SINGAPORE/LONDON: Global shares rose on Friday, along with the dollar, as investors clung to the view that US interest rates may fall further this year, while gold futures rallied on a report of duties on US imports of bullion bars.
An index of world stocks traded near record highs, shrugging off weakness on Wall Street overnight and in Europe, shares got a lift from a series of robust earnings and from optimism that the hefty US tariffs that kicked in on Thursday would be subject to negotiation.
The outlook for monetary policy in the United States, a linchpin for global markets, has become even more open to question due to a series of changes at the Federal Reserve, where policymakers are divided on the impact of inflation and the central bank's leadership is shifting.
US President Donald Trump said on Thursday he would nominate Council of Economic Advisers Chairman Stephen Miran to fill a vacant seat at the Fed for a few months while the White House seeks a permanent addition to the central bank's governing board and continues its search for a new chair.
Miran holds similar views to Trump, who has berated Chair Jerome Powell for being "too late" in cutting interest rates, even though growth is holding up and inflation is ticking higher.
"It locks in a vote for rate cuts at all the meetings between now and the end of January", said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.
"Markets are already travelling with a very strong expectation that there will be a rate cut", he added. "Though there's a question mark over whether he'll succeed in ratification in time for the September meeting".
The MSCI All-Country index was up 0.1 per cent on the day, just below record highs struck two weeks ago and was heading for a 2 per cent rise this week, its best performance since mid-June.
Europe's STOXX 600 was up 0.2 per cent. Zurich's SMI index, which on Thursday shrugged off Switzerland's 39 per cent US tariff coming into effect, eased 0.14 per cent.
The market is also digesting a Bloomberg News report that Fed Governor Christopher Waller is the top candidate to replace Powell, whose term ends on May 15, 2026.
"The effective shock (from tariffs) is there. So the question now is: How is it going to impact the economy and the data; and when? Because up to now, up to now, let's be fair, it's been less severe than most have anticipated", Lombard Odier economist Samy Chaar said.
Overall tariffs may be lower than many had feared back in April, but they are at their highest in at least a century. — Reuters
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