Post by : Rameen Ariff

Global stock markets reached new record highs on Friday, fueled by investor optimism around artificial intelligence (AI) and expectations of potential US interest rate cuts. The upbeat sentiment outweighed concerns over the ongoing partial government shutdown in the United States.

On Wall Street, major indices showed mixed results by the end of trading, but the Dow Jones and S&P 500 achieved fresh record levels. “The stock market remains resilient, largely supported by expectations of multiple rate cuts before the year ends,” said Patrick O’Hare of Briefing.com.

European markets also saw gains, with London’s FTSE 100 reaching an all-time high, driven by strong performances in banking and mining stocks. Paris’ CAC 40 rose close to its March peak, while Frankfurt’s DAX 40 remained near record levels despite a slight dip.

Tech stocks worldwide received a boost following a collaboration announcement between Japan’s Hitachi and AI leader OpenAI, focusing on AI and energy projects. Hitachi shares surged over 10%, with other Japanese tech companies and investment giant SoftBank following the trend, helping Tokyo’s Nikkei jump 1.9%. Meanwhile, Hong Kong markets retreated, and Shanghai remained closed for a holiday.

The global AI investment surge this year has propelled valuations of major companies, with US chipmaker Nvidia surpassing a market value of $4 trillion, pushing stock markets to record highs. Nvidia shares slightly fell on Friday. South Korean semiconductor leaders Samsung and SK hynix also announced a preliminary deal with OpenAI to supply chips and equipment for its Stargate project, adding further momentum.

Positive investor sentiment has been strengthened by recent data indicating a slowdown in the US labor market, prompting the Federal Reserve to cut borrowing costs and signal potential additional easing. Traders largely ignored the federal government shutdown, which has closed some services and delayed key jobs data. Analysts suggest the shutdown is unlikely to change the Fed’s expected second rate cut this month.

“Markets have largely taken the political deadlock in stride, showing little stress,” said Joshua Mahony, chief market analyst at Scope Markets. He added, “Investors believe the shutdown will not significantly impact growth or interest rates in the medium term.”

Despite this, US senators rejected a Republican stopgap funding bill on Friday, extending the federal government shutdown into next week.

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