Global Stocks Rise as Investors Expect Rate Cut in December

Summary

Global stocks rose as investors anticipate a Federal Reserve rate cut next month, despite muted trading due to the US Thanksgiving holiday. The yen remains under intervention watch, while AI spending concerns have subsided. European markets saw modest gains, and the dollar slightly increased against other currencies. Traders now see an 85% chance of a December rate cut, influenced by recent Fed comments. The Japanese yen strengthened amid potential intervention, and Bitcoin rose, breaking a four-week losing streak.Reuters

Impact Analysis

So, the market’s clearly betting on a Fed rate cut in December, with expectations now at 85%—that’s a big jump from earlier in the month. This is driving a global rally, even with the US markets quiet due to Thanksgiving. The timing here is crucial; it suggests the Fed’s recent dovish comments are being taken seriously, and investors are positioning for a more accommodative monetary policy. This could mean a boost for equities, especially in tech and growth sectors, as lower rates typically support higher valuations. However, the yen’s strength hints at potential intervention, which could complicate currency markets. For portfolios, this might be a good time to look at sectors that benefit from lower rates, like tech and consumer discretionary, while keeping an eye on currency risks, especially if you’re exposed to the yen or dollar movements. Bottom line—this is a classic ‘buy the rumor’ scenario, but watch for any Fed pushback that could temper these expectations.