Global stocks have surged, extending momentum from the previous session when data showed an easing in core US inflation that raised expectations for Federal Reserve cuts and sent global bond yields lower.

Strong results from blue-chip companies across the world added fuel to the equities rally and supported risk sentiment across a range of asset classes.

Richemont, the owner of Cartier jewellery, jumped 17 per cent, putting it on track for its best day in 17 years, after its results exceeded analyst expectations, driving up the wider European luxury sector.

Earlier on Thursday, chip maker Taiwan Semiconductor Manufacturing Co, reported record quarterly profit – albeit in line with expectations – and rose 3.7 per cent, offering support to other chip firms. Overnight JPMorgan , BlackRock and Goldman Sachs delivered robust earnings.

That all left Europe’s STOXX 600 up 0.65 per cent at its highest in a month and within two per cent of September’s record.

Asia ex-Japan shares gained 1.33 per cent and Japan’s benchmark Nikkei 225 added 0.3 per cent, while on Wall Street on Wednesday all three major indices registered their biggest daily percentage gains since November 6 – the day after the US presidential election.

Earnings aside, the rally in risk assets stemmed from Wednesday’s benign US inflation report that showed the consumer price index rose in line with expectations at an annual rate of 2.9 per cent in December, while core inflation, which excludes food and energy prices, rose by 3.2 per cent, below forecasts for 3.3 per cent.

The inflation report led traders to price in a 50 per cent chance of a second 25-basis point Fed rate cut in 2025.

Markets gave the data greater credence because other releases painted a similar picture.

Numbers released on Tuesday showed US producer prices increased moderately in December.

Wednesday’s softer British inflation print also offered support.

“Wherever you were around the world yesterday, I’m sure you could hear the huge collective sigh of relief from financial markets as downside inflation surprises from the US and the UK allowed us to step back from the recent one-way trade on inflation and bond yields,” said Jim Reid global head of macro research at Deutsche Bank in a morning note to clients.

The benchmark 10-year Treasury yield fell 13.5 basis points in the aftermath of the data, its biggest daily fall since mid November.

It was steady on Thursday at 4.66 per cent, having nudged above 4.8 per cent at the start of the week.

Moves were even larger in Britain, whose government bonds have been some of the biggest victims of the recent global sell-off.

The 10-year gilt yield fell 15 bps Wednesday, its most since late 2023.

The data also offered support to other currencies against the dollar.

On Thursday, Japan’s yen hit its strongest in nearly a month on the dollar and euro after comments from governor Kazuo Ueda prompted traders to price in a more than 70 per cent chance the Bank of Japan will raise interest rates next week.

The dollar was last down 0.4 per cent on the Japanese currency at 155.8 yen.

The euro eased by a similar amount at 160.

Other currencies were quiet, but the pound dropped 0.3 per cent on both the dollar and euro after British GDP rose just 0.1 per cent in December, below expectations.

In energy markets, Brent crude futures slipped 0.2 per cent to $US81.88 a barrel, as investors processed the ceasefire accord between Israel and Hamas.

Spot gold hit a one month high of $US2,704.9 an ounce after the shift in interest rate expectations.

This post was originally published on Michael West.