Morning Bid: Stock markets celebrate mild inflation data
Record highs are popping up on stock markets all over the world, from Wall Street to Japan and Vietnam, and equity indexes across Asia are a sea of green.
Data in the United States and other major markets are falling into a Goldilocks zone of not-too-hot inflation that allows central banks to keep the easy money flowing.
The MSCI All Country World Index (.MIWD00000PUS), opens new tab of shares reached a new all-time high, as did Japan's Nikkei (.N225), opens new tab gauge, which smashed through the 43,000 level for the first time. Bitcoin's cryptocurrency rival ether jumped to a near four-year high.
Traders are pricing in a 94% chance the Federal Reserve will cut its key interest rate in September, up from nearly 86% a day ago and about 57% a month earlier, according to the CME FedWatch tool.
The central bank in Australia cut rates yesterday and New Zealand's is expected to follow suit next week. The Bank of Japan's long-anticipated rate hike keeps getting kicked down the road.
A Reuters poll that tracks the BOJ's quarterly tankan business survey showed Japanese manufacturers' sentiment index improved for a second-straight month, while another report showed the nation's wholesale inflation slowed in July.
Left in the cold is the dollar, still the biggest loser since U.S. President Donald Trump began his on-again, off-again tariff saga in April.
A new problem for the greenback is concern that partisanship will creep into U.S. monetary policy and the sanctity of economic data. Trump has nominated White House adviser Stephen Miran to temporarily fill a vacant board seat at the Fed.
And the White House said it was "the plan" that the Bureau of Labor Statistics would continue to publish its closely watched monthly employment report after Trump's pick to head the agency, E.J. Antoni, previously proposed suspending its release.
It's a light calendar for data and earnings in Europe and the U.S., and equity futures are pointing another day of gains in both markets.
Meanwhile, small bands of Russian soldiers thrust deeper into eastern Ukraine, with Trump planning to meet Russian President Vladimir Putin in Alaska on Friday in search of an end to the war. European leaders fear the summit could result in peace terms imposed on an unlawfully shrunken Ukraine.
Key developments that could influence markets on Wednesday:
- Germany final consumer price index (CPI) data for July
- United Kingdom RICS Housing Survey for July
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