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Stocks Push Higher on Reassuring US Inflation Data

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Stocks mostly pushed higher on Tuesday, boosted by encouraging data and earnings reports suggesting inflation may be slowing and resilience in the US economy. online news

Moves by China to shore up its economy also boosted sentiment, while the dollar continued to fall back following the inflation data which further raised hopes of a slowdown in the hiking of US interest rates.

Stocks have taken a beating in recent months as the US Federal Reserve and other central banks have aggressively hiked interest rates, and on statements by policymakers who say they are ready to push economies into recession if necessary to bring inflation down.

But stocks rallied last week as data suggested that US inflation may be moderating and policymakers have indicated that the pace of interest rate hikes may slow even if interest rates need to rise further.

Data released Tuesday suggested US inflation may be slowing.

Manufacturing prices rose just 0.2 percent month-on-month in October, and were flat when volatile food and energy prices are excluded. On an annual measure, core manufacturing prices fell to 6.7 percent from 7.2 percent in September.

“The key takeaway from the report is the clear signs of disinflation embedded in it,” said Patrick O’Hare at Briefing.com.

The data “will feed the market’s newfound belief that the Fed is apt to take a less aggressive rate-hike approach and ultimately settle on a lower terminal rate than previously thought,” he added.

Wall Street stocks snapped higher at the start of trading and remained there during morning trading.

“While Fed officials have been at pains to push back on the narrative that inflation may well have peaked the numbers appear to be speaking for themselves,” said market analyst Michael Hewson at CMC Markets.

“Fed officials may well be urging caution but investors already appear to have made up their minds,” he added.

Meanwhile, a key US manufacturing survey released on Tuesday turned positive when analysts had expected it to continue pointing to a contraction, suggesting resilience in the economy despite the Fed interest rate hikes.

Meanwhile, top retailer Walmart, a bellwether for shifts in consumer activity, also posted better-than-expected third quarter results with rising sales volumes and increased earnings.

A $20 billion share buyback helped send its shares rocketing 7.4 percent higher.

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European stocks were mostly higher in afternoon trading, with an improvement in German investor sentiment helping eurozone stocks, while London’s blue-chip FTSE 100 index was penalised by the strong pound.

China’s move to ease some of its strict Covid-19 restrictions and provide much-needed support to its beleaguered property sector helped support sentiment in Asian trading.

Hong Kong rose more than four percent and Shanghai also closed in positive territory.

Optimism for a thawing in relations between Washington and Beijing was boosted after Biden and Xi’s extended talks on the sidelines of the G20 summit in Indonesia.

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While there remain differences on hot-potato issues such as Taiwan, the two did find common ground on the Ukraine conflict, climate and the need to avoid another Cold War.

Oil prices initially slid as the International Energy Agency once again cut its demand growth forecasts given the fragile state of the global economy, but the drop in the dollar helped them later turn positive.

Key figures around 15:30 GMT

New York – Dow: UP 0.7 percent at 33,776.67 points

EURO STOXX 50: UP 0.7 percent at 3,915.09

London – FTSE 100: DOWN 0.2 percent at 7,369.44 (close)

Frankfurt – DAX: UP 0.5 percent at 14,378.51 (close)

Paris – CAC 40: UP 0.5 percent at 6,641.66 (close)

Tokyo – Nikkei 225: UP 0.1 percent at 27,990.17 (close)

Hong Kong – Hang Seng Index: UP 4.1 percent at 18,343.12 (close)

Shanghai – Composite: UP 1.6 percent at 3,134.08 (close)

Euro/dollar: UP at $1.081 from $1.0331 on Monday

Pound/dollar: UP at $1.1884 from $1.1751

Dollar/yen: DOWN at 139.26 yen from 139.90 yen

Euro/pound: DOWN at 87.35 pence from 87.89 pence

West Texas Intermediate: UP 0.2 percent at $86.08 per barrel

Brent North Sea crude: UP 0.2 percent at $93.33 per barrel


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