The World’s Stocks Could Reach a Record High – Europe Market Wrap

A worldwide stock index approached a record high as traders became increasingly confident that the Fed was on the verge of cutting interest rates for the first time in more than four years.

MSCI’s All Country World index rose 0.1%, closing near its all-time high on July 16. Europe’s Stoxx 600 index rose 0.5% after Deutsche Bank forecasted a jump in Q3 earnings. US futures edged higher.

Growing expectations for US rate cuts have erased the market drop at the beginning of August, which was caused by recession fears in the US and a rapid unwinding of the Yen carry trade. Traders are back to pricing in 100 bps of easing this year, following payroll revisions and Fed minutes that supported the case for lower rates. After four days of decreases, 10-year Treasury rates increased two basis points to 3.83% on Thursday. The Dollar remained flat.

French services increased at their strongest rate in more than two years, but Germany’s composite PMI added to signs that the country’s recovery has stalled. Britain’s private sector companies posted their greatest growth in four months, despite easing price pressures.