Nasdaq gains while Dow, S&P 500 fall as US inflation ticks higher
In New York, the Nasdaq edged higher to close at another record, propelled by buoyant news from tech darling Nvidia. But the blue-chip Dow and broader S&P 500 both retreated.
The US consumer price index for June showed inflation rose 2.7 per cent compared with a year earlier.
Though in line with economists' forecasts, the rate was above the Federal Reserve's two-per cent target and marked an acceleration from the prior month.
Jochen Stanzl, an analyst at CMC Markets, said detail in the CPI report "points to a trend toward stagflation — an unwelcome topic for investors in an increasingly overvalued market."
Stephen Innes, managing partner at SPI Asset Management, said that "the CPI release showed some early signs of tariff pass-through but underlying inflation remains muted."
Since April, the United States has imposed a baseline 10-per cent tariff on goods imported from most of its main trading partners, with steeper levies on steel, aluminium and cars.
Trump has threatened big tariff hikes on August 1 on numerous countries if they do not reach deals.
Yesterday, Trump announced a trade agreement with Indonesia. Indonesian goods entering the United States would encounter a 19 per cent tariff, below the 32 per cent previously threatened.
The Indonesia accord, however, comes as US negotiations remain unresolved with around two dozen other trading partners.
High stock market prices "may be emboldening the administration to keep up the bluster on tariffs," said Art Hogan of B. Riley Wealth Management.
Tariff threat to Russia
Most Asian indices closed higher before the US inflation report came out, except for those in Shanghai and Mumbai.
China and India are both major trading partners of Russia — which Trump said would be hit with tariffs of up to 100 per cent within 50 days if President Vladimir Putin did not end his war on Ukraine.
China, which has negotiated a US tariff truce, had on yesterday issued economic growth data that met expectations, largely thanks to an April-June export surge to get ahead of Trump's levies.
Even though Russia is a major crude producer, oil traders bid prices lower, not higher, following Trump's announcement.
"The fact that oil prices fell suggests investors are relieved that Trump has allowed sufficiently enough time for Putin to agree to a ceasefire," said Fawad Razaqzada, analyst at Forex.com.
"They are also getting used to Trump threatening tariffs, only to change his mind in the last minute and extend deadlines," he said.
In corporate news, US banks JPMorgan Chase, Wells Fargo and Citi posted strong second-quarter results.
And Nvidia's share price jumped after it said US export restrictions will be eased to allow it to sell its H20 artificial intelligence chips to China. — AFP
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