The global markets have rallied in response to the Federal Reserve’s decision to cut interest rates. Meanwhile, Japan’s central bank has adopted a more hawkish stance, and the quadruple witching date has led to increased volatility.

Global equities are currently in a “risk-on” mode following the U.S. Federal Reserve’s quarter-point rate cut, which has led to a notable improvement in investor sentiment. Nasdaq futures are trading with stability after reaching record-high closes, and corporate news is providing additional support, with FedEx reporting strong results. However, a less positive earnings report from Lennar is exerting pressure on the housing sector. Today’s quadruple witching, the simultaneous expiration of stock options and futures, is expected to increase trading volume and intraday volatility. The market is also monitoring the potential for a call between U.S. President Trump and Chinese President Xi Jinping, which could impact technology stocks.

In Europe, markets are poised for a positive weekly close. This is being driven by the Federal Reserve’s dovish move and a surprising decline in Germany’s producer prices, which has strengthened the case for future European Central Bank rate cuts. The DAX is seeing modest gains, but like the U.S., is also experiencing volatility due to quadruple witching.

Meanwhile, the Bank of Japan has taken a hawkish shift in its policy, which has caught markets by surprise. While maintaining interest rates, the central bank unveiled plans to commence the sale of its holdings in exchange-traded funds (ETFs) and real estate investment trusts (J-REITs), signifying a transition towards balance-sheet normalization. This decision, in conjunction with ongoing inflation above target levels, has led to a moderation in gains on the Nikkei, which has softened from its recent highs, while the broader Asian market is poised for a robust week.