Global stocks hit record highs despite geopolitical tensions

Global stock markets surged to fresh record highs on Tuesday, driven by expectations of further US interest rate cuts that outweighed growing geopolitical concerns.

Data showing US producer prices fell unexpectedly in August helped push major indices, including the S&P 500 and Nasdaq Composite, to all-time highs. The US producer price index dipped 0.1 percent month-on-month, contrary to analysts’ predictions of a 0.3-percent rise, according to the Department of Labor.

Patrick O’Hare, analyst at Briefing.com, said the report eases concerns over tariffs fueling inflation in consumer prices. "This report will keep the market locked on its view that there will be at least 75 basis points of rate cuts by the Fed before the end of the year," he noted.

Wall Street also reacted to weak US jobs data that strengthened expectations the Federal Reserve will lower interest rates at its next meeting, with investors anticipating further cuts at the remaining two meetings in 2025.

The US dollar drifted lower against other major currencies, while Oracle shares jumped more than 40 percent following projections of significant revenue growth from AI-related contracts.

Asian markets followed the upward trend, with Tokyo ending at a record high and Seoul rallying as traders welcomed news that the South Korean government might not reduce the capital gains tax threshold on stocks.

In Europe, the Paris CAC 40 finished slightly higher amid political developments, with Sebastien Lecornu appointed France’s prime minister after Francois Bayrou lost a confidence vote over proposed austerity measures. Joshua Mahony, chief market analyst at Scope Markets, commented, "The failure of the austerity push signals that compromise will be needed, but for now, investors are focusing on the near-term boost to sentiment rather than the longer-term fiscal risks."

Kathleen Brooks, research director at XTB trading group, added that markets were defying seasonal trends. "Financial markets are once again defying gravity as we move through September, which is seasonally a weak month for stocks," she said.

Investors largely ignored geopolitical unrest, including Russia’s violation of Polish airspace and Israel’s strikes against Hamas in gas-rich Qatar. Oil prices posted modest gains, gas futures remained stable, and gold traded near record highs.

Elsewhere, Jakarta’s stock market recovered some losses after the dismissal of finance minister Sri Mulyani Indrawati following anti-government protests, while London fell on a nearly 13-percent drop in Primark owner ABF’s shares due to disappointing trading results.

Key Figures Tuesday (1530 GMT)

- New York Dow: down 0.6 percent at 45,454.46

- S&P 500: up 0.4 percent at 6,538.15

- Nasdaq Composite: up 0.4 percent at 21,957.35

- London FTSE 100: down 0.2 percent at 9,225.39

- Paris CAC 40: up 0.2 percent at 7,761.32

- Frankfurt DAX: down 0.4 percent at 23,632.95

- Tokyo Nikkei 225: up 0.9 percent at 43,837.67

- Hong Kong Hang Seng: up 1.0 percent at 26,200.26

- Shanghai Composite: up 0.1 percent at 3,812.22

Currency Movements

- Euro/dollar: up to $1.1723 from $1.1707

- Pound/dollar: up to $1.3547 from $1.3527

- Dollar/yen: down to 147.40 from 147.42 yen

- Euro/pound: down to 86.54 pence from 86.57 pence

Commodities

- Brent North Sea Crude: up 1.5 percent at $67.36 per barrel

- West Texas Intermediate: up 1.6 percent at $63.62 per barrel

Markets appear confident that monetary easing in the US will continue to fuel equity growth despite global uncertainties, leaving investors cautiously optimistic heading into the final months of 2025.