Global markets rallied on Wednesday after U.S. Federal Reserve Chair Jerome Powell hinted that further interest rate cuts could be on the horizon, boosting investor sentiment across both sides of the Atlantic despite ongoing trade tensions between Washington and Beijing.
Speaking at an event in Philadelphia on Tuesday, Powell said the Fed was increasingly concerned about the job market, suggesting another rate reduction could come later this month. “Rising downside risks to employment have shifted our assessment of the balance of risks,” Powell told the National Association of Business Economics. His remarks reinforced expectations of continued monetary easing after the central bank’s quarter-point rate cut in September.
Investors reacted positively to the comments. Futures tied to major U.S. indexes rose in early European trading, with S&P 500 futures up 0.64%, Dow Jones Industrial Average futures gaining 0.41%, and Nasdaq futures climbing 0.79%. Analysts said Powell’s statement revived optimism that two further rate cuts could still occur in 2025.
“Markets have been lifted by the rekindling of rate cut expectations,” said Danni Hewson, head of financial analysis at AJ Bell. “Investors seem prepared to overlook the growing warnings about a market correction, but this earnings season will be crucial if that optimism is to continue.”
In Europe, stocks surged as investors responded to upbeat earnings reports and Powell’s dovish tone. The pan-European STOXX 600 rose 0.6%, while France’s CAC 40 jumped more than 2% by midday. The rally in Paris was fueled by strong corporate performance and political developments after Prime Minister Sébastien Lecornu secured key parliamentary backing to avert a no-confidence vote by suspending a controversial pension reform.
Luxury conglomerate LVMH saw its shares soar over 14% after reporting a return to positive organic growth in the third quarter. In the technology sector, Dutch semiconductor equipment maker ASML gained more than 4% after posting strong quarterly results driven by booming demand for AI chips. ASML’s stock has surged nearly 50% since August, solidifying its position as Europe’s most valuable company.
Elsewhere, Frankfurt’s DAX inched up 0.1%, Milan’s FTSE MIB gained 0.36%, and Madrid’s Ibex 35 climbed 0.71%. London’s FTSE 100 was the only major European index in the red, slipping 0.43%.
Gold prices continued their extraordinary rally, hitting $4,217 per ounce, up more than 60% this year as investors sought safe havens amid global uncertainty and intensifying U.S.-China trade frictions.
In currency markets, the dollar weakened slightly, slipping 0.25% against the Japanese yen. The euro rose 0.19%, and the British pound gained 0.35% against the greenback.
Oil prices also held steady, with U.S. benchmark crude trading at $58.65 per barrel and Brent crude around $62.24.
Despite the positive momentum, analysts warned that markets remain sensitive to geopolitical risks and trade tensions, particularly given the exposure of global technology firms to Chinese supply chains and consumer demand.
