World equities hit record highs

An index of global equity markets rose to a record high for the second straight session on Wednesday, partly underpinned by bullish sentiment on Wall Street as investors positioned for a likely interest rate cut from the US Federal Reserve.

The MSCI All Country World Index rose as high as 954.21, breaking another record a day after reaching a new peak. It was last up 0.60 per cent at 952.83.

The benchmark S&P 500 and the Nasdaq Composite Index scored record highs for the second straight session, while the Dow Jones Industrial Average finished stronger. Among the S&P 500's 11 sectors, materials, healthcare and consumer discretionary stocks led gains while communication services, consumer staples and technology shares lost ground.

The Dow gained 1.0 per cent, the S&P 500 rose 0.32 per cent and the Nasdaq Composite added 0.14 per cent, reports Reuters.

European stocks advanced 0.54 per cent, almost reaching two-week highs, while Japan's Nikkei rose for the sixth straight day, breaking the 43,000 level for the first time and hitting a fresh high. MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.54 per cent.

"It's largely just a continuation from what we saw yesterday, with inflation obviously being the driver of the rally," said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions in Boston.

US inflation readings, which on Tuesday showed the consumer price index rising slightly less than forecast in the year through July, indicated President Donald Trump's import tariffs had yet to filter down to consumer prices.

That helped Wall Street scale new heights, supported by the increasing likelihood that the Federal Reserve will cut interest rates next month.

"It's hard to really glean any sort of trends from that report other than maybe just some noise. I think on the whole, it's better than feared and that was enough to kind of spur expectations that the Fed has kind of the green light to go in September," Melson added.

Traders are pricing in a nearly 94 per cent chance of a Fed cut in September, up from about 57 per cent a month ago, according to the CME FedWatch tool.

Also boosting market optimism was Trump's signing of an executive order pausing triple-digit levies on Chinese imports for another 90 days.

Treasury Secretary Scott Bessent said he thought an aggressive half-point cut was possible given recent Bureau of Labor Statistics revisions showing job growth had slowed to a crawl in May, June and July, though initial estimates had shown stronger employment growth that Fed officials used to argue that the labour market remained in good shape.

US Treasury bond prices rose across the board, with the 2-year note yield, which typically moves in step with interest rate expectations for the Fed, dropping 5.2 basis points to 3.679 per cent. The benchmark US 10-year note yield fell 5.5 basis points to 4.238 per cent.

The dollar weakened 0.32 per cent to 147.36 against the Japanese yen and was down 0.12 per cent to 0.805 against the Swiss franc. The euro was up 0.27 per cent at $1.1704.

The dollar index, which tracks the greenback against a basket of major peers, fell for a second day to its lowest in two weeks. It was last down 0.25 per cent at 97.79.

Oil prices fell ahead of Trump's meeting with Russian President Vladimir Putin.

Brent crude futures settled down 0.74 per cent to $65.63 a barrel, while US West Texas Intermediate crude futures fell 0.82 per cent to settle at $62.65 a barrel.

Spot gold rose 0.34 per cent to $3,356.49 an ounce.