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Stock markets make slight gains after mild US consumer price rise

Equity markets ended Thursday’s session marginally up after a modest increase in US consumer prices. Investors interpreted the inflation data to mean the US Federal Reserve (Fed) could have room to pause its hiking cycle again to allow time for prices to come down.

Shane Strowmatt, LGT
Tempo di lettura
5 minuto
US Consumer Prices
© Shutterstock

The US Consumer Price Index (CPI) rose 3.2% in July when compared to the same month a year earlier, or 0.2% when compared with the previous month. Increases to rent prices accounted for 90% of July’s prices gains, according to the US Bureau of Labor Statistics. Core CPI, which strips out volatile food and energy prices and is the Fed’s preferred gauge for inflation, was up 4.7% on the year. Both the headline and core figures are still much higher than the Fed’s target of 2% inflation but much lower than a year ago when headline CPI was over 8% with core CPI nearly 6% and still rising.

Also supporting a Fed pause on Thursday was fresh labour market data. US weekly initial jobless claims increased during the week ending August 5 by 21,000 to 248,000.

In New York, the major stock indices ended the day with small gains. The positive inflation data drove prices up significantly at first, before the momentum slowed noticeably again later in the session. The Dow Jones Industrial finished the day up 0.15% to 35,176.15 points and the S&P 500 gained 0.03%, ending at 4,468.83 points. The Nasdaq-100 gained 0.18% to close at 15,128.84 points.

In a contentious vote on Thursday, regulators in California decided to relax most rules for operating and charging for rides, opening the market for more self-driving taxi services. The move solidifies San Francisco as the capital of self-driving cars and could be a boost to a potentially massive industry yet to see widespread adoption.

In individual stocks, Siemens shares were down 4.79% after the German industrial giant cut the guidance at its key Digital Industries segment. Order intake at the unit was weak when presenting its third-quarter results on Thursday.

Chinese tech company Alibaba said revenue was up 14% on the year in the quarter ending June 30. Notably, revenue from international retail jumped by 60% year-on-year, pushing the firm’s US-listed shares up by 3.65% on Thursday.

In Asia, stock markets were mostly down on Friday. The exception was Japan, where the Nikkei 225 was trading up 0.8%. Hong Kong's Hang Seng Index lost 0.5%, while the Shanghai Composite was down 1.2% in early trading. In South Korea, the Kospi was a bit lower, at -0.2%, and Australia’s S&P/ASX 200 was trading down 0.4%.

Corporate news in focus: Half-year figures from Salzgitter.

Economic data in focus: French unemployment (07:30 CET), UK industrial production, gross domestic product, and trade balance (08:00), US Producer Price Index (14:30) and University of Michigan Consumer Sentiment Index (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.