NEW YORK/LONDON,– Global markets surged in a pre-Christmas rally, with Wall Street leading gains in thin trading on Thursday. Investors are speculating that the U.S. Federal Reserve may slow its monetary easing in 2025, buoying Treasury yields and lifting the U.S. dollar.
In late morning trading, the Dow Jones Industrial Average rose by 0.47%, the S&P 500 climbed 0.73%, and the Nasdaq Composite advanced 0.99%. U.S. trading will close early, with stock markets shutting at 1:00 p.m. EDT (1800 GMT) and the bond market closing an hour later. Most global financial markets are closed on Wednesday for Christmas, with some observing a second holiday on Thursday.
“Limited news and data are keeping attention on a potentially more hawkish Fed stance,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
Global Gains Across Regions
MSCI’s global stock index gained over 0.5%, driven by strong performances across major markets. The pan-European STOXX 600 rose 0.18%, while Britain’s FTSE 100 and France’s CAC 40 posted modest gains of 0.19% and 0.14%, respectively. Germany’s markets remained closed for the Christmas holiday.
In Asia, Chinese stocks rallied after reports that Beijing plans to issue a record volume of special treasury bonds next year to boost fiscal stimulus. The CSI300 blue-chip index and the Shanghai Composite both ended 1.3% higher, while Hong Kong’s Hang Seng Index advanced by 1.1%.
China’s finance ministry announced measures to bolster fiscal support for consumption in 2025, including raising pensions and medical insurance subsidies and promoting trade-ins for consumer goods. However, caution lingers over the outlook for China’s economy, which faces challenges such as potential U.S. tariffs.
MSCI’s index of Asia-Pacific shares outside Japan rose 0.37%, reflecting the region’s optimism.
Fed Signals Influence Market Sentiment
Markets remain focused on the Federal Reserve’s monetary policy, following last week’s 25-basis-point interest rate cut. The Fed’s moves have sparked speculation of further easing in 2025, with markets pricing in about 35 basis points of cuts. Analysts suggest this may include one rate cut of 25 basis points and a partial probability of a second.
U.S. Treasury yields reflected this sentiment, with the two-year yield rising slightly to 4.359% and the benchmark 10-year yield reaching a seven-month high at 4.629%.
“While uncertain, we expect a gradual policy rate of 3.75% as the Fed navigates inflation and labor market dynamics,” analysts at Citi Wealth commented.
Currency and Commodities Update
The U.S. dollar strengthened, with the dollar index rising 0.14%, nearing a two-year high. The euro edged down 0.15% to $1.0389, while the yen traded near a five-month low at 157.35 per dollar.
Spot gold rose 0.13% to $2,616.26 an ounce, marking a 27% gain for the year—its largest annual increase since 2010.
In energy markets, U.S. crude oil prices climbed 1.56% to $70.32 per barrel, while Brent crude rose by 1.51% to $73.73.
As global markets enter the holiday season, traders remain cautious about the outlook for inflation, monetary policy, and geopolitical uncertainties, setting the stage for a dynamic start to 2025.
Source: Reuters
