2 weeks ago
Soft US Inflation Boosts Global Markets; India Sees Cautious Start
Imagine a giant scoreboard that shows how companies around the world are doing.
On Wednesday, stocks in the United States finished with mixed results — some went up a little and some went down a little.
Prices in stores rose more slowly than people expected, which is good news because it means the Federal Reserve probably won't make borrowing money more expensive.
That good news helped stock markets in Asia go up on Thursday, with South Korea and Japan climbing the most.
Companies that build computers and machines for artificial intelligence earned a lot of money, so their stocks jumped.
At the same time, the United States and Iran are in a standoff over the Strait of Hormuz, and attacks on shipping in the Middle East have made investors nervous.
Because of that, the price of oil stayed high, which can make many things cost more.
Investors are also watching India, where the stock market is expected to open cautiously after a couple of down days.
Experts have pointed to important support levels for Indian stocks, so everyone is waiting to see what happens next.
US stocks closed mixed on Wednesday, with the Nasdaq Composite up 0.54% to 26,588.49, the S&P 500 up 0.26% to 7,748.50, and the Dow Jones slipping 0.04% to 53,770.27.
Softer-than-expected US inflation data — headline CPI up 0.1% month-on-month at a 3.4% annual rate, core CPI up 0.2% on the month and 2.5% year-on-year — reinforced expectations the Federal Reserve will leave rates unchanged in September.
AI infrastructure stocks led gains, with Nebius Group surging more than 34% and Super Micro Computer and CoreWeave rallying around 19-20% on strong quarterly earnings.
Asian markets traded higher on Thursday, with South Korea's Kospi up 3.46%, Japan's Nikkei 225 up 1.67%, and Hong Kong's Hang Seng down 0.20%.
India's market is expected to open cautiously after two sessions of selling pressure, with GIFT Nifty futures just above 24,400 versus the Nifty's previous close of 24,435, while WTI crude stayed near $82 amid the US-Iran standoff over the Strait of Hormuz.
- Who
- Global investors, the US Federal Reserve, the US and Iranian governments, AI infrastructure companies such as Nebius Group, Super Micro Computer and CoreWeave, and analysts at Enrich Money, Kotak Securities and LKP Securities.
- What
- US stocks closed mixed and Asian markets rallied after softer-than-expected US inflation data boosted expectations that the Federal Reserve will keep interest rates unchanged, while elevated crude prices from the US-Iran standoff kept sentiment cautious; India's market was expected to open cautiously.
- Where
- United States, Japan, South Korea, Hong Kong, China, Europe, India, and the Strait of Hormuz.
- When
- Thursday early-morning trading in Asia, following Wednesday's US market close; the US Producer Price Index data was due later on Thursday.
- Why
- Softer-than-expected US inflation data reinforced expectations that the Federal Reserve will likely keep interest rates unchanged at its September meeting, while the continuing US-Iran standoff over the Strait of Hormuz kept oil prices and investor caution elevated.
Optimistic on Rate Relief
Cautious on Geopolitics
US inflation and Fed policy
Optimistic on Rate Relief
July's consumer inflation broadly matched expectations, with headline CPI at 3.4% and core CPI at 2.5% year-on-year, reinforcing expectations the Federal Reserve will maintain a less restrictive policy stance and likely keep rates unchanged in September.
Cautious on Geopolitics
Investor attention is shifting to the US Producer Price Index for further confirmation that inflationary pressures are moderating, while elevated crude prices keep India's inflation outlook, import costs, the rupee and corporate margins firmly in focus.
Oil and the Strait of Hormuz
Optimistic on Rate Relief
WTI crude has eased from recent highs, declining more than 0.8% to around $82 a barrel, offering a modest pullback in energy markets.
Cautious on Geopolitics
Prices remain well above levels seen before the latest escalation in Middle East tensions and are likely to retain a geopolitical risk premium until there is clarity on the Strait of Hormuz; Tehran reiterated the strait will remain closed unless Washington accepts its conditions.
Key facts
- Nasdaq Composite (Wednesday close)
- +0.54% to 26,588.49
- S&P 500 (Wednesday close)
- +0.26% to 7,748.50
- Dow Jones Industrial Average (Wednesday close)
- -0.04% (21.58 points) to 53,770.27
- US headline CPI (July)
- +0.1% month-on-month; 3.4% year-on-year
- US core CPI (July)
- +0.2% month-on-month; 2.5% year-on-year
- WTI crude price
- Around $82 a barrel, down more than 0.8%
- Asian indices (Thursday)
- Kospi +3.46%, Nikkei 225 +1.67%, Hang Seng -0.20%
- Indian market indicators
- Nifty previous close 24,435; GIFT Nifty futures just above 24,400; Key support 24,300/77,500 (Kotak Securities)
Quotes
Ponmudi R
CEO at Enrich Money
“Investor attention is now shifting to the U.S. Producer Price Index (PPI), due later today, for further confirmation that inflationary pressures are moderating. At the same time, developments surrounding the Strait of Hormuz continue to be closely monitored for their implications on energy markets and global risk sentiment.”
livemint.com
“Indian equity markets are expected to open on a cautious note.”
livemint.com
Shrikant Chouhan
Head Equity Research at Kotak Securities
“We believe that the 20-day SMA or 24,300/77,500 would act as key support zones for traders. If the market manages to trade above these levels, it could bounce back to 24,500-24,600 / 78,500-78,800.”
livemint.com
Sources
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