Global stocks mostly rise as US inflation eases

US data showed inflation moderated in July 2021
·3 min read

Global stocks mostly rose Wednesday, hitting records in some cases, after a closely-watched US report showed inflation moderating in July.

Both the Dow and S&P 500 finished at all-time records, joining Frankfurt's DAX, while Paris ended near an all-time high.

The US inflation report showed consumer prices rising significantly for energy and food in July. But when those volatile items were left out of the calculation, the core CPI climbed just 0.3 percent, seasonally adjusted, just a third of the rate in June.

The moderation in price growth "feeds into the 'peak inflation' narrative," said Briefing.com analyst Patrick O'Hare, while adding that the report suggested inflation could still linger at high levels.

Equities have had a largely positive week after a recent run of pressure caused by the prospect of central banks tightening their monetary policies, as well as by the fast-spreading Delta variant of the coronavirus.

World central bankers will meet later this month at an annual conference in Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell will speak.

Heading into Wednesday's consumer price report, a lingering worry had been that accelerating inflation could pressure the Fed to hasten its plan to tighten monetary policy, leading to a potential economic shock.

But Wednesday's data was seen as supportive of statements by the Fed and other central banks that inflation pressures are due to short-term supply chain issues and not reflective of a structural shift in the economy.

"Easing price pressures, an economy that's recovering strongly and a labor market that's rapidly improving will be music to the ears of Fed policy makers," said Craig Erlam, senior market analyst at OANDA.

"While it may not change the start date, or even pace of tapering given their view that inflation was transitory, it will give them an additional degree of comfort and allow them to take their foot off the gas should it be required."

In other markets, oil prices rose despite a call from President Joe Biden's White House for OPEC+ oil producers (the Organization of the Petroleum Exporting Countries and allies) to lift output to meet rising demand as the global economy recovers from Covid-19.

Among individual companies, Southwest Airlines advanced 1.4 percent as investors shrugged off a recent slowdown in bookings and uptick in cancelations, likely due to the latest rise in Covid-19 infections.

- Key figures around 2040 GMT -

New York - Dow: UP 0.6 percent at 35,484.97 (close)

New York - S&P 500: UP 0.3 percent at 4,447.79 (close)

New York - Nasdaq: DOWN 0.2 percent at 14,765.14 (close)

London - FTSE 100: UP 0.8 percent at 7,220.14 (close)

Frankfurt - DAX 30: UP 0.4 percent at 15,826.09 (close)

Paris - CAC 40: UP 0.6 percent at 6,857.99 (close)

EURO STOXX 50: UP 0.4 percent at 4,206.33 (close)

Tokyo - Nikkei 225: UP 0.7 percent at 28,070.51 (close)

Hong Kong - Hang Seng Index: UP 0.2 percent at 26,660.16 (close)

Shanghai - Composite: UP 0.1 percent at 3,532.62 (close)

Euro/dollar: UP at $1.1743 from $1.1720 at 2100 GMT

Pound/dollar: UP at $1.3866 from $1.3843

Euro/pound: DOWN at 84.67 pence from 84.68 pence

Dollar/yen: DOWN at 110.43 yen from 110.57 yen

Brent North Sea crude: UP 1.1 percent at $71.44 per barrel

West Texas Intermediate: UP 1.4 percent at $69.25 per barrel

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