Stocks around the world rose on Friday, with three major indexes in the US finishing at all-time highs after the country reported softer than anticipated inflation data, raising hopes of another interest rate cut by the Federal Reserve.
Next week's trade talks between the leaders of the US and China, the world’s two largest economies, are also supporting stock markets.
In the US, the Dow Jones Industrial Average rose by 1 per cent to 47,207.12 and the S&P 500 up by 0.8 per cent to 6,791.69, while the tech-rich Nasdaq Composite Index jumped 1.2 per cent to 23,204.87.
European and Asian stocks also rose on the back of interest rate cut optimism and trade talks between the US and China.
In London the FTSE 100 gained 0.7 per cent, while Frankfurt’s DAX was up 0.1 per cent. In Asia, major stock indexes ended the week positively, with Tokyo’s Nikkei 225, Hong Kong’s Hang Seng index and Shanghai Composite posting gains.
The US Consumer Price Index increased 0.3 per cent in September, after rising 0.4 per cent in August, according to the latest data from the Bureau of Labour Statistics.
On an annual basis, the index rose 3 per cent, up from 2.9 per cent in August but below the expectations of 3.1 per cent among economists polled by Bloomberg.
“Tariff-related inflation will remain a concern in the near term, but it is the jobs market that is becoming the more pressing issue for the Fed, with a clear chance that the 'low hire, low fire' economy becomes a 'no hire, let's fire' story,” ING economists said in a research note on Friday.
“We continue to look for a 25 basis point rate cut next week, with a further 25 basis point move in December and 50 basis points of cuts in early 2026.”
In September, the Federal Reserve cut US interest rates by 25 basis points on increased concerns over the strength of the labour market and indicated further rate cuts this year.
Meanwhile, US and China trade talks expected to be held next week during President Donald Trump’s visit to Asia are also supporting stock markets.
The US and China have been levying tariffs on each other since the return of Mr Trump to the White House this year.
The US announced an additional 100 per cent tariff on China in a dispute over export controls on rare earth minerals this month.
“Trade tensions between the US and China eased – after flaring up, easing and flaring up again over recent weeks – on news that Trump and Xi will meet next Thursday at a summit in Asia,” Ipek Ozkardeskaya, senior analyst at Swissquote, said.
“There’s no guarantee the US-China meeting will happen or lead to a durable truce but it would mark the first face-to-face encounter since Trump returned to the White House and follow a wild ride of tariff and chip wars that have only intensified since January.”
