The main benchmarks from Europe and the US recovered a large amount of ground as investors cheered regional and international CPI data. US CPI was lower-than-expected, while the UK’s CPI showed signs of slowing down, prompting investors to put bets on more rate cuts to take place this year.
Wall Street’s main three benchmarks rose sharply following lower-than-expected December CPI data. Investors cheered the +3.2% rise compared to the +3.3% expectation. As a result, the NASDAQ added +2.1%, the S&P 500 increased +1.6%, and the DOW rose +1.5%. Traders are now hopeful of at least two rate cuts by the end of this year, with the first taking place in July. Investors were also relieved by a ceasefire deal between Israel and Hamas, the potential first step in ending the 15-month long war. JPMorgan Chase rose +1.4% after it posted record annual profit in the fourth quarter of 2024. Wells Fargo jumped +6.1% after it beat the Street in profit as well. Goldman took on +4.8% after it posted its best quarterly profit since 2021, while Citi notched a profit in the fourth quarter, raising its stock price +5.6%. BlackRock jumped +3.8% after its assets under management reached a record US$11.6 trillion in the fourth quarter. In rates markets, the US two-year treasury bond yield fell -8 bp to 4.28% while the US 10-year slumped -12 bp to 4.67%.
The Stoxx 600 jumped +1.3% while London’s FTSE 100 increased +1.2%. The UK CPI data release showed an annual increase of +2.5% in December, a touch lower than November’s +2.6%. As a result, traders are pricing in more BoE rate cuts during this year. In stocks, Hays rose +1.7% after the recruiter reported another drop in its quarterly fees. Serco increased +1.6% after it won a contract from the US Army valued at US$247 million. Nordex, the German wind turbine manufacturer, rose +1.8% after it said it has increased its gigawatt order intake by more than +10% in 2024.
The ASX 200 fell -0.2% ahead of US inflation data. Fortescue rode the iron ore price gain, adding +1.8%. Transurban fell -0.9% and CSL lost -1.2% following target price reductions from brokerages. New Zealand’s own NZX 50 increased +0.5%. In Asia, Hong Kong’s Hang Seng was the only benchmark to turn over into the green, adding +0.3%. Korea’s Kospi remained relatively flat (-0.0%), while Japan’s Nikkei 225 edged -0.1% down. China’s Shanghai Composite fell -0.4% while its CSI 300 lost a larger -0.6%.
WTI Crude increased +2.5% to US$79.44/bbl, Gold rose +0.5% to US$2,691.88/oz, Iron Ore increased +1.3% to US$99.99/MT.