Global stock markets saw gains on Tuesday as investors responded to growing expectations of a Federal Reserve interest rate cut in December. The positive sentiment fueled a surge in technology stocks, highlighting optimism about continued growth in the AI-driven tech sector.

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Rising Optimism for a Fed Rate Cut

Federal Reserve officials have signaled that a quarter-point reduction in interest rates could be on the horizon, boosting investor confidence. Fed Governor Christopher Waller indicated that U.S. job market data showed weakness sufficient to justify a rate cut, echoing remarks from New York Fed President John Williams that a December cut is possible.

According to CME’s FedWatch Tool, markets are now pricing in an 81% chance of a quarter-point rate cut, up sharply from 42.4% just a week ago. The Fed is scheduled to meet on December 9–10, 2025.

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Technology Stocks Lead Market Rally

Investor enthusiasm was particularly strong in the technology sector. Alphabet (GOOGL), the parent company of Google, is approaching a $4 trillion valuation, set to become only the fourth company globally to achieve this milestone. The rally reflects optimism about AI-driven growth and innovation across tech giants, with companies like Meta exploring partnerships to integrate AI chips into data centers.

The MSCI All-World Index rose for a third consecutive day, recovering from last week’s two-month lows. European stocks gained modestly, while U.S. stock futures edged closer to positive territory, highlighting a global rebound in equity markets.

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Dollar and Currency Movements

Despite the surge in stocks, the U.S. dollar remained steady against most major currencies. It has gained against all major currencies this month, except the offshore Chinese yuan, which strengthened by around 0.5%.

Michael Brown, a senior research strategist at Pepperstone, noted:
“The FX market continues to focus on growth differentials. With the U.S. economy outperforming peers, the dollar is likely to remain strong into 2026.”

The Japanese yen has remained near a 10-month low, causing concern among Tokyo officials about possible intervention to support the currency. Political tensions between Tokyo and Beijing, related to comments by Japan’s Prime Minister Sanae Takaichi on Taiwan, have added pressure to the yen.

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Commodity Market Movements

Commodities experienced mixed results amid the market rally:

• Brent crude futures fell 0.8% to $62.88 per barrel, reflecting concerns about potential oversupply in 2026.
• Gold prices dipped 0.6% to $4,115 an ounce, though the metal is still on track for a near 3% gain in November.

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U.S. Market Schedule

Investors should note that U.S. stock and bond markets will be closed on Thursday for Thanksgiving and will operate for a half-day on Friday. Market participants are expected to monitor incoming economic data on retail sales, wholesale inflation, home prices, and consumer confidence, although these releases may have limited influence on the Fed’s decision.

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Conclusion

Rising expectations of a Federal Reserve rate cut in December have provided a boost to global stocks, particularly in the technology sector. While the U.S. dollar remains largely steady, geopolitical tensions and currency volatility, especially involving the Japanese yen, remain key factors for investors.

With Alphabet nearing a historic $4 trillion valuation and AI innovation driving market optimism, the outlook for equities and commodities in late 2025 remains cautiously positive.