Global stocks were mixed on Thursday after Wall Street benchmarks closed at three-month highs as investors cheered a report showing inflation cooled more than expected in July.
US futures rose slightly and oil prices also rose.
The US government said on Wednesday consumer inflation jumped 8.5% in July from a year earlier. But that was down from June’s four-decade high of 9.1%.
The German DAX edged down 0.2% to 13,674.98, while in Paris the CAC 40 gained 0.1% to 6,531.38. Britain’s FTSE 100 slipped 0.1% to 7,498.34. Futures on the S&P 500 and the Dow Jones Industrial Average rose 0.2%.
On Wednesday, the S&P 500 jumped 2.1% on expectations that slower inflation will mean the Federal Reserve may moderate its interest rate hikes. Tech stocks, cryptocurrencies and other investments that were among the biggest losers of the year due to the Fed’s aggressive rate hikes led the way.
The Nasdaq composite, whose many high-growth and expensive-looking stocks have been particularly vulnerable to interest rates, jumped 2.9% while Dow industrials rose 1.6%.
Asian markets also took heart. Hong Kong’s Hang Seng Index gained 2.4% on Thursday to 20,082.43, while the Shanghai Composite Index gained 1.6% to 3,281.67. The Kospi in Seoul rose 1.7% to 2,523.78. In Australia, the S&P/ASX 200 climbed 1.6% to 7,071.00. Taiwan’s Taiex rose 1.7%.
Tokyo markets were closed for a holiday.
In Thailand, the SET fell 0.2% after the country’s central bank raised its benchmark interest rate by 0.25 percentage points to 0.75% a day earlier. The Southeast Asian country’s economy has been hit hard by the pandemic, which has ravaged its all-important tourism sector.
Despite improving inflation in the United States, analysts warned that the war on rising prices was not over.
It’s of course great to see the latest inflation numbers coming in below expectations, but first one data point doesn’t trend, and we had a similar surprise earlier this year, but then the inflation has reached new multi-decade highs. the following month,” Ipek Ozkardeskaya of Swissquote Bank said in a report.
She noted that lower energy prices were the main factor moderating inflation, while food, housing and wage prices pushed higher.
Gasoline prices paid by U.S. drivers fell just below the $4 mark for the first time in more than five months, good news for consumers struggling with high prices for many other essentials .
The AAA automobile club said the national average for a gallon of regular fuel was $3.99 on Thursday. Shopping app GasBuddy reported that the national average had already fallen to $3.98 on Wednesday.
Inflation data encouraged traders to cut bets on how much the Fed will raise interest rates at its next meeting. Interest rates help determine where prices go in financial markets and higher rates tend to lower prices for everything from stocks to commodities to crypto.
Further reports this week will show how inflation is doing at the wholesale level and whether US households are further reducing their expectations for inflation ahead, an influential data point for Fed officials.
Recession worries have been mounting as the highest inflation in 40 years weighs on households and businesses around the world. Wall Street is watching closely whether the Fed can successfully rein in the economy and cool inflation without sliding into a recession.
The Federal Reserve will be receiving a few more highly anticipated reports ahead of its next interest rate announcement on September 21st. They could also change his position. These include data on hiring trends in the economy, due September 2, and the next update on consumer inflation, due September 13.
In other exchanges, the benchmark U.S. crude oil 19 cents to $92.12 a barrel in electronic trading on the New York Mercantile Exchange. It gained $1.43 to $91.93 on Wednesday.
Brent, the basis for international prices, gained 15 cents to $97.55.
The US dollar slipped to 132.62 Japanese yen from 132.93 yen on Wednesday night. The euro fell from 1.0300 USD to 1.0326 USD.
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