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Global stocks rally on Fed optimism and luxury sector boost

Optimism over potential US interest rate cuts and strong quarterly earnings from luxury goods makers drove global equity markets higher Wednesday and Thursday. Asian markets rose on Thursday, led by South Korea’s record-setting Kospi and Australia’s ASX 200, as investors welcomed upgraded growth forecasts and expectations for looser monetary policy. US indices closed mixed on Wednesday with tech and bank shares leading gains amid speculation around further Federal Reserve (Fed) rate cuts, while Europe saw advances thanks to sharp rallies in luxury stocks following LVMH’s results. Gold hit a new record above USD 4230 per ounce as investors sought safe havens alongside the strengthening Japanese yen and Swiss franc.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Market chart
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Asian equity markets advanced on Thursday, led by South Korea’s Kospi which jumped 2.1%, following an upgrade of the country’s 2025 growth forecast by the International Monetary Fund to 0.9%. Sentiment was buoyed by optimism surrounding a potential US-South Korea trade agreement and robust gains among major firms such as Samsung Electronics, Hyundai Motor and Kia. Australia’s S&P/ASX 200 climbed 0.9% to a new record following weaker jobs data, strengthening market bets on policy easing by the Reserve Bank of Australia. Japan’s Nikkei 225 was trading 1.3% higher. Hong Kong’s Hang Seng index slipped 0.6%, while mainland China’s CSI 300 was essentially amid flat renewed US-China trade tensions.

US indices mixed as tech stocks rise

After a positive start, US stock markets closed with mixed results on Wednesday. The S&P 500 rose by 0.4% to 6671.06 points, while the Dow Jones Industrial fell just slightly to 46,253.31 points. Meanwhile, the Nasdaq 100 climbed 0.7% on notable gains in the technology sector, with AMD shares jumping 9.4%. Major banks such as Bank of America and Morgan Stanley posted robust quarterly earnings, supporting their shares, as investors anticipated lower interest rates following comments by Fed Chair Jerome Powell regarding labour market risks. Retail giant Walmart hit a record high with a 1.7% increase.

US economy stagnates, more job cuts reported

With macroeconomic data remaining largely unpublished due to the ongoing US government shutdown, the Fed’s Beige Book released on Wednesday was forced into investors' focus. It indicated that US economic activity has largely stagnated in recent weeks, while the labour market remained mostly stable despite more firms reducing staff levels. Reasons for the increased layoffs included weaker demand, persistent economic uncertainty, and higher investment in artificial intelligence, while several Fed districts continued to cite labour shortages in hospitality, agriculture, construction and manufacturing, partly due to recent immigration policy changes. Import costs rose in many regions due to tariffs, although not all sectors passed these increases on to consumers. The next interest rate decision is expected at the end of October, with the market forecasting another reduction following September’s 0.25 percentage point cut.

European stocks lifted by luxury rally

European equity markets advanced on Wednesday, with the EuroStoxx 50 climbing 0.9%, supported by strong gains among luxury goods makers and renewed optimism about lower interest rates following remarks by Fed President Powell. French luxury conglomerate LVMH was the standout performer, surging 12.2% after posting encouraging third-quarter results, while peers Hermes and Kering also advanced sharply, helping Paris’s CAC 40 index to close 2% higher. Outside the euro area, Switzerland's SMI gained 0.5% led by Richemont shares, while British shares slipped despite Burberry rising 3.4%. Germany’s DAX fell 0.2%. ASML and Totalenergies also posted notable gains after quarterly reports exceeded market expectations.

Euro-area industrial production declines in August

In macroeconomic data, industrial production in the euro area fell by 1.2% in August compared with July, reversing the 0.5% growth recorded in July, according to Eurostat figures released on Wednesday. The annual pace of industrial output increased by 1.1% versus August of last year, supported mainly by a strong rise in non-durable consumer goods, but was offset by declines in intermediate goods, energy, capital goods and durable consumer goods. Germany, Greece and Austria saw the sharpest monthly drops among member states, while Ireland posted the largest increase, reflecting ongoing volatility linked to multinationals’ contract manufacturing in Ireland.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from ABB, Charles Schwab, Marsh & McLennan, Nordea Bank, Sartorius, and Taiwan Semiconductor.

Economic data in focus: UK gross domestic product (08:00), UK manufacturing production (08:00), UK trade balance (08:00), Swiss SECO economic forecast (09:00), US retail sales (14:30), Philadelphia Fed Manufacturing Index (14:30), European Central Bank President Christine Lagarde speaks (18:00).

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Editor: Alessandro Fezzi
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