Global stock markets surged on Friday, driven by expectations of rate cuts in Europe, while U.S. investors focused on attractive valuations amid rising geopolitical tensions. European exchanges closed positively, supported by declining private sector activity and calls for economic reforms. In the U.S., major indices also rose, although concerns over escalating conflict in Ukraine persisted. Safe-haven assets like gold and cryptocurrencies gained traction, with Bitcoin nearing $100,000, amid heightened demand for bonds and energy prices climbing.
Stock Markets Rally Amid Geopolitical Tensions
Global stock markets experienced a notable upswing on Friday, buoyed by expectations of a more significant rate cut than anticipated in Europe. Meanwhile, investors in the United States turned their focus to attractive valuations, as geopolitical risks led to a surge in safe-haven assets.
In Europe, major exchanges closed positively with the Paris stock exchange climbing 0.58%, Frankfurt increasing by 0.92%, London rising by 1.38%, and Milan gaining 0.60%. The Swiss Market Index (SMI) also saw an uptick of 1.08%.
Economic Indicators Influence Market Trends
Interestingly, European stock markets found support from a drop in private sector activity within the eurozone, which fell to 48.1 in November from 50 in October, according to the PMI Flash index released by S&P Global. Analyst Kathleen Brooks from XTB highlighted that this data heightened the chances of additional rate cuts from the European Central Bank (ECB) next year.
The positive trend on major European exchanges was further reinforced by comments from German Finance Minister Jörg Kukies, who emphasized the need for Germany to enhance its skilled labor potential, deregulation, tax incentives for investment and research, and address energy costs.
On Wall Street, the Dow Jones Industrial Average surged by 0.97%, achieving a record close at 44,296 points. The Nasdaq and broader S&P 500 also rose, gaining 0.16% and 0.35%, respectively. Art Hogan from B. Riley Wealth Management remarked that the market appears robust and has established a calm trajectory toward upward momentum.
Investor sentiment was also influenced by the latest PMI index from S&P Global, indicating that U.S. economic activity reached its highest level in two and a half years in November. However, concerns regarding escalating geopolitical tensions remain at the forefront of investor minds, particularly following remarks from Russian President Vladimir Putin about the conflict in Ukraine evolving into a “global” war.
This alarming rhetoric coincided with a day of heightened tensions, including Russia’s launch of an intermediate-range ballistic missile on Ukrainian territory, capable of carrying a nuclear warhead.
In the energy sector, the Dutch TTF, a key natural gas benchmark in Europe, approached €50 per megawatt-hour (MWh), hitting €49.55, a peak not seen in over a year. This spike followed the suspension of gas deliveries from Gazprom to Austria, highlighting the mounting tensions in the region. Oil prices also climbed, with Brent crude for January delivery rising by 1.27% to $75.17, while West Texas Intermediate (WTI) crude jumped 1.63% to $71.24.
In foreign exchange markets, the Russian ruble fell to its lowest value against the dollar since March 2022, trading at 102.58 rubles per dollar, as reported by the Central Bank of Russia.
Safe-Haven Assets and Cryptocurrency Surge
Amid the geopolitical uncertainties, safe-haven assets like gold gained traction, increasing by 1.75% to $2,716.33 per ounce, surpassing the critical $2,700 threshold. Gold’s price has surged over 5% since the beginning of the week. Patrick Munnelly from Tickmill Group noted that the risk of escalation not only drove investors towards safe-haven assets but also pushed European gas prices to a yearly high and bolstered demand for German debt.
The bond market reflected this sentiment, with yields on ten-year German government bonds dropping to 2.24%, down from 2.32% the previous day, signifying increased investor interest.
In the realm of cryptocurrencies, Bitcoin approached a new milestone, crossing the $99,000 mark and reaching $99,149.56 by 22:15 GMT. The anticipated resignation of U.S. SEC chairman Gary Gensler, viewed as a significant adversary to crypto assets, provided a notable boost to Bitcoin’s price. Stocks of cryptocurrency-related companies also saw gains, with Riot Platforms rising by 4.68%, Coinbase by 3.19%, and MicroStrategy by 6.19%.