Global Stocks Rally on AI Boom and Rate Cut Hopes, Shrug Off Trump’s New Tariff Threats
Global stock markets continued their upward climb on Thursday, fueled by mounting optimism over artificial intelligence (AI) advancements and expectations of U.S. interest rate cuts. This bullish sentiment held firm despite fresh tariff announcements by former U.S. President Donald Trump, including a 50% levy on copper imports beginning August 1 and threats of similar tariffs on exports from Brazil and several smaller trading partners. Markets appeared largely unfazed, with Germany’s DAX and the UK’s FTSE 100 hitting record highs, while Asian markets also saw modest gains.
The restrained market response to Trump’s tariff declarations contrasts with sharper reactions earlier in the year. Analysts suggest investors are becoming desensitized to Trump’s aggressive trade rhetoric, viewing it as flexible and potentially short-lived. SMBC’s Jeff Ng noted that such announcements often begin with dramatic figures but remain subject to change or reversal. European and Asian indices rose, though U.S. Nasdaq futures took a slight dip after a tech-driven record high the previous day.
Strong earnings from Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, reinforced positive sentiment in tech stocks. TSMC’s strong performance came on the heels of Nvidia reaching an unprecedented $4 trillion market valuation—further evidence of AI’s transformative impact on financial markets. This trend boosted tech stocks in Korea and Japan as well, continuing to drive momentum in global equities.
The Federal Reserve also played a role in supporting markets, with recently released meeting minutes revealing that most policymakers anticipate rate cuts before the year ends. Economists like Mohit Kumar of Jefferies interpret this as a signal that the Fed prioritizes employment concerns over inflation, especially if labor market data weakens over the summer. The prospect of monetary easing helped investors look past near-term risks posed by tariffs or inflation shocks.
On the currency front, the U.S. dollar dipped slightly against the euro and pound but held firm against the yen after a tariff-related surge earlier in the week. However, Brazil’s real slumped to a one-month low following Trump’s threats, triggering volatility and the unwinding of carry trades. Meanwhile, bitcoin hovered near record highs at over $111,000, and commodities saw little movement—crude oil prices remained stable, and gold edged slightly higher, maintaining its role as a safe haven amid uncertain geopolitics.
Source: Reuters