Stocks climb as US inflation stays tame

US inflation data fuels market optimism, but core gains hint at tariff ripple

Stock markets brushed higher on Tuesday after the latest U.S. consumer price index (CPI) for July showed a still‑subdued headline figure, but underlying core inflation accelerated, signalling that President Donald Trump’s tariffs are starting to permeate the economy.

Key market movements

• New York: Dow 44,202.5 (+0.5 %), S&P 500 6,402.1 (+0.5 %), Nasdaq 21,495.8 (+0.5 %)
• London: FTSE 100 9,138.1 (+0.1 %)
• Paris: CAC 40 7,720.96 (+0.3 %)
• Frankfurt: DAX 24,000.18 (-0.3 %)
• Tokyo: Nikkei 225 42,718.17 (+2.2 %)
• Hong Kong: Hang Seng 24,968.68 (+0.3 %)
• Shanghai: Composite 3,665.92 (+0.5 %)

Currency and commodity backdrop

• Euro/dollar: 1.1626 (+0.9 cents)
• Pound/dollar: 1.3470 (+0.4 cents)
• Dollar/yen: 148.34 (+0.22 cents)
• Brent North Sea: $66.26 (-0.6 %)
• West Texas: $63.45 (-0.7 %)

Inflation data reveals mixed signals

The headline CPI remained flat at 2.7 %, stable from June. But core inflation – which removes volatile food and energy costs – ticked up to 5.3 %, the fastest gain in six months. The acceleration suggests that tariff‑related price pressures are seeping into the core: a trend still too early to alarm markets.

Analyst perspective

• Lindsay James (Quilter): “The CPI data is reassuring for a U.S. economy that is beginning to show marginal stress on the edges. Tariff‑induced inflation is feeding into the core figure, but not yet at a level that is a major concern.”
• Richard Flax (Moneyfarm): “The markets view a high likelihood of an interest‑rate cut in September, and this report should not materially shift those expectations.”
• Aoife McLarnon (Camarco): “The gentle cooling of the economy does’t justify a rate cut to one percent, as President Trump calls for.”

Oil market reaction

Crude prices fell as OPEC’s latest growth projections maintained steady demand forecasts for 2025 and raised 2026 expectations, reflecting a backdrop of stronger global activity. Despite the data, the oil cartel’s outlook kept prices down.

Trump’s trade stance boosts investor sentiment

President Trump’s decision to postpone re‑implementation of high tariffs on China until November—giving additional time for talks—fueled optimism. Asian stocks rose, with the Nikkei recording a new high. “Kicking the trade truce down the road maintains the market mood,” noted Kathleen Brooks (XTB).

Other geopolitical developments

Investors are awaiting a summit between Trump and Russian leader Vladimir Putin this Friday. Trump has downplayed the chance of a breakthrough to end the Ukraine war.

Corporate headline: Evergrande’s exit from Hong Kong

Chinese property titan Evergrande Group announced its delisting from the Hong Kong Stock Exchange following its 2021 default, underscoring the prolonged crisis in China’s real‑estate market.

Bottom line

U.S. inflation data for July shows a stable headline figure but a notable rise in core inflation, reflecting early tariff impacts. Markets remain cautiously optimistic, anticipating a Federal Reserve rate cut in September. Trade decisions and corporate actions continue to shape investor sentiment across global arenas.