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US inflation rise keeps markets on edge

US inflation ticked higher in May, with annual consumer price growth accelerating slightly, keeping investors focused on the Federal Reserve’s next moves amid tariff pressures. US stock markets closed mixed on Wednesday, European markets were in the red and Asian equities traded mostly lower on Thursday. Oil prices surged to seven-week highs as market participants anticipated increased economic activity resulting from progress in trade negotiations between the US and China.

  • Date
  • Author Shane Strowmatt, LGT
  • Reading time 5 minutes

Inflation shown with icons

US consumer prices rose modestly in May, with the Consumer Price Index (CPI) increasing by 0.1%, down from a 0.2% rise in April, according to data released on Wednesday. On an annual basis, inflation accelerated slightly to 2.4%, up from 2.3% in April. Core inflation, which excludes food and energy, remained steady at 2.8% year-on-year. The market expects inflation to intensify in the coming months due to the impact of tariffs and rising retail prices, while consensus expects the Federal Reserve to maintain its current interest rate policy as it monitors these developments.

US indices mixed amid trade progress

US stock markets showed mixed results on Wednesday, with brief gains to multi-month highs reversing later in the session. The Dow Jones Industrial closed flat at 42,865.77 points, while the S&P 500 fell 0.3% to 6022 points, and the Nasdaq 100 dropped 0.4% to 21,860.80 points. Progress in US-China trade talks and the lower-than-expected inflation provided temporary support. However, concerns about steel tariffs and disappointing corporate updates weighed on sentiment.

Asia-Pacific markets mostly lower

Asia-Pacific markets showed mixed performance on Thursday. Japan’s Nikkei 225 was down 0.6%, while Hong Kong’s Hang Seng Index dropped 1%. Mainland China’s CSI 300 edged 0.2% lower, and Australia’s S&P/ASX 200 slipped 0.1%. Korea’s Kospi, however, bucked the trend, trading 0.2% higher, supported by gains in key sectors.

Oil prices hit 7-week high on trade optimism

Oil prices surged on Wednesday to their highest levels in seven weeks after US President Donald Trump announced a tentative trade agreement with China, raising hopes of reduced economic tensions. Brent crude rose 4.3% to USD 69.77 per barrel midweek, while WTI climbed 5.5% to USD 68.58 per barrel, its highest in over two months. A trade framework between the US and China was finalised earlier in the week, including a 55% tariff on Chinese imports to the US and a 10% tariff on US imports to China, alongside the removal of Chinese export restrictions on rare earth minerals.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Adobe and Toho. Annual general meetings at Toyota.

Economic data in focus: UK gross domestic product (08:00), UK manufacturing production (08:00), UK industrial production (08:00), UK trade balance (08:00), US Producer Price Index (14:30), US weekly initial jobless claims (14:30).

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