Global markets surge to record highs as Fed rate cut bets gain momentum
Goldilocks inflation data fuels rally from Wall Street to Asia with the Nikkei 225 smashing through 43,000 for the first time and ether nearing a four-year peak.
Goldilocks inflation data fuels rally from Wall Street to Asia
Stock markets worldwide hit fresh record highs on Wednesday, with benchmarks from Wall Street to Tokyo and even Ho Chi Minh City climbing on optimism that central banks will maintain accommodative policy amid cooling inflation.
The MSCI All Country World Index and several US indices set new all-time highs, while Japan’s Nikkei 225 surged past the 43,000 mark for the first time, and cryptocurrency ether jumped to levels last seen nearly four years ago.
The rally followed US inflation data that landed in a “Goldilocks” zone - headline inflation held steady at 2.7%, below expectations for a tariff-driven uptick, and core inflation rose to 3.1%, its highest in six months but not hot enough to deter policymakers.
The softer-than-forecast figures strengthened market bets on a Federal Reserve (Fed) rate cut next month, with traders pricing in a 94% probability of a 25-basis-point move in September and another cut by year-end.
FTSE 100 nears record high
On Wednesday morning the FTSE 100 resumed where it left off on Tuesday and is fast approaching its July record high at 9,189.30. If overcome on a daily chart closing basis the 161.8% Fibonacci extension of the October 2022-to-February 2023 6,707.62-to-8,047.06 advance, projected higher from the 7,206.82 March 2023 low, at 9,374.03 represents the next technical upside target.
FTSE 100 daily candlestick chart
Defence stock BAE Systems and healthcare stocks like AstraZeneca and GlaxoSmithKline (GSK) propped up the UK blue chip index, compensating a near 7% drop in the Beazley share price as the company reported a 31% drop in pre-tax profit to $502.5m for the six months ended 30 June 2025.
Persimmon was the second biggest loser with a near 2% fall following a smaller-than expected pre-tax profit of £146.7m for the six months to 30 June 2025, broadly flat year-on-year.
US dollar slips amid steady inflation print and political uncertainty
The US dollar index slipped to a two-week low at 97.71, pressured not only by easing inflation expectations but also by political uncertainty, after White House spokeswoman Karoline Leavitt said President Donald Trump is considering legal action against Fed Chair Jerome Powell over renovations at the central bank’s headquarters.
US Dollar Index daily candlestick chart
The greenback held losses against the euro and sterling but clawed back some ground versus the yen.
Japanese inflation slows as trade deal boosts sentiment
In Japan, producer prices rose 2.6% year-on-year (YoY) in July, the slowest pace in nearly a year and slightly above forecasts, marking the fourth straight month of moderation.
Business sentiment also improved for a second month, buoyed by a new trade agreement with Washington that slashes US tariffs on Japanese cars and goods in exchange for a $550 billion investment package spanning equity, loans, and guarantees.
Cryptocurrencies benefit from bullish sentiment
Crypto joined the risk rally as ether jumped to an almost four-year high, signalling broader appetite for growth and speculative assets.
Ether’s more around 8% rise on Tuesday, compared with Bitcoin's muted 1% gain, highlights investors’ focus on its own strong catalysts. Robust institutional inflows into US spot ETH ETFs and rising confidence in the network’s recent upgrades are drawing far greater interest than the broader, macro-driven momentum supporting Bitcoin.
Ether versus bitcoin daily candlestick chart
Ether now trades within less than 6% of its November 2021 all-time high at $4,867.95.
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