Global stocks edged higher on hopes of Fed and ECB rate cuts, led by strong gains in the tech and defence sectors. Asian markets were mixed as policy uncertainty and pullbacks weighed on sentiment.
US stocks climb as CPI fuels Fed cut bets
US stocks advanced on Thursday as investors bet inflation data would not stop the Federal Reserve from cutting rates next week. August CPI rose +0.4% month-on-month, hotter than expected, but matched forecasts at +2.9% year-on-year, while core CPI increased +0.3% on the month and +3.1% annually, both in line with expectations. Weekly jobless claims jumped to their highest level since October 2021, reinforcing signs of labour market weakness. The DOW gained +1.3%, the S&P 500 rose +0.8%, and the NASDAQ added +0.7%, with all three hitting intraday record highs. Oracle slipped -5.8% after a historic +36% surge the prior session on booming AI infrastructure demand. Tesla rose despite no company-specific news, while banks such as JPMorgan and consumer names including Walmart gained on expectations of lower rates. In the rates market, the US two-year yield rose +6bp to 3.537% while the US 10-year yield fell -1.3bp to 4.019%.
European stocks rise as ECB holds rates steady
European stocks closed higher on Thursday after the European Central Bank held interest rates steady and reaffirmed its outlook for growth and inflation. The ECB kept the deposit rate at 2%, the refinancing rate at 2.15%, and the marginal lending rate at 2.4%, with President Christine Lagarde signalling confidence in stable inflation while upgrading euro area growth projections. US inflation and jobs data, which boosted expectations of a Fed rate cut next week, also supported sentiment. The STOXX 600 gained +0.6%, the FTSE 100 rose +0.8%, Germany’s DAX added +0.3%, and France’s CAC 40 lifted +0.8%. On the corporate side, automotive manufacturing firm Stellantis NV surged +9.2% on a stronger profitability outlook, while defence shares advanced for a second session, led by a +6.3% jump in BAE Systems.
Asian markets mixed as rate hopes clash with political pressures
Asian markets ended mixed on Thursday as a surprise drop in US producer prices boosted Fed rate cut hopes, while political and geopolitical tensions kept sentiment in check. Japan’s Nikkei 225 jumped +1.2% to a record high on tech gains, with SoftBank soaring +10% after Oracle’s upbeat cloud outlook, while South Korea’s Kospi rose +0.9% after the government dropped plans to revise capital gains tax rules. Hong Kong’s Hang Seng slipped -0.4% as pharma stocks across the region fell on reports of potential US curbs on experimental drug imports. Australia’s ASX 200 slipped -0.3%, with defence contractors standing out after the government awarded a fresh tranche of long-term contracts: Downer EDI rose +3.0% on a A$3.1b deal to service eight major bases; Ventia Services gained +0.6% on a A$2.7b contract; and Service Stream rocketed +16.0% after securing a A$1.6b deal to provide asset maintenance and management at 113 defence sites. New Zealand’s NZX 50 fell -0.4%.
Commodities
WTI crude fell -2.2% to US$62.3/bbl, while gold slipped -0.2% to US$3,632.17/oz. Iron ore dropped -0.3% to US$105.8/mt.