By Chris Prentice and Amanda Cooper
NEW YORK/LONDON (Reuters) -Global equities rose on Friday as investors clung to the view that U.S. interest rates may fall further this year, with European shares posting their biggest weekly gain in 12 weeks on strength from banking stocks.
U.S. gold futures hit a record high on uncertainty over whether country-specific U.S. import tariffs would apply to the most commonly traded sizes of gold bars.
Investors watched for signs of a potential Russia-Ukraine ceasefire after a report that the United States and Russia are aiming to reach a deal to halt the war in Ukraine.
President Donald Trump on Thursday moved to reshape the U.S. central bank, nominating Council of Economic Advisers’ Chair Stephen Miran for a short-term board seat after Adriana Kugler’s abrupt exit.
Miran holds similar views to Trump, who has berated Powell for being “too late” in cutting 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.”
Bloomberg News reported that Fed Governor Christopher Waller was emerging as a leading contender for the role of Fed chair.
MSCI’s gauge of stocks across the globe rose 0.52%. On Wall Street, the Dow Jones Industrial Average rose 0.47% to 44,175.61, the S&P 500 added 0.78% to 6,389.45 and the Nasdaq Composite climbed 0.98% to 21,450.02.
The pan-European STOXX 600 index rose 0.2% to finish the week up more than 2% as largely upbeat corporate results and firming bets of more Fed rate cuts lifted prices from last week’s five-week lows.
Shares also saw a lift from optimism that hefty U.S. tariffs that kicked in on Thursday would be subject to negotiation. Zurich’s SMI index gained as traders continued to shrug off Switzerland’s 39% U.S. tariff coming into effect.
“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, 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.
