Global Stocks Poised to Surge Amid Earnings Growth and AI Frenzy

Global stocks are poised for their strongest weekly gain since May, driven by robust earnings growth and enthusiasm over artificial intelligence (AI). The MSCI's All-World index has risen 2.3% this week, with shares in drugmakers and technology companies lifting Europe's STOXX 600 by 0.2% on Friday.

Investors are eagerly awaiting the US payrolls report due later today, which could prove crucial for the interest-rate outlook. Forecasts suggest a rise of 80,000 jobs for July, with the unemployment rate expected to hold steady at 4.2%. Money markets show traders are split over whether or not the Federal Reserve will raise rates next month.

JPMorgan's chief US economist Michael Feroli noted that 'good news is bad news' for stocks in this scenario, meaning a strong jobs number could reinforce higher-for-longer pricing and put upward pressure on rates. Conversely, equities may respond positively to a soft payrolls report as yields ease and policy expectations shift toward a dovish path.