Global shares were mixed Thursday after Wall Street benchmarks closed at three-month highs as investors cheered a report showing inflation cooled more than expected in July.
U.S. futures edged higher and oil prices also advanced.
The U.S. government said Wednesday that consumer inflation jumped 8.5% in July from a year earlier. But that was down from June’s four-decade high of 9.1%.
Germany’s DAX edged 0.2% lower, to 13,674.98, while in Paris the CAC 40 added 0.1% to 6,531.38. Britain’s FTSE 100 slipped 0.1% to 7,498.34. The futures for the S&P 500 and the Dow Jones Industrial Average were 0.2% higher.
On Wednesday, the S&P 500 surged 2.1% on expectations that slower inflation will mean the Federal Reserve may moderate its interest rates hikes. Technology stocks, cryptocurrencies and other investments that have been among the year’s biggest losers 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 the Dow industrials advanced 1.6%.
Asian markets also took heart. Hong Kong’s Hang Seng index added 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 was up 1.7%.
Tokyo’s markets were closed for a holiday.
In Thailand, the SET gave up 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 hard hit by the pandemic, which ravaged its all-important tourism sector.
Despite the improved U.S. inflation reading, analysts warned the war on higher prices is not over.
“It’s of course great to see the latest inflation print come lower-than-expected, but first, one data point doesn’t make a trend, and we had a similar surprise earlier this year, but then inflation spiked to fresh multi-decade highs the following month,” Ipek Ozkardeskaya of Swissquote Bank said in a report.
She noted that softer energy prices were the main factor tempering inflation, while prices for food, housing and wages pushed higher.
Gasoline prices paid by American drivers dipped to just under the USD 4 mark for the first time in more than five months — good news for consumers who are struggling with high prices for many other essentials.
The AAA auto club said the national average for a gallon of regular was USD 3.99 on Thursday. The shopping app GasBuddy reported that the national average was already down to $3.98 on Wednesday.
The inflation data encouraged traders to scale back bets for how much the Fed will raise interest rates at its next meeting. Interest rates help set where prices go across financial markets and higher rates tend to pull down prices for everything from stocks to commodities to crypto.
Other reports this week will show how inflation is doing at the wholesale level and whether U.S. households are still ratcheting down their expectations for coming inflation, an influential data point for Fed officials.
Recession worries have built as the highest inflation in 40 years squeezes households and corporations around the world. Wall Street is closely watching to see if the Fed can succeed in hitting the brakes on the economy and cooling inflation without veering into a recession.
The Federal Reserve will get a few more highly anticipated reports before its next announcement on interest rates, on Sept. 21. They could also alter its stance. Those include data on hiring trends across the economy, due Sept. 2, and the next update on consumer inflation, coming on Sept. 13.
In other trading, U.S. benchmark crude oil 19 cents to USD 92.12 per barrel in electronic trading on the New York Mercantile Exchange. It gained USD 1.43 to USD 91.93 on Wednesday.
Brent crude, the basis for international pricing, picked up 15 cents to USD 97.55.
The U.S. dollar slipped to 132.62 Japanese yen from 132.93 yen late Wednesday. The euro rose to USD 1.0326 from USD 1.0300.