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Global stock markets mostly rose Thursday as investors digested highly anticipated data showing another softening of US consumer inflation, potentially giving the Federal Reserve room to slow its interest rate hikes. news online
Equities also found support on growing optimism over China’s economic reopening.
Europe’s main bourses were higher in mid-afternoon trading.
In Paris, the CAC 40 rose past 7,000 points for the first time since a few days before Russia’s invasion of Ukraine.
On Wall Street, shares were down however after the S&P 500 and Nasdaq soared Wednesday thanks to demand for recently beaten-down tech firms.
After inflation soared to decades-high levels in the last year, investors had been keenly awaiting the latest US consumer price index (CPI) reading for indications about the Fed’s next move.
It showed that consumer inflation slipped in December to the lowest level in over a year — rising 6.5 percent from a year ago, the smallest increase since October 2021, according to the Labor Department.
The annual figure was also down from November’s 7.1 percent spike.
Between November and December, CPI dipped 0.1 percent, the first time in around two years it logged a month-on-month contraction.
Although generally positive, the report showed that services inflation remained above the Fed’s target rate.
“From a headline standpoint, the Consumer Price Index was pretty much on the mark with the market’s hopeful expectations,” said Patrick J. O’Hare from Briefing.com.
Srijan Katyal, global head of strategy and trading services at the brokerage ADSS, said the retreat from a 40-year high above nine percent was “certainly welcome news for both the markets and consumers”.
“The annual CPI decreasing for a second consecutive month to reach 6.5 percent shows that the Fed’s aggressive monetary policy continues to slow inflation.”
The Fed has raised interest rates seven times in the past year to try to cool demand and rein in surging prices.
Fed pivot coming
Stock market gains were also helped by comments from Fed official Susan Collins backing a quarter-point US rate hike at the bank’s next policy decision on February 1.
Collins, who is head of the Boston Fed, told The New York Times that slowing the pace of increases would give policymakers a chance to see how their efforts to rein in inflation were working.
Investors are also keeping tabs on developments in China as it emerges from years of strict zero-Covid containment measures.
While the long-term outlook remains positive, soaring infections across the country are leading to worries about the effect on economic activity.
World oil prices also jumped on expectations of rebounding Chinese energy demand.
“Energy traders should get used to seeing oil prices head higher,” said Oanda analyst Edward Moya. “Oil demand is coming back and expectations are high that China’s demand is about to skyrocket.”
Several oil experts have tipped prices to hit $100 a barrel this year, with top hedge fund manager Pierre Andurand predicting last week that it could pass $140.
Key figures around 1445 GMT
London – FTSE 100: UP 0.5 percent at 7,760.15 points
Frankfurt – DAX: UP 0.2 percent at 14,975.29
Paris – CAC 40: UP 0.5 percent at 6,957.95
EURO STOXX 50: UP 0.2 percent at 4,110.45
New York – Dow: DOWN 0.4 percent at 33,848.41
Tokyo – Nikkei 225: FLAT at 26,449.82 (close)
Hong Kong – Hang Seng Index: UP 0.4 percent at 21,514.10 (close)
Shanghai – Composite: UP 0.1 percent at 3,163.45 (close)
Euro/dollar: UP at $1.0776 from $1.0757 on Wednesday
Dollar/yen: DOWN at 130.67 yen from 132.45 yen
Pound/dollar: DOWN at $1.2106 from $1.2146
Euro/pound: UP at 88.93 pence from 88.56 pence
Brent North Sea crude: UP 1.8 percent at $84.17 a barrel
West Texas Intermediate: UP 1.3 percent at $78.73 a barrel
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