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Easing US inflation and AI rally lifts equities

Easing US inflation and robust demand for artificial-intelligence infrastructure lifted technology shares, with Wall Street ending Wednesday mostly higher and South Korean equities surging on Thursday. The softer price data strengthened expectations that the Federal Reserve (Fed) will refrain from raising interest rates next months. Attention will now turn to US producer-price data, which could offer further clues on the inflation outlook and the likely path of Fed policy.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

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US consumer prices rose 0.1% in July, leaving annual inflation at 3.4%, while core inflation excluding food and energy eased to 2.5% year-on-year from 2.6% in June and increased 0.2% month-on-month, data showed on Wednesday. The second consecutive monthly moderation, alongside a July loss of 23,000 jobs, reinforced expectations that the Fed will leave interest rates unchanged in September. Falling energy costs helped contain overall price pressures, though renewed tensions involving Iran could cause further volatility. Markets put the probability of unchanged rates at 55%, despite three Federal Open Market Committee (FOMC) members favouring an increase at the July meeting.

Tech shares lift US market

The Nasdaq-100 gained 0.7% to close at 29,742.60 points on Wednesday, supported by upbeat outlooks from artificial-intelligence and semiconductor-related companies, while the S&P 500 rose 0.3% to 7748.50 points and the Dow Jones Industrial Average was little changed at 53,770.27 points, as easing US consumer-price inflation limited concerns about higher interest rates. Cloud computing company Nebius surged 34% after reporting cloud revenue growth of more than 500% in the second quarter, while CoreWeave and Super Micro Computer each rose about 19% on strong demand for AI capacity.

KOSPI enters bull market on AI rally

Korea’s Kospi climbed 3.7% to 6822.40 points on Thursday, taking its recovery from its late-July low to about 23% and meeting the technical definition of a bull market as chipmakers rallied. Japan’s Nikkei 225 advanced 1.8% to 68,708 points, after national producer prices rose 7.2% year-on-year in July, slowing from a revised 7.3% increase in June and undershooting market expectations. Renewed confidence in demand for artificial-intelligence infrastructure was largely responsible for the gains, while Hong Kong’s Hang Seng Index rose 0.2% and mainland China’s CSI 300 gained 0.7%. Australia’s S&P/ASX 200 fell 0.2%, while India’s Nifty 50 declined 0.4%. Meanwhile, oil prices remained elevated and little changed on Thursday after Iran reiterated that the Strait of Hormuz remained closed, with vessel traffic through the waterway about 90% below pre-conflict levels.

German inflation accelerates in July

German consumer prices rose 2.8% year-on-year in July, accelerating from 2.3% in June, while prices increased 0.8% month-on-month, data confirmed on Wednesday. Energy prices rose 8.3% from a year earlier, driven by a 23% increase in motor fuel costs after a temporary fuel-tax reduction ended in June and oil prices rose amid the Iran war. Core inflation, which excludes food and energy, stood at 2.4%, while food prices rose 0.4% and services cost 2.9% more than a year earlier. The Euro Stoxx 50 was down 0.2% on Wednesday, while Germany’s DAX also fell 0.2%. France’s CAC 40 lost 0.5% and the Swiss Market Index declined 0.9%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Applied Materials, Adyen, and RWE.

Economic data in focus: UK gross domestic product (08:00), UK manufacturing production (08:00), UK trade balance (08:00), Chinese Producer Price Index (08:30), euro-area manufacturing production (11:00), US Producer Price Index (14:30) and US weekly initial jobless claims (14:30).

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