Global Equities Markets Rise After U.S. Inflation Data

By Dow Jones Newswires Staff

U.S. stock futures were slightly higher early in Europe and global equities markets rose after U.S. inflation data on Tuesday cemented expectations for the Federal Reserve to resume cutting interest rates in September. That powered the S&P 500 and the Nasdaq to fresh record highs in Tuesday's session with follow-through to international markets on Wednesday. The dollar continued to ease and Treasury yields edged lower, having risen a touch shortly after the CPI print.

In terms of U.S. data, focus turns to weekly jobless claims on Thursday, followed by retail sales for July and the University of Michigan preliminary consumer survey for August on Friday.

• U.S. stock futures for the S&P 500 and Dow Jones Industrial Average were flat while tech-heavy Nasdaq futures edged up around 0.2%. Intel shares climbed 5.6% for their third straight day of gains after President Trump on Monday said that he had met with CEO Lip-Bu Tan after calling for his removal last week. In early European trade, the pan-European Stoxx Europe 600 climbed 0.5% in morning trading, France's CAC 40 gained 0.4% and Germany's DAX climbed 0.7%. The U.K.'s FTSE 100 added 0.4%.
• Tracking the strong U.S. close, Japan's Nikkei Stock Average closed at another record high. Hong Kong's Hang Seng gained 2.3% and South Korea's Kospi ended up 1.1%. Still, Australian stocks fell, with the S&P/ASX 200 Benchmark Index dropping 0.6%.
• The dollar remained weaker after U.S. inflation data on Tuesday showed annual inflation held at 2.7% in July, below the 2.8% expected by economists in a WSJ survey. The main takeaway was for investors to increase the likelihood of a 25 basis-point rate cut in September and price in further cuts for subsequent months, Deutsche Bank analysts said. The data came alongside remarks from Treasury Secretary Scott Bessent who suggested the Fed should be open to a 50 basis-point rate cut in September. The DXY dollar index against a basket of major currencies was last down 0.1% to 97.996 after reaching a two-week low of 97.897 Tuesday.
• U.S. Treasury yields fell, with U.S. money markets now pricing in a 98% chance of a September rate cut, up from around 88% on Tuesday. Short-dated yields fell the most, causing the gap between short-dated and long-dated yields to steepen on Tuesday. The U.S. 10-year Treasury yield was last down 2 basis points at 4.273%, Tradeweb data show.
• In commodities, Brent crude fell 0.2% to $65.97 a barrel and WTI crude dropped 0.3% to $63.00 a barrel as investors await President Trump and Vladimir Putin's summit in Alaska on Friday. The Organization of the Petroleum Exporting Countries on Tuesday raised its expectations for global oil-demand growth next year while also lowering the supply growth forecast for producers outside the wider OPEC+ group, signaling a tighter oil outlook. But on Wednesday, the International Energy Agency said global oil markets are poised for a larger surplus than previously expected this year, with supply set to grow more than three times faster than demand. Gold futures were up 0.3% at $3,409.50 a troy ounce.

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