Global stock markets reached new highs, buoyed by expectations for additional US interest rate cuts that overshadowed rising geopolitical tensions. On Wednesday, the S&P 500 and Nasdaq Composite hit record territories, benefiting from a report indicating that US producer prices unexpectedly fell by 0.1% month-on-month in August, contrary to analysts’ forecasts of a 0.3% rise.
Patrick O’Hare, an analyst at Briefing.com, emphasized the positive implications of the producer price index (PPI) data, suggesting it alleviated concerns about tariffs inflating consumer prices. “This report will keep the market locked on its view that there will be at least 75 basis points of rate cuts by the Fed before the end of the year,” he stated. This optimism followed Wall Street’s recent gains as investors reacted to disappointing US jobs data, reinforcing expectations for a Federal Reserve interest rate cut in their forthcoming meeting next week and potentially two additional cuts within the remaining meetings of 2025.
The dollar weakened against major currencies, while Wall Street received a significant boost from a 35% surge in Oracle shares. The software giant projected impressive revenue growth driven by contracts tied to artificial intelligence.
In Asia, Tokyo’s stock market concluded at an all-time high, reflecting traders’ confidence amidst expectations the South Korean government might retract plans to lower the capital gains tax threshold for stock investments. Meanwhile, in Europe, Paris’s CAC 40 index gained ground following the appointment of Sebastien Lecornu as the new French prime minister. His predecessor, Francois Bayrou, faced a confidence vote concerning austerity measures aimed at reducing the nation’s debt.
Analysts noted that although the failure of the austerity initiatives indicated a need for compromise, investor sentiment remained optimistic in the short term. Joshua Mahony, Chief Market Analyst at Scope Markets, highlighted the market’s resilience despite external pressures.
Despite geopolitical concerns, including a reported violation of Polish airspace by Russian aircraft, traders largely remained focused on market trends. Oil prices experienced moderate gains, while gas futures remained stable following Israel’s military actions against Hamas in Qatar. Gold prices, traditionally viewed as a safe-haven asset, approached recent record highs.
Elsewhere, Jakarta’s stock market rebounded significantly after President Prabowo Subianto dismissed Finance Minister Sri Mulyani Indrawati in the wake of deadly protests against the government. In London, overall market gains were slightly tempered by a 10% decline in shares of Primark’s parent company, Associated British Foods (ABF), stemming from a disappointing trading update related to its clothing and food businesses.
Key market indices around 1330 GMT reflected these developments:
– New York:
– Dow: -0.1% at 45,645.12 points
– S&P 500: +0.4% at 6,538.52
– Nasdaq Composite: +0.4% at 21,969.12
– London:
– FTSE 100: Flat at 9,241.63
– Paris:
– CAC 40: +0.3% at 7,769.68
– Frankfurt:
– DAX: Flat at 23,712.48
– Tokyo:
– Nikkei 225: +0.9% at 43,837.67 (close)
– Hong Kong:
– Hang Seng Index: +1.0% at 26,200.26 (close)
– Shanghai:
– Composite: +0.1% at 3,812.22 (close)
Currency movements indicated:
– Euro/dollar: Up to $1.1718 from $1.1707
– Pound/dollar: Up to $1.3546 from $1.3527
– Dollar/yen: Down to 147.29 from 147.42
– Euro/pound: Down to 86.51 pence from 86.57 pence
In commodities, Brent North Sea Crude was up 1.0% at $67.02 per barrel, while West Texas Intermediate also rose 1.0% to $63.23 per barrel.
