Stock markets worldwide struck fresh records on Friday as investor optimism over artificial intelligence (AI) and expectations of US interest rate cuts outweighed concerns over an ongoing government shutdown. While Wall Street’s major indices closed mixed, both the Dow Jones Industrial Average and the S&P 500 notched new all-time highs.
“That’s a stock market that continues to be pretty resilient to selling interest for any number of reasons, probably the most supportive of which is the expectation for multiple rate cuts before year-end,” said Patrick O’Hare of Briefing.com.
European markets show strong gains
In Europe, London’s FTSE 100 hit an all-time high, driven by bank and mining stocks. Paris’ CAC 40 also rose, approaching its March peak, while Frankfurt’s DAX 40 dipped slightly but remains near record levels.
Tech rally fueled by AI partnerships
The technology sector received a boost after Japanese conglomerate Hitachi announced a partnership with ChatGPT developer OpenAI to collaborate on AI and energy projects. Hitachi shares surged more than 10%, with other Japanese tech firms and investment giant SoftBank following suit. The move helped push Tokyo’s Nikkei 225 up 1.9%.
Hong Kong markets retreated, and Shanghai remained closed for a public holiday.
AI-driven investment lifts valuations
The surge in AI-related investment this year has elevated valuations for major tech firms, with US chipmaker Nvidia briefly surpassing a US$4 trillion valuation. Shares in Nvidia pulled back slightly on Friday. Investor enthusiasm was further bolstered after South Korea’s Samsung and SK hynix revealed a preliminary deal to supply chips and equipment for OpenAI’s Stargate project.
US economic data and government shutdown impact
Recent data indicating a slowdown in the US labor market has led the Federal Reserve to cut borrowing costs and signal potential further easing. Despite a partial government shutdown delaying key monthly jobs reports, traders largely shrugged off the political impasse.
“Markets seem to have taken this political impasse in their stride, showing little sign of stress,” said Joshua Mahony, chief market analyst at Scope Markets. “The lack of market reaction highlights how little investors believe the shutdown will matter for the medium-term outlook on growth or interest rates.”
However, US senators on Friday rejected a Republican stopgap funding measure, meaning the federal government shutdown will extend into next week.
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