Finance
Stocks buoyed by rate cut expectations, sterling choppy on UK budget surprise
Published by Global Banking and Finance Review
Posted on November 26, 2025
4 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on November 26, 2025
4 min readLast updated: January 20, 2026
Stocks rose as rate cut hopes grew, while sterling was volatile due to UK budget surprises. Tech stocks led Wall Street gains.
By Chuck Mikolajczak
NEW YORK (Reuters) -Global stocks rallied for a fourth straight day on Wednesday as expectations for a U.S. Federal Reserve rate cut remained elevated, while sterling was whipsawed by Britain's fiscal watchdog inadvertently publishing new forecasts before a UK budget release.
On Wall Street, U.S. stocks closed higher, led by gains in the tech sector that rose about 1.5%, in part due to a jump of nearly 7% in Dell Technologies after its quarterly results and outlook.
Equities have rallied since Friday, when expectations for a December rate cut from the Federal Reserve jumped after New York Fed President John Williams said interest rates can fall in the near term even as other policymakers insisted borrowing costs should remain steady for now.
Those expectations were buttressed by comments this week from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller in support of a December cut.
"We've seen some dovish comments from the Fed, particularly the New York Fed ... which I think are signaling a potential cut next month, and I think that that's what's been driving the markets lately," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
Economic data on Wednesday showed weekly initial jobless claims dropped 6,000 to a seasonally adjusted 216,000 for the week ended November 22, the lowest level since April and below the 225,000 estimate of economists polled by Reuters.
The Dow Jones Industrial Average rose 314.67 points, or 0.67%, to 47,427.12, the S&P 500 gained 46.73 points, or 0.69%, to 6,812.61 and the Nasdaq Composite climbed 189.10 points, or 0.82%, to 23,214.69.
Expectations for a 25 basis point cut from the Fed held at more than 80%, according to CME's FedWatch Tool, well above the 30.1% from a week ago.
U.S. markets will be closed on Thursday for the Thanksgiving holiday and will have an abbreviated session on Friday.
MSCI's gauge of stocks across the globe jumped 9.31 points, or 0.94%, to 1,000.37, and was on pace for its fourth straight session of gains, its longest streak in a month. The MSCI index has gained 3.3% over the four-day rally, its biggest four-day percentage gain since mid-May.
The pan-European STOXX 600 index closed up 1.09% to record its biggest daily percentage gain in two weeks.
The dollar index, which measures the greenback against a basket of currencies, declined 0.26% to 99.59, with the euro up 0.22% at $1.1594.
Sterling strengthened 0.52% to $1.3234. The currency had swung between a gain of 0.57% and a decline of 0.34% on the day in the wake of the UK budget confusion as the Office for Budget Responsibility's Economic and Fiscal Outlook was released early.
British finance minister Rachel Reeves then announced a big tax-raising budget that will take more money from workers, people saving for a pension and from investors to give herself greater room to meet her deficit-reduction targets.
Ten-year gilt yields were last down 7 basis points at 4.426%.
The Japanese yen weakened 0.25% against the greenback to 156.45 per dollar even as sources told Reuters the Bank of Japan is preparing markets for a possible interest rate hike as soon as next month as it may take a more consistent rate hike path to alter the trajectory of the currency.
The yield on benchmark U.S. 10-year notes shed 1 basis point to 3.992% as the rally in UK government bonds helped limit the downside for longer-dated U.S. debt after stronger-than-expected economic data fueled selling.
The 2-year note yield rose 2 basis points to 3.479%.
(Additional reporting by Stephen Culp in New York, Johann M Cherian and Pranav Kashyap in Bengaluru, Gregor Stuart Hunter in Singapore, Joice Alves and Marc Jones in London; Editing by Conor Humphries, Nick Zieminski, Will Dunham and Philippa Fletcher)
A rate cut refers to a decision by a central bank to lower the interest rate, making borrowing cheaper and stimulating economic activity.
Sterling is the official currency of the United Kingdom, often referred to as the British pound, and is used in international trade and finance.
Economic growth is an increase in the production of goods and services in an economy over a period, typically measured by GDP.
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