Stocks rise, dollar wilts as investors strap in for rate cut

Global shares rose on Friday, heading for a second week of gains ahead of a key read of US inflation that investors are confident will pave the way for a Federal Reserve rate cut next week, a likelihood that weighed on the dollar and boosted gold.

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European stock markets were propelled higher by gains in mining stocks after the price of copper hit record highs. The STOXX 600, which has gained 0.7% this week, was up 0.3% by early afternoon in Europe. US stock futures were up 0.2% to 0.3%, pointing to a modest rally on Wall Street later.

Government bonds, which have been at the centre of a lot of market action this week, traded steadily ahead of monthly US core inflation data.

BONDS IN FOCUS Japanese government bonds have led a global debt selloff this week. Yields on 10-year JGBs have hit their highest point since mid-2007, while 30-year yields have hit record highs, after the Bank of Japan gave its strongest signal yet that rates were likely to rise this month.

“If they do proceed, that would take the policy rate up to 0.75%, the highest since 1995,” said Jim Reid, a strategist at Deutsche Bank.

“That's led to a hawkish reaction among Japanese assets, with the yen strengthening 0.18% this morning against the US dollar, whilst the Nikkei is down 1.29%,” he said.