Global markets rallied on Wednesday, August 14, 2024, as optimism grew over a potential interest rate cut by the Federal Reserve next month, following a report showing U.S. wholesale prices rose less than expected in July.
The Producer Price Index (PPI) figures offered a reprieve from the market’s recent volatility, with key indicators suggesting that inflation is inching closer to the Fed’s 2% target.
Rodrigo Catril of National Australia Bank commented, “A softer-than-expected U.S. PPI for July was treated as welcome news by the market, particularly as it feeds into the Fed’s preferred inflation measure.”
The PPI data helped lift U.S. equities, pushing the Nasdaq up over 2%, driven by gains in tech giants such as Amazon, Nvidia, and Apple. This renewed investor confidence spilled over into Asian markets, where most major indices closed in positive territory, including Tokyo’s Nikkei, which rose 0.6%.
Stephen Innes, in his “Dark Side Of The Boom” newsletter, noted, “Despite a brief dance with recession fears last week, core optimism remains resilient due to a better-than-even chance the Fed delivers a 50-basis-point cut in September.”
Oil prices also saw a slight increase amid continuing tensions in the Middle East, though analysts warned that the situation remains unpredictable and could disrupt supplies, leading to potential price spikes.
As the global market braces for upcoming consumer inflation figures and retail sales data, the focus remains on whether the Fed will proceed with the anticipated rate cut to steer the U.S. economy towards a “soft landing.”
