Wall Street Rally Sparks Global Market Surge: What Investors and Businesses Need to Know
European and Asian stock markets rose on Friday, buoyed by a record-setting session on Wall Street following the Federal Reserve’s latest interest rate cut. The gains came despite renewed concerns over tech sector valuations after disappointing earnings reports from industry giants Oracle and Broadcom.
Dan Coatsworth, head of markets at AJ Bell, observed that “the US tech sell-off was short-lived as Wall Street narrowed losses towards the end of yesterday’s session, helping to lift the broader market mood.”
In London, the FTSE 100 gained 0.3% in late morning trading, despite official data revealing an unexpected contraction in the UK economy for October, ahead of Britain’s upcoming tax-raising budget.
Investor attention is now shifting to next week’s US jobs data release, which may offer clues about the Federal Reserve’s monetary policy direction for the coming year. Partial data from Thursday indicated a larger-than-expected rise in US jobless claims for the week ending December 6, marking the largest increase in over five years and reinforcing signs of a softening labor market.
Following the Fed’s announcement, Chairman Jerome Powell’s comments were viewed as less hawkish than anticipated. However, the policy statement hinted at the possibility of withholding a fourth consecutive rate cut in January, lending support to the US dollar.
Stock markets across major Asian centers also advanced notably: Tokyo, Hong Kong, Sydney, Singapore, and Seoul all climbed by more than 1%, while Shanghai, Wellington, Taipei, Mumbai, and Manila closed higher. Conversely, Jakarta declined, and Bangkok saw little change as investors largely discounted news of Thailand’s prime minister dissolving parliament ahead of general elections scheduled for early next year.
The positive momentum occurred amid ongoing concerns about a tech rally driven by artificial intelligence (AI), which has propelled valuations to record highs. Nvidia notably became the first company to surpass a $5 trillion market valuation in October. Analysts caution that the surge of hundreds of billions invested in AI may be excessive, with potential returns still distant, raising the risk of an overheated market bubble.
These concerns intensified on Thursday when Broadcom’s earnings missed expectations and its AI sales forecast disappointed investors, causing its shares to drop over 4% in after-hours trading. Similarly, Oracle reported quarterly revenue below forecasts and highlighted a significant increase in data center spending to support AI workloads. Oracle’s shares closed down 10.8% in New York trading.
In corporate developments, SoftBank saw its stock rise 3.9% following Bloomberg reports that the tech investment firm is considering further acquisitions, including data center operator Switch, to strengthen its foothold in the AI sector.
Key market indices closed as follows:
– London FTSE 100: up 0.3% at 9,730.52 points
– Paris CAC 40: up 0.6% at 8,137.78
– Frankfurt DAX: up 0.4% at 24,382.37
– Tokyo Nikkei 225: up 1.4% at 50,836.55 (close)
– Hong Kong Hang Seng: up 1.8% at 25,976.79 (close)
– Shanghai Composite: up 0.4% at 3,889.35 (close)
– New York Dow Jones: up 1.3% at 48,704.01 (close)
Currency movements saw the US dollar gain against the yen, trading at 155.92 yen compared to 155.58 yen Thursday, while the euro slipped to $1.1728 from $1.1741.
— AFP
Special Analysis by Omanet | Navigate Oman’s Market
The recent Federal Reserve interest rate cut and global stock market gains signal a cautiously optimistic environment for Oman’s investors, emphasizing the importance of monitoring US economic indicators like jobs data. However, the tech sector’s volatility, especially concerns around AI-driven valuations, presents both a risk of overvaluation and an opportunity for strategic investment in innovation-focused firms. Smart entrepreneurs and investors in Oman should balance enthusiasm for tech advancements with careful risk management to navigate potential market corrections ahead.
