European, US Markets Diverge as Inflation Data Shapes Rate Expectations
The European and US equity markets diverged as a softer-than-expected consumer price index print shaped investors’ sentiment across the global indices.
In the US, the S&P 500 closed 0.26% higher yesterday, and the Nasdaq Composite gained 0.54%, as downwardly revised rate hike expectations and a chipmaker-led AI rally boosted the technology sector.
Meanwhile, the Dow Jones slipped 0.04% as geopolitical uncertainty and weakness in select mega-cap names kept a lid on broader gains.
Also, European stocks closed lower yesterday, with the FTSE 100 slipping 0.10% and the Euro Stoxx 50 falling 0.26%, as renewed Middle East tensions and a sharp drop in SAP weighed on sentiment, offsetting earlier relief from the in-line US CPI print.
Despite ongoing tensions in the Middle East, Asian markets are trading mostly higher on Thursday, tracking mostly positive overnight cues from Wall Street.
Traders said a slowdown in US inflation has now strengthened expectations that the US Federal Reserve could adopt a more accommodative policy stance in the months ahead.
According to Bloomberg, the market is now pricing in a 33.2% chance of a rate hike in September, down from 48.1% prior to the consumer price index (CPI) release.
Looking to Asian markets, the Nikkei 225 surged 1.80% as softer-than-expected Japanese PPI data tempered Bank of Japan tightening expectations.
The Hang Seng edged fractionally higher, up 0.07%, despite Tencent falling sharply after the company more than doubled AI capital expenditure, fuelling margin concerns that prompted Goldman Sachs and Morgan Stanley to cut their price targets on the stock.
Australia’s ASX 200 slipped 0.23% thus far as mining and consumer shares dragged following disappointing earnings from Telstra and others.
The Johannesburg Stock Exchange (JSE) is set for a flat-to-negative open this morning despite global signals pulling in competing directions, First National Bann stockbroking and portfolio management subsidiary said in a note.
While global futures are pointing broadly higher, Tencent fell 3.68% in Hong Kong this morning, a move that is likely to weigh on Naspers and Prosus at the open.
The majority of Australian resource shares are softer as well, which offers a cautious read-through for JSE resource counters this morning. Gold and platinum are both trading marginally lower, a development that may temper appetite for precious metals counters on the bourse.
The local bourse closed lower on Wednesday as investors digested fresh corporate releases against underlying macroeconomic signals. The All Share Index and Top 40 fell 0.83% and 0.81% at 114 981 points and 107 214 points, respectively.
Industrials led losses for the second consecutive session, despite Shoprite’s 8.20% surge after releasing a robust operational update, while the sector was pressured by a sharp sell-off in heavyweight technology counters Prosus (-7.73%) and Naspers (-7.44%), as well as weakness in luxury goods counter Richemont (-3.91%).
Financials (-0.46%) ended modestly lower amid a risk-off tone, while Resources (+0.98%) outperformed the broader market as higher precious metals prices supported gold miners, with Goldfields (+1.36%), Harmony (+1.36%) and AngloGold Ashanti (+1.27%) posting solid gains.
Global Equities Markets Mixed as Rising Energy Costs Dampen Momentum
