Global equity markets posted their second straight record-breaking session as investors grew more confident that the U.S. Federal Reserve (Fed) will move to cut interest rates soon.
At the close, the MSCI All Country World Index gained 0.6% to 952.83 points – its highest level ever. In the U.S., both the S&P 500 and Nasdaq Composite hit fresh all-time highs for the second day in a row, while the Dow Jones also advanced firmly.
Materials, healthcare, and consumer discretionary sectors led the gains, while communication services, consumer staples, and technology saw slight declines.
European stocks added 0.54%, moving close to a two-week peak.
In Asia, Japan’s Nikkei 225 extended its winning streak to six sessions, surpassing the 43,000 mark for the first time and setting a new record high. The MSCI Asia-Pacific Index (excluding Japan) rose 1.54%.
According to Garrett Melson, Strategist at Natixis Investment Managers Solutions (Boston), the latest rally carried over from the previous session, driven by softer-than-expected U.S. inflation data.
The July Consumer Price Index (CPI) report showed weaker price growth, suggesting that recent tariff measures have yet to create significant upward pressure on inflation.
The inflation reading strengthened expectations that the Fed may cut rates as early as September. The CME FedWatch tool shows markets now pricing in a 94% chance of a September rate cut, up sharply from 57% a month ago.
Investor sentiment was further boosted after President Donald Trump signed an executive order extending the suspension of tariff hikes on China for another 90 days.
U.S. Treasury Secretary Scott Bessent suggested that a 0.5 percentage point rate cut was plausible, citing recent data showing a marked slowdown in job growth between May and July 2025.
U.S. Treasury prices climbed broadly, sending yields lower. The 2-year yield – often sensitive to Fed policy expectations – fell 5.2 basis points to 3.679%, while the 10-year yield dropped 5.5 basis points to 4.238%.
In foreign exchange markets, the U.S. dollar weakened, falling 0.32% against the Japanese yen to 147.36 and slipping 0.12% against the Swiss franc to 0.805. The euro rose 0.27% to trade at $1.1704.
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