subdued, with oil prices largely unchanged amid geopolitical uncertainty and signals of weaker demand, while gold advanced 0.4% supported by a softer dollar and expectations of monetary easing. Bitcoin also posted a modest 0.9% gain but remains below its October peak, reflecting weaker speculative momentum.
The near-term outlook hinges on Wednesday’s data releases, including jobless claims and durable goods orders. Any signs of labor market cooling or weaker activity could reinforce rate cut expectations, supporting equities and gold while pressuring the dollar and yields. Conversely, stronger employment or durable goods data may undermine the prospect of a near term cut, driving the dollar higher and yields upward while weighing on technology and growth stocks.
Overall, financial markets continue to respond to a clear narrative driven by monetary policy, with investors favoring high quality assets while remaining selective toward sectors most sensitive to interest rates. A constructive approach remains centered on the resilience of equities and gold, while the main risk lies in labor or spending data that may force a repricing of the Fed’s policy path.
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