Global stock markets rise on falling inflation, favorable economic data
Date
8/14/2024 5:02:47 AM
(MENAFN) U.S. Stocks experienced a notable rise on Tuesday, driven by encouraging data from the U.S. producer price index (PPI), which indicated that inflationary pressures are easing. This development has bolstered investor confidence that the Federal Reserve is on track to reduce interest rates in September. The Dow Jones Industrial Average gained 100 points, or 0.26 percent, while the S&P 500 advanced by 44 points, or 0.80 percent. The nasdaq Composite led the charge, adding 220 points, or 1.3 percent. Notably, Starbucks shares surged by 10 percent following the announcement of Brian Niccol, the current CEO of Chipotle, as its new chief executive, while Home Depot shares dipped by 1.6 percent. Sean Osborne, chief foreign exchange strategist at Scotiabank, noted that the markets appear somewhat detached from U.S. rate data, as the focus has shifted to the Federal Reserve's employment data. He cautioned that flawed data could provoke stronger-than-usual market reactions, especially during periods of high volatility.
In Europe, stock markets also saw a modest uptick on Monday as investors assessed U.S. economic data alongside underwhelming corporate earnings, which tempered the overall gains. The pan-European STOXX 600 index rose by 0.3 percent to 500.74 points, following a flat finish in the previous session. Major indices across Europe, including Germany's DAX, Britain's FTSE, and France's CAC 40, each gained 0.2 to 0.3 percent. In the UK, official data revealed a significant slowdown in wage growth during the second quarter, marking its lowest level in nearly two years. This slowdown is viewed positively by the Bank of England, as it suggests that inflationary pressures are easing. Additionally, the unexpected decline in the unemployment rate further supported the outlook for reduced inflation in the UK.
Meanwhile, Japan's Nikkei surged by 3.5 percent, with technology stocks leading the gains as market sentiment was bolstered by a weaker yen. This rally came as traders returned from the Obon holiday. The Nikkei closed at a session high of 36,232.51, marking a significant rise in the last 40 minutes of trading. The broader Topix index also increased by 2.8 percent. Among the standout performers were chip equipment giant Tokyo Electron, which saw a 6.2 percent rise, and chip testing machine maker Advantest, which jumped by 7.7 percent. Exporters like Sony Group and Toyota Motor Corp also benefited, with gains of 5 percent and 3.3 percent, respectively. The depreciation of the yen, which fell by 0.3 percent to 147.64 yen per dollar, further supported these companies by increasing the value of their overseas sales when converted back to local currency.
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