Summary:
Global stocks hit a one-year high, and the dollar reached a five-month low on expectations of early interest rate cuts by major central banks.
World stocks rallied to their highest level in more than a year on Wednesday, while the dollar hit a five-month low, as expectations mounted that major central banks will start to cut interest rates early next year.
US stocks appears to be in a self-perpetuating upward spiral with the S&P 500 closing near its all-time high. 90% of the stocks in the benchmark index are currently trading above their 50-day averages.
Similarly, European markets ended higher with the DAX and the CAC 40 eyeing a new historical high. The FTSE 100 eked out a small gain so far this year, lagging behind its peers.
The benchmark 10-year Treasury yield fell to a 5-month low, while the two-year Treasury yield tumbled to a low not seen in 7 months. But analysts are concerned that rates might not fall as much as expected.
BofA Global Research said on Monday that it expects the Fed to deliver four 25-bp rate cuts starting in March. It also raised the country's economic growth forecast on a quarterly average basis by 0.6% to 1.2% for next year.
Investors shed stocks at the highest weekly rate since December 2022, and recorded their largest outflow from tech stocks in 15 weeks of $700 million in the week to Wednesday, according to a report from BofA.
The NASDAQ 100 retreated near the 17,000 level. The tech-heavy index remains on the front foot but a bearish RSI divergence and an overbought signal suggest that a correction may occur.
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