Global stock markets experienced an upswing on Thursday, largely influenced by a positive report regarding inflation in the United States, which boosted sentiment on Wall Street.
France’s CAC 40 index saw a rise of 1.4%, reaching 7,576.97 during early trading, while Germany’s DAX slightly declined by less than 0.1%. Meanwhile, Britain’s FTSE 100 climbed 0.7% to settle at 8,355.34. The futures for the S&P 500 increased by 0.2%, and the Dow Jones Industrial Average remained relatively unchanged.
In Asia, Japan’s Nikkei 225 index experienced a modest gain, rising by 0.3% to finish at 38,572.60. Data from the Bank of Japan indicated that wholesale prices surged by 3.8% in December of the previous year compared to the same time the year prior, intensifying the pressure on the central bank to consider increasing interest rates during an upcoming monetary policy meeting.
In Hong Kong, the Hang Seng index climbed by 1.2% to reach 19,522.89, while the Shanghai Composite index recorded a nearly 0.3% increase, reaching 3,236.03. In Australia, the S&P/ASX 200 saw a notable increase of 1.4%, closing at 8,327.00, while South Korea’s Kospi advanced by 1.2%, ending at 2,527.49.
Treasury yields softened after a report indicated the rising costs that U.S. households faced in December, covering essentials like eggs, gasoline, housing, and other expenses. The overall inflation rate was reported to have risen to 2.9%, up from 2.7% the previous month.
Encouragingly, the more stable underlying inflation, excluding food and energy prices that are often volatile, eased to 3.2% in December. This figure was better than economists’ expectations, who anticipated a steady figure of 3.3% for a fourth consecutive month according to FactSet.
The Federal Reserve closely monitors this core inflation rate rather than the overall one. This development is particularly reassuring in light of recent concerns over potential stagnation in inflation improvements and the difficulty in reaching the Fed’s 2% target.
Market volatility had been prevalent as traders reevaluated future interest rate decisions from the Fed regarding 2025. A reduction in rates would benefit the U.S. economy and investment values but might also reignite inflationary pressures.
Most traders do not foresee the Fed cutting its main interest rate at its upcoming meeting later this month, following three consecutive cuts since September. However, economists suggest that if further data indicates inflationary pressures are easing, this could pave the way for rate reductions later in the year, possibly as soon as March.
In early trading, benchmark U.S. crude oil prices dipped by 8 cents, settling at $78.63 per barrel, while Brent crude, the global benchmark, decreased by 11 cents to $81.92 per barrel. The U.S. dollar also weakened, trading at 155.72 Japanese yen, down from 156.47 yen, while the euro was valued at $1.0288, slightly lower than its previous rate of $1.0289.
