By Esther Ososanya
Global stock markets soared to unprecedented levels on Wednesday, buoyed by softer-than-expected U.S. inflation figures and mounting investor confidence that the U.S. Federal Reserve will deliver a much-anticipated interest rate cut in September.
The MSCI All Country World Index, a benchmark tracking shares across 47 countries, climbed 0.4% to a record 951.74 points, while Japan’s Nikkei 225 broke above the 43,000 threshold for the first time in history.
European shares also joined the rally, with the STOXX 600 up 0.5%, led by strong gains in defence and industrial stocks.
The optimism followed the release of July’s U.S. consumer price index (CPI), which came in slightly below market expectations.
The softer reading eased fears that President Donald Trump’s import tariffs were accelerating inflation, while also reinforcing hopes that the Fed will move to cut rates for the first time in 2025.
According to the CME FedWatch Tool, traders are now pricing in a 98% probability of a September rate cut.
Sentiment was further boosted by Trump’s recent decision to impose a 90-day pause on new tariffs against Chinese goods, a move seen as a temporary de-escalation in trade tensions between the world’s two largest economies.
Dollar Weakens, Bond Yields Ease
In currency markets, the U.S. dollar slipped to a two-week low against major peers, weighed down by falling Treasury yields and expectations of looser U.S. monetary policy.
Bond markets also reacted positively to the inflation data. German 30-year yields, which had climbed to a 14-year high earlier in the week, eased, while U.S. 10-year Treasury yields retreated modestly.
In Asia, the Bank of Japan found support for its view that inflationary pressures are moderating after data showed a slowdown in wholesale prices. Investors interpreted this as a sign the central bank may continue its accommodative policy stance.
On the cryptocurrency front, ether surged to its highest level in nearly four years, bolstered by optimism around blockchain adoption and renewed interest from institutional investors.
Oil prices, however, edged lower amid mixed signals about global demand. U.S. West Texas Intermediate crude fell 0.3% to $62.99 a barrel, while Brent crude eased 0.2% to $66.42.
READ ALSO: Global Stocks Edge Higher Ahead of U.S. Inflation Data, Geopolitical Talks
Analysts say the rally could continue in the short term if the Fed delivers the expected rate cut next month. “Markets are essentially running on a perfect combination of cooling inflation and central bank support,” said Michael Thompson, chief market strategist at Global Asset Partners. “But any surprises from the Fed or an escalation in trade tensions could quickly change the mood.”
For now, investors appear firmly in “risk-on” mode, with equities from Tokyo to New York riding a wave of optimism that monetary easing and geopolitical breathing space will keep the global recovery on track.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
