European Stocks Soar After Record-Setting Wall Street Gains
Rising Confidence in a Possible US Rate Cut Fuels Market Rally
What’s Driving the Surge
- Fed Outlook: Investors are betting on a sooner-than-expected shift in U.S. monetary policy.
- Economic Indicators: Recent data suggest softer inflation and stronger labor statistics.
- Global Sentiment: A break in geopolitical tensions has lowered risk premiums.
Market Performance Highlights
The S&P 500 climbed 3.6%, while the Nasdaq surged 4.1%. Bond yields dipped as buyers sought safety in government notes.
Key Sectors Benefiting
- Technology – gains surpass 5% amid optimism about lower borrowing costs.
- Financials – experiencing a rebound as rates are expected to trim growth lately.
- Energy – outperformed following a brief dip in oil prices.
Moving Forward
While the market is buoyated by rate cut expectations, analysts remind investors to keep a close eye on the Fed’s next statements and potential inflation surprises.
Global Markets Surge After U.S. Inflation Spike
European and Asian equities climb as U.S. stocks set new record highs on Wednesday, following early-month inflation data that showed a modest improvement.
Key Market Highlights
- Nikkei 225 – Tokyo’s benchmark added to its record, reflecting strong domestic momentum.
- S&P 500 Futures – Up 0.2%, signaling continued bullish sentiment.
- Dow Jones Futures – Little change, maintaining a steady stance.
- DAX (Germany) – Rose 0.8% to 24,207.78.
- CAC 40 (France) – Climbed 0.4% to 7,784.63.
- FTSE 100 (United Kingdom) – Edged higher by 0.1% to 9,157.26.
Driving Forces Behind the Rally
Two main catalysts fueled the surge:
- Relief from a prolonged pause in the trade escalation between President Donald Trump and China.
- Hope that the Federal Reserve will soon lower interest rates, buoyed by a tempering of the Consumer Price Index (CPI) in July.
The combination of these factors helped bolster investor confidence across the globe, leading to widespread gains in both developed and emerging markets.
Asian markets
Asian Markets Rally as US Confidence Persists
Asian equities opened with a pronounced risk‑on spirit, propelled by a strong U.S. session that felt like a burst of momentum after inflation data remained softer than anticipated.
Key Trade Development
- China & U.S. Extension – The two powers agreed to continue a 90‑day pause on elevated tariffs, effective 12 August, providing additional time for negotiations toward a comprehensive trade pact.
- While the final outcome of the talks remains uncertain, the temporary truce eases pressure for businesses and economies across Asia that heavily rely on China‑linked supply chains.
Index Performance Highlights
- Hong Kong Hang Seng – Up 2.6%, reaching 25,613.67.
- Shanghai Composite – Gained 0.5%, settling at 3,683.46.
- Nikkei 225 – Rose 1.3% to 43,274.67, driven by robust gains in chip‑related and export companies.
- KOSPI (South Korea) – Advanced 1.1%, closing at 3,224.37.
- S&P/ASX 200 (Australia) – Fell 0.6%, ending at 8,827.10.
- Taiex (Taiwan) – Up 0.9%.
- Sensex (India) – Gained 0.5%.
- SET (Bangkok) – Climbed 1% after the Bank of Thailand trimmed its key rate to 1.5%, a 0.25‑percentage‑point cut.
Additional Market Movements
- U.S. inflation remains moderate, indicating limited impact from tariffs, yet consumer prices continue to climb.
- Russian equities edge ahead in anticipation of the forthcoming Trump‑Putin summit.
US markets
US Markets Soar to New Peaks Amid Soft Inflation Data
On Tuesday, the S&P 500 surged 1.1%, surpassing its all‑time high reached two weeks earlier. The index closed at 6,445.76.
Other Major Indices Lead the Rally
- Dow Jones Industrial Average climbed 1.1% to 44,458.61.
- Nasdaq Composite jumped 1.4%, setting a new record of 21,681.90.
Strong inflation numbers have bolstered expectations that the Federal Reserve may have room to reduce rates in its upcoming September meeting.
Inflation Report Highlights
- US consumers paid an average of 2.7% more for groceries, gasoline, and other living expenses in July versus the previous year.
- The figure matches June’s inflation rate and falls short of the 2.8% forecasted by economists.
Lower interest rates could provide a significant lift to investment and the broader economy by making borrowing cheaper for households and businesses buying homes, cars, and equipment.
Political Reactions
President Donald Trump has repeatedly urged rate cuts, often directing criticism at the Fed’s chair. Conversely, the Federal Reserve remains cautious, citing concerns that Trump’s tariffs might intensify inflation.
Looking Ahead
- The Fed will review one more inflation report and another on the US labor market before its next session on September 17.
- Recent job data came in weaker than expected, adding further uncertainty.
Critics argue that the stock market has become expensive after its rally from an April trough, pressuring companies to sustain profit growth.
Early Wednesday Movements in Commodities and Currency
- US benchmark crude oil fell $0.26 to $62.91 a barrel.
- Brent crude slipped $0.20 to $65.92 a barrel.
- The Japanese yen weakened to 147.24 against the dollar from 147.84.
- The euro strengthened to $1.1727 from $1.1677.
